There's Sustainable Growth in Housing: Herman

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March 20 (Bloomberg) -- Dottie Herman, president and CEO of Douglas Elliman, discusses the state of the U.S. housing market with Alix Steel on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Give me your broad take on housing.

Low inventory, high demand, sustainable growth.

You are not going to see the double-digit growth at we did the last couple of years, but you still have very tight credit -- growth that we did the last couple of years, but you still have very tight credit.

Is there a cutoff for interest rates for mortgage rates?

Is there a number that scares people off?

Well, let me say this, at this time about in -- 10 years ago, actually 1980-something, interest rates were 17%. and people still bought houses.

Right now, i think it is a little over 4%. the cutoff would have to be well over 5%. we have a little bit of room there.

What are the difficulties?

A lot of it was blamed on the weather.

We have seen some weakness for the past six or seven months.

What are the risks?

The weather has something to do with it, but that's not going to stop somebody from buying.

It will just maybe delay it.

I think you saw a lot of pent-up demand.

You had the fiscal cliff.

Everybody was waiting.

You had to do it before the year changed.

Rices were starting to rise.

People ran out and there was pent-up demand -- prices were starting to rise.

People ran out and there was pent-up demand.

One of the biggest problems has been a strong rental market eating into overall homeownership.

The cofounder of case-shiller talked about that earlier.

Take a listnen.

Americans seem to be more interested in renting now.

There is a natural business of converting to rental.

That is part of what investors are doing.

It is a healthy sign, but it is not a particularly encouraging sign if people want -- that people want to rent.

It is not encouraging for detached, single-family home prices.

What do you think, dottie?

I disagree with him.

I do a radio show.

I'm on all the information.

Every poll that they've made, most renters are renting because they don't have a down payment to buy.

Most young people that are in their 20's, 30's, a first-time home buyer range, they are renting because they don't have a down payment or they have some credit issues.

If you look at the top 20 big cities, actually buying a home is cheaper than renting.

Especially in new york.

Do you expect the credit issue and the down payment issue to work its way out for these first-time homebuyers?

When would that happen?

I think the pendulum, what goes up comes down.

It was way too loose when we had the no-win come checks, no jobs -- the no income checks, no jobs.

Now it is really tight.

I think that will loosen up.

I think banks and lenders are getting used to it.

If they make more money with higher interest rates, we will see of that helps out as well.

What about the overhaul of fannie and freddie?

That was being floated in washington.

What do you think, if anything does pass, that might do to the availability for people to buy houses?

I think there is a lot of talk.

They are talking about interest rates, taking away interest rates, doing all this stuff.

I have talked to a lot of lenders.

I think that is going to be an individual -- depending on their risk.

I encourage people that are buying to have a relationship with a lender, because they are going to be more willing to take that risk and not be so cookie-cutter if they know the person and they know something about them.

It is not a blanket issue for the housing market.

It is lender-by-lender.

What kind of investment interest have you noticed?

We saw a lot of investors coming in.

Is that slowing down?

It is slowing down.

We never saw millions of investors in new york city.

Across the country, the investors picked up for nothing.

Tons of homes.

You still see investors, but the bulk of them bought and the prices have gone up, so it is not as lucrative for them to do it now.

If they get out, does that create softness?

Does that remove support we need?

It would if they got out at the same time.

Thank you so much, dottie.

I really appreciate it.

I am a first-time home buyer

This text has been automatically generated. It may not be 100% accurate.

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