Date July 21, 2004
Time 06:00 AM - 08:00 AM
Station Business Talk Radio
Location Network
Program Business Talk Radio

DAVID WEISS, co-host:

First, we turn to the housing market. For a look at that, his finger on the pulse of the market, founder of Americana Mortgage in the New York area, Bob Moulton. Welcome back to BUSINESS TALK this morning.

Mr. BOB MOULTON (Americana Mortgage Group): Good morning, David. How are you today?

WEISS: Great to have you. Can you hold on just a second, Bob? Because I brought my tool belt in today, I've got a building permit.

AMANDA CLARKE, co-host:
You can't build a house.

WEISS: Well, I can hire somebody to build a house, I can certainly do that. Bob, let's take a look at housing numbers. A lot of people were buzzing about these numbers yesterday. Home construction took a tumble in June, falling sharply.

The Commerce Department reporting yesterday housing starts decreased by eight and a half percent. The expectation was that housing starts would increase by 1.2 percent. So, that was a little jarring.

But everybody kind of assumes the economy hit a rough patch over all last month. New building permits as well. That's a forward indicator increase by 8.2 percent.

Would you maintain, though, Bob, that the housing industry is still very healthy?

Mr. MOULTON: I was very surprised to see those figures yesterday, David. They are down quite a bit. I think year to date, we are still strong. I don't think it's time to panic right now, looking at one month's data dropping down. May was down a little bit too in terms of housing starts. But building permits were up in May.

I think we have to give it another month or two to see if this is a trend or an aberration in the data.

WEISS: Well, certainly you are an expert when it comes to the mortgage industry and I assume it's good news that mortgage rates have started inching back down. Last week the 30 year fixed was about at a six percent?

Mr. MOULTON: Yeah, it's a real surprise. I mean, it's a nice surprise too for a lot of people who are still looking to refinance and looking to buy a home.

The Fed increased rates June 29th and then we saw a nice rally in the bond market thereafter. And right afterwards, mortgage applications were up. So, the rates are actually slightly under six percent for a 30 year fix, which is a good number for a lot of borrowers.

WEISS: We could be splitting hairs here and just looking too deep into the numbers, but just in an overall sense, do you get the indication that the housing industry, which certainly has led the way in this economic recovery, that we've peaked? That we're on the other side of the hill?

Mr. MOULTON: We're still brisk. We're not as busy as we were. We're still very brisk right now. The numbers are still good coming out regarding the economy.

The summer is usually a little quieter than the spring, and even in the fall. So, we'll have to see how the next month or two goes. But hopefully the wind will still be in the sails.

WEISS: Houses are still at appreciated values. You know that, especially in the West and the East.

Mr. MOULTON: We're seeing still firm real estate prices. We have not seen any real estate price corrections in the first time home buyer market or the middle market.

On the high end prices, we are still seeing houses stay out there a little bit longer than usual, not being sold in two to four weeks but a little closer to four to eight weeks right now.

WEISS: Is that so? OK. So, are buyers starting to readjust what they're asking for? Are you seeking fewer of the bidding wars and people showing up with binder checks in their pocket?

Mr. MOULTON: Seeing fewer of the bidding wars at the multi--at the $2 million dollar level. Anywhere from $200,000 to $1.5 million is still very strong and we are seeing multiple bidders right now.

WEISS: Boy, it's incredible though, there's still areas in this country where $200,00 will get you just a one room studio of a house.

Mr. MOULTON: Exactly. It depends on where you're looking. In the middle of the country, house prices are still around that level. But when you go coast to coast, you're right. The studio apartments are about $200,000.

WEISS: We have been saying for so long now, how much longer can this continue? Have you even been shocked at just how this has gone?

Mr. MOULTON: It's been a wonderful ride. I mean, we've been riding the wave now for the past--many, many years. Actually, since the early 1990s and every time we seem to get concerned, something else comes in that helps the housing market. Whether it's income or jobs numbers or interest rates.

So, it wouldn't surprise me to see it continue for the next six to 12 months.

WEISS: And for those who are trying to get into a house for the first time, I assume there are more and more people asking for creative ways to be able to get the deal done.

Mr. MOULTON: We're seeing a lot more adjustable rate mortgages for those people who are not in the real estate market right now but want to make the stretch to get into the house that they dream of and looking for the lowest payment.

We're also seeing a lot of interest-only new mortgages, which have been very popular this year.

WEISS: All right, let me get back to my housing construction here in the studio. I love power tools, Bob. I really do. Bob Moulton, Americana Mortgage in the New York area. Always a pleasure. Thanks so much, we'll talk again soon.

Mr. MOULTON: Thank you very much. Have a good day.

WEISS: You too. Bob Moulton. Love talking to him. Nobody knows more about the housing and mortgage industry than Bob.