http://batonrougehousingreports.com/ – Encouraging Baton Rouge Housing News: CNBC Buffett’s Real Estate CEO on Housing Fix. Good Outlook, Pent up Demand, Rents Becoming Equal To or Exceeding House Payments Becoming “Tipping Point” for buyers to buy housing if they qualify.
Transcript is below, quoted and provided by CNBC. The link to watch the short video is here: http://video.cnbc.com/gallery/?video=3000067593
“for more on the housing recovery, we hope it’s a recovery, we’re joined by ron pelltier, thanks for joining thus morning. i don’t want to put words in your mouth but you are cautiously optimistic for the second half of the year, ron? that’s correct. you know, i clearly agree with diana’s comments, the fact is housing has been under a lot of stress. i think there are some emerging signs of optimism that unless they are stifled here in the next few months i think give us reason to believe that, after six years of pain, there is a warm glow that’s starting to shine over the housing market. and what is that warm glow? what’s the tipping point? well, i think the tipping point a couple of things specifically is that you know, we have population growth in the area of 3 million people a year, and household formation that’s about 1.5 million. after six years of very, very low levels of activity in terms of housing of housing sales, housing new construction, we have a lot of people that are sitting on the sidelines, and people have moved to rental housing or have moved back to live with mom and dad. neither of those options are optimum, and frankly, we’re sitting here today in almost every major market, rents have exceeded the cost of home ownership, and i think that’s a major tipping point that is going to cause people to start to re-think, do i want to continue to rent or do i want to move into a rental or do i want to buy a home. and when do you think people are going to appreciate that tipping point is taking place, that the rent versus buying price, you know, people have those calculators that the numbers now add the opposite way. well, i think that’s happening right as we speak. i think the last couple of months particularly of 2011, we saw home sales activity start to, you know, move north versus south. we — early indicators are for the month of january and virtually all of our markets, we’re seeing some very, very positive activity. one might argue if you want to look for the negatives we’ve had no winter in many of the northern climates but the fact is there’s a lot of activity. i also think it’s very important to identify the fact that inventory from its peak is off about one-third, and as we move more into a balanced marketplace, where you know supply and demand are closer to equilibrium, i think we start to get price stabilization and maybe by the second half of the year we might see some small but at least positive price growth. ron, looking city by city, is there a particular city where you think the greatest opportunity lies in the next six months? well, i think that you know, the larger cities are, i mean we can — miami’s been under the spotlight for good or bad reasons for a long, long time. i this i if i used miami as an example, if you go back two years and listen to the dialogue, they said about ten years of unsold inventory. we sit here today, miami believe it or not is concerned about having enough inventory. i do think the inventory will come as homeowners that are currently homeowners are starting to think that they can sell their home. for years, people have held onto their home, unless they were under distress, because you know, they’re giving up in their mind too much of a price forgiveness, and we’re not going to be at 2004-’05 prices. we’re seeing a stabilization and we’re seeing that in markets across the country. i use miami as the most outrageous and most positive. what do you see happening in detroit, one of the hardest hit cities but of course we see auto sales coming back. well, again, there’s a very good example. the auto industry that was, you know, maybe by some people’s standards was given up for dead, in this country, the big three has come back. housing sales are actually very brisk. we’d all like to pay the average sales price in detroit. you can hardly buy a car for the price of a home or a home for a price of the car. it’s a bargain, but sales activity is picking up, and you know, i think that a lot of the, you know the markets that were very stressed are really showing some significant signs. i don’t think it’s going to be a boom, and i certainly would not suggest that, but i do think there’s reason for us to believe that as we go through 2012, this will be a transformational year from correction and continued distress to you know, stabilization and minimal recovery, and i think we’ll see a slow, steady growth going forward. is there anything you want to see or hope to see out of washington that you think is going to actually change the game? well, you know, there are a lot of issues still remaining in housing. the foreclosure issue is a big issue. i think people at the street level would like to see the foreclosure issue just get settled and move on. there are going to be homes that are foreclosed. we need to be able to sell those”