Transcript for Where Are Housing Prices Headed?
It's barely a day goes by without more troubling news about the housing market the latest prediction that home prices could fall another 8%. Here to talk about what he sees happening in housing is Jim Gillespie CEO of Coldwell banker real estate Jan thanks so much for joining us Stephanie thinks -- So stop and think about this predictions by Pimco. That we could see prices fall another 8%. Well it's -- -- nobody knows for sure I think I'm I'm the first one to admit I think that there will still continue. To be pressure on prices because of the foreclosure situation. What I really applaud his core logic because -- logic comes out with a report showing what the prices with what prices have done -- in the last year. For the entire country and -- they also break out. Not distressed prices so you know that it's the mix of the of the number of sales and and when you have. Arguably thirty to 40% of the homes in the country being. So -- that are distressed properties and according -- distressed properties are selling 25 to 30%. Below. What the true market value would be in -- in a regular marketplace I think that that you know that reflects but again you know they're they're they're just guessing nobody really knows. -- always certainly seen several attempts to jump start the housing market and they don't seem to have worked. Why do you think that is. Well I think that that -- probably talking about the administration's camp program that modification program. I think initially it didn't work because most of the the people that we're struggling -- back three or four years ago. You know had difficulties with sub prime loans and toxic loans that that they were sold. More recently the last 23 years it's been a situation of just. A lot of unemployment and people losing their jobs but also the -- is you know is trying to. Two modify loans and with the paperwork and so forth you know my position is the sooner we can -- through the foreclosures the sooner we're going to be back. Two regular normal real estate -- -- we need to get the foreclosures. -- through the system and anything that delays that is really kicking the can down the road. And delaying the recovery in real estate and also delaying the recovery. For our economy. Well like you -- can't judge the country as a whole because there are pockets in areas they do better than others. -- from your perspective are you seeing strengths. In the housing market -- yes and. And that's a real good point Stephanie that -- all real estate is local. And -- traditionally real -- has been local we're seeing you know I mean not great strength but for example I was in Shreveport Louisiana. Several months ago there's a slight appreciation there we're seeing some you know some fairly. Fairly good numbers out of Texas some some parts of the Carolinas. The Dakotas but again you know I'm not here -- to say all everything is. Rosie and everything is wonderful we still do have a ways to go in there will continue to be pressure on prices. Throughout the country but. But you know where most of the price pressure is is in in markets where there's a lot of foreclosures and wrong and if you take a look at -- the -- happened there USA today's -- and exposing on this and other. Other news organizations have pretty much and being a half of the the foreclosures and about fifty counties and in really focused on for five states. So that again that's why I I applaud what core logic does which is break out the non distress sales. OK -- -- switch gears here a little bit Coldwell Banker is just come out. With a list of the most affordable college towns I want to show for all the top five according to your surveys of that viewers concede Memphis Muncie. It's a land he Toledo Kalamazoo that interesting -- and how you came up with this survey because I was just reading that you came up with it when you're stuck on a train. Very -- and because you love. College football spent -- -- criteria is behind. -- survey well you know we do this survey every September for the last 25 years for the entire country. You know we've released -- Local banker back in September and cover 2300 markets and we thought it on a big sports fan big football fan. -- a rodeo are vice president of public relations is also when he was stuck with me on that that train. So we got to looking -- we thought oh my goodness you I would I graduated from the university of Illinois and the prices are very reasonable there and we started picking out other. Towns like Stillwater Oklahoma in Norman Oklahoma. In a different different college towns around the country. And we found out that there is an awful lot very very affordable properties in these great. Quintessential. College town so much so that -- we've been doing this report Stephanie for the last F five or six years and so much so that three. And a half years ago I went back to Champaign Illinois -- my alma mater and bought a three bedroom two bath town home. That I enjoy with my wife and with friends and we go back for sporting events or cultural events. But the important question is was -- a good investment. It was a great and has that are considered him buying property and -- college to now. Well the first while people like myself that like that graduate from there and want to go back for the culture and for the sports and for the entertainment. Now this the second group that might wanna buy there is -- person that I bought my town home from -- that was a couple in Chicago. That bought their town home in Champaign five years before I bought it. When their son was going to school so they. Kept that property as an investment for those warning half or five years at their son went to school they ran -- -- a couple other -- bedrooms two. Buddies of his and the nice thing about having a son. Or -- daughter reading from -- from a college town is they're gonna take care. At that place so that's a second group in the third group is we're starting to see more and more retirees. Either you know by a second home or plan to retire in in. In the college town lot of lot of them where they graduated from. Taking courses may be in photography here partners and something like that to kind of stay stay in tune with what's going on in the around. Young people in a vibrant community. Well that makes sense what are the drawbacks. -- living in a college town. Well the drawbacks are. -- can be avoided by talking to the local real estate professional. In that particular town I would caution somebody maybe from buying something right on campus because there might be some you know maybe an issue -- -- sometimes with. With students like for example -- The town on that I purchase -- three miles away. From campus in a residential area so I mean isn't it true residential area but but whenever you're gonna do anything with real -- whether it's buying. Second home retirement home. Our principal residence makes here. That you contact a full service real estate sales person that knows that market he can tell you exactly what to look for and what to avoid. Yeah I'm looking at the listed that top five in noticing that they're all in the midwest is that you went to -- -- part of a larger trend. Now that's something that we've seen for years and years and years Stephanie. You know the good old midwest you don't see is -- Quite that the price appreciation and you don't do not see them. The you know that the steep drops that that we've seen that I think gay if you take a look probably down to that to the ten. Most affordable markets I think seven or rate -- in the midwest and conversely. The more expensive markets. -- are on the West Coast and and you know for example the most expensive is the Westwood neighborhood of Los Angeles where UCLA is followed closely. By Palo Alto where Stanford University as though those say and at night I failed -- to to mention Stephanie what we're comparing. Is a three bedroom two bath home so -- three bedroom two bath home in Memphis. For university of map for Memphis university. Is is 89000 dollars that same home in Westwood Los Angeles would be a little over one point two million dollars. That makes sense though -- Jim Gillespie CEO of Caldwell banker thanks so much -- for your time and your insights Stephanie thanks for having me on.
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