Date: September 28, 2004
Time: 06:10 AM
Station: Business Talk
Program:Business Talk

DAVID WEISS, Anchor

David Weiss: But first we're going to talk about housing. And joining us on Business Talk this morning on a monthly basis Bob Moulton, President of the New York-based Americana Mortgage. Bob…Welcome back.

Bob Moulton: Good Morning, Dave…Good Morning, Amanda. Thank you.

David Weiss: Great to have you back and sales of new homes in August shot up nine percent. We got those figures out yesterday. Was that a surprise at all for you?!?

Bob Moulton: The mortgage rates continue to drop. And as long as the mortgage rates continue to drop, these new home sales continue to rise. It was a nice surprise, the rates are the lowest they've been in the last four months, close to our forty-year low again.

David Weiss: So once again, after they were inching up earlier this year, and we seem to see a drop off in home equity loans, refinancing…And now…That's starting to pick up again as well?

Bob Moulton: Everything seems to be a direct correlation with the rates. The Fed increased rates about a week and a half ago to 1 ¾ percent. However the bond market has reacted the other way and the mortgage rates have fallen in suit.

David Weiss: What are we looking at as far as supply and demand in different areas of the country?

Bob Moulton: We're seeing not a lot of inventory. We're seeing a strong demand for housing particularly in the metropolitan areas. We had a lot of hurricanes down in the southeast as you just mentioned and I think new homes sales are going to be affected by that as well. Bad news could be good news for the housing market in those parts of the country as well.

David Weiss: No doubt about that. But have homes sales in the past couple of months settled down from the really break neck pace back in spring?

Bob Moulton: Well, we were looking at about 1 million homes being sold on an annualized basis back in the June/July timeframe. Now we're looking at about 1.2 million on an annual pace based on the August numbers so things were slowing down at the end of the spring and now are starting to pick up again.

David Weiss: Bob, you and I know, everyone knows, it's all about the price of oil. It can affect and will affect everything. We're above $50 a barrel, at least right now and this will trickle down and affect everything, from construction cost, everything. It's only a matter of time, isn't it, before this catches up with this industry.

Bob Moulon: Yeah…We'll have to see where these oil prices stay. I mean, the fact that they're over $50 a barrel right now is very discouraging because oil is part of everything that we do. Not only heating the houses, but the cost of construction and a lot of the components that go into it. So we're going to have to wait and see and hopefully it will be a mild winter for us and won't be hurt as bad.

David Weiss: Bob Moulton, joining us, President of the New York-based Americana Mortgage…Let's talk about the way a first time home buyer tries to get into his or her first home, as with an Amanda Clarke, who is still renting, unfortunately, but looking to save for a new home or for somebody looking to upgrade, move into a larger home. Are there some new ways or ways that they're trying to do it with the appreciated cost of the house?

Bob Moulton: The underwriters and lending institutions, back about fifteen to twenty years ago were taking into consideration anticipated values based on trends that they were seeing across the country of real estate values. However, right after that situation occurred, they stopped doing that because we had all the savings and loans go under in the early 1990s. Thanks to being a little more conservative right now, taking into account appreciated anticipated values. However they are very encouraging with much lower down payments and they're looking at more creative financing options for first time home buyers, such as interest only products to get them into their first home.

David Weiss: Are you seeing an increase in people who are just folding all the cost right into the mortgage like 106% mortgages?!?

Bob Moulton: In some areas of the country, we are seeing that 103% mortgages and those are normally for purchases around the 200-250K dollar price range. One interesting statistic that did come out with the rise in home sales is that the median price on a home was 214K in July. That's dropped to 209K. So we are seeing a softening of prices. We're not seeing that so much in the northeast and on the west coast but in certain parts in the middle of the country we're starting to see a lower sales price right now.

David Weiss: Now you go region by region or even city by city. You don't…San Francisco, it was a while back they started averaging a half a million dollars for every home and that's true in the greater New York City area as well. We're approaching that if we're not there already. You mentioned the median price of a house in the 200K dollar range and, you know, that will get you about a third of a house in some areas of the country.

Bob Moulton: Exactly. It would get you a share in a condominium.

David Weiss: No kidding. Bob Moulton, President New York-based Americana Mortgage. Always enlightening and great having you here, once a month. Take a look at these home figures and we'll talk to you again soon.

Bob Moulton: Thank you very much. Have a great day!

David Weiss: Thank you Bob. Bob Moulton, joining us on Business Talk this morning, coast to coast, Business Talk Radio Network.