Doug Duncan is Fannie Mae SVP & Chief Economist. Gillian Tett is Financial Times US Managing Editor. This is a great video.
[We're finally seeing signs of stabilization....this is it?]
"The rest of the economy is slowing but housing has been doing better than in the last couple of years. Our forecast is growth of 2.2 per cent and 7 per cent increase in home sales. There was a housing cycle but it was disguised by that flood of distressed properties. That's starting to recede. Now a typical sales season is emerging. Whether we seeing a slowing...we have it built into our forecasts, to prices. Even though we see some strengthening in prices"
[The credit problem - haves and have nots. If you need money it's difficult if you don't have a credit score and money to put down. The Fed can't get money to people who need it. This is a big part of the housing problem. People can't buy houses like they used to]
"No question. But do we want to return to the underwriting behaviour of 2005? Probably not. No question criteria have tightened. Downpayments are a bigger issue than in the past. That is an issue. It's being dealt with in the regulatory world. That's appropriate if we want to target credit to those who can manage credit"
[3000 pages and it hasn't worked...if banks had done the normal type of underwriting that they've done historically to make sure they got their money back it would be very hard...]
"That's a critical piece of it. Also the mortage business with AUTOMATED UNDERWRITING became very efficient at underwriting loans people would buy. Look at ageing populations in China. There was demand for fixed-income products [Wow]
[Gillian Tett -
On the West Coast, you get teams of savvy investors hoovering up properties that have been repossessed and rent them. Do you need the cleansing process?]
"30 per cent of sales is cash. The nice thing about cash is you don't have to go through the mortgage underwriting thing. Investors are bringing down the flood of distressed properties. Also people are moving into the rental market. You can see that migration"
[When do we see this reflected in consumer confidence? And all the crap happening across the pond?]
"Over 50 per cent of the global economy is having an election this year. What we've seen is in the 3 months when we had 250,000 jobs in the private sector per month, the share of people who were happy dropped each month. When the labour market flattened out their attitude flattened out. They are in a holding pattern"
[Gillian Tett -
People are marched up the hill then marched back down again. The sun comes out, people are optimistic, then bang the Japanese earthquake, the eurozone problems and then everyone freezes. Will people again sit on their money?]
"I think so. The weakness in the payroll data. People drawed down savings. Don't we want to get savings rates back up so we get some cushion within the population? [oh my god] Simply extending credit to households that couldn't manage it in the past...I'm not sure in the long-run that's the place to be" {F****** beautiful - this beast has only just started}.
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