Housing Outlook for the Balance of 2008

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Video Transcript

Kevin McCormally: I am Kevin McCormally of Kiplinger's. I am here with Pat Esswein, the Housing Editor of Kiplinger's Personal Finance Magazine, to talk about the housing outlook for the rest of 2008. Pat, I can't imagine, I mean worst start for a year with the subprime mess and the foreclosure crisis, what do you see for the rest of the year?

Pat Esswein: Well, things are still pretty bleak in the markets that saw the biggest run up in prices during the boom years. Places like California and Florida and Las Vegas are still experiencing pretty strong declines in sales and also strong decline in prices. For instance, California has seen a decline of about a quarter in home prices in the past year.

Kevin McCormally: Is there any good news?

Pat Esswein: It looks like there are fewer resale homes coming on to the market right now, so that means that the rate of increase and supply is slowing down and that's a good sign. And in a lot of smaller American cities, prices are still going up by little or by a lot in some cases.

Kevin McCormally: Can you give me some example of where that's happening and why your housing prices holding up anywhere?

Pat Esswein: Not all markets saw the big run up in prices; some have just been perking along at their usual pace. But there are some cities where the economies are either very vibrant or they are attracting, say, retirees and second home buyers.

Kevin McCormally: Examples?

Pat Esswein: Wenatchee, Washington, in the middle of Washington state is getting a lot of retiree buyers. In the farm belt and in some of the oil patches, in the middle of the country like in Western North Dakota or West Texas, the economies are very vibrant right now, because of the demand for oil and grain for ethanol and agricultural exports.

Kevin McCormally: Give us the alignment in the parts of the country where housing and prices are down, are they good deals for buyers?

Pat Esswein: There can be some really great deals for buyers. Prices are certainly lower now than they were a year ago.

Kevin McCormally: What about giving finance and can people find mortgage money these days?

Pat Esswein: That can be the rub. If you have a good credit score, if you have a solid down payment, if you have got good documentation and reserves, yes, you can probably get a pretty good mortgage and rates are still at historic lows.

Kevin McCormally: Patty, what do you see for the rest of 2008 from the housing market?

Pat Esswein: Well, the best case scenario is that prices bottom out by mid year and the housing market stabilizes through the balance of this year and into next. Things begin to improve next year. The worst case is that prices continue to decline and we don't see any real improvement until late 2009 or even 2010.

Kevin McCormally: Well, thank you, Patty.