The Housing Bubble, WLIE-AM Business Talk Radio, 4/19/04
David Weiss: On a monthly basis, checking in with us, Bob Moulton, President of the Americana Mortgage Group. Taking a look at the housing industry now that we have the figures for the month of March under our belts. Mr. Moulton, welcome back to Business Talk This Morning.
Bob Moulton: Good morning, David and good morning, Amanda. Glad to be back. David Weiss: Great to have you back, Bob. As far as housing for the Month of March, we rebounded after a couple of down months, which I assume you can blame a lot of it on the weather, but the largest increase in 10 months. We went up by 6.4 percent, so the number is very positive here. Bob Moulton: Very positive. I think it was due to the excellent weather. I was reading an article over the weekend, and that was the warmest March that we've had in 110 years, since 1895. Rates also have been at a historically low, which has been absolutely excellent for home buyers. And I think the expectation of rates beginning to go up is putting a sense of urgency into a lot of buyers. David Weiss: Absolutely. So construction at a fever pitch here, trying to get it built and get it sold before rates inch up, right? Bob Moulton: Yeah, I think a lot of that has already been financed and with rates at the 45-year low, averaging about 5.1 percent on a 30-year fixed. People looking at rates going up in the month of April, those will have the effect in June, when the number comes out in June. David Weiss: Absolutely. You know, we continue to use the image of a bubble. Everyone talks about the housing bubble; when will it burst. But the truth is, in the past, if you use history as any sort of guide here, it won't burst all at once here. It is a slow, gradual process, isn't it? Bob Moulton: It is a slow, gradual process, and I also think there is a shortage of inventory, which I don't know if we'll necessarily have that housing bubble. There are a lot of first-time buyers out there, looking to get into the housing market. Even if rates go up slightly, we're still at an all-time low and rates are excellent compared to 10 years ago and 20 years ago. David Weiss: Are we still seeing a lot of folks taking out equity loans? Are they really sitting on their bank accounts here? Are they exploring that? Bob Moulton: The home equity lines of credit, David, are excellent. I mean, they're under prime, usually prime minus a quarter, prime minus a half, very cheap money. No closing costs. And if people are still looking to tap into that, they're taking that and even looking into the vacation home market with that right now. David Weiss: We know one thing, you've been bust lately and you're still busy now. Bob Moulton, Americana Mortgage Group, thank you as always for being with Business Talk this morning, and we'll talk again soon. Bob Moulton: Thank you very much. Have a great week. David Weiss: You too, take care.