What’s Driving the U.S. Housing Market Recovery?

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June 25 (Bloomberg) -- Jonathan Miller, president and Chief Executive Officer at Miller Samuel, and Kate Moore, chief investment strategist at JPMorgan Private Bank, examine the strength of the U.S. housing recovery, where the money is coming from that’s flowing into housing and the factors holding back the market from further gains. They speak on “Bloomberg Surveillance.”

Think the spike is more of an anomaly, -- this is a one-month blip.

Permits are down and i would like to think that housing, we are seeing more new construction, but i think that that is a little bit, we go a couple of months with that kind of growth.

At least on the coastal u.s. it is foreign buyers, with about one third of the market is investors coming in and looking for a way to park their money, especially on the redevelopment side.

One of the other data points is the price index, austin and san francisco are correctly back to where they were in 2008. what do you make of those numbers?

Dallas and denver have exceeded their 2008 highs.

2006 highs.

They are back but you have to remember the market with dallas, it did not fall very far and they have had a booming economy.

The last time i was on, tom alluded to the legalization of marijuana having something to do with it.

But it is interesting.

Boston also is about four percent off of its all-time high.

The all-time high is an artificial credit, that is not something that we necessarily want to aspire to.

This is new-home sales, and this is a regression.

Those blurred lines down at the bottom, when you wake up in the morning, john miller, do you see new-home sales as a proxy that will get back to what, 2003 levels, 2006 levels, will they ever get back there?

All of the above or one or three?

I will take a different answer to that.

Right now, new-home sales are about 10% of total transactions.

Historically business to be about 15%. i think that we don't normalize until we are at about 50% in terms of the volume that we are getting now.

I think that this is jobs and credits.

New household formation and simply, we are not making new houses because kids are living with their parents.

Student loan debt and the plummet rate for people right out of college is 50%. that is a big number.

New-home sales are 10% of all transactions for most of the activity in the housing market and where this takes place.

You like the release on existing home sales, what did you learn, about where we are in the cycle.

What you saw with these numbers is i don't -- and i don't know if i can articulate this on a national scale, but what you're -- what you are seeing is a step down from the euphoria that we saw last year, leading up to a burst of activity, we are talking about a year and a half of prices year-over-year, income is flat and credit, the math does not make sense.

You said $20 million, i am just getting folks.

The foreign import into the housing market, with cash -- do you have the same effect on the equity markets?

Are people from abroad loading up on u.s. equities like they are with john miller?

This is a great question and about six weeks ago we had the off-site in asia, we were talking to clients in hong kong and singapore, but one of the biggest questions we had is what sectors you would buy in the u.s. and europe.

We have a lot of numbers from the asian clients about diversifying their equity portfolios into non-asian markets.

I think that there is the move to diversify and i think that the u.s. and europe will be picking up.

I love how jpmorgan has an off-site.

We go to the monkey bar on 54th street.

I was is going to have that one thing you're seeing in urban markets, you see a tremendous amount of redevelopment, more so than in the suburban areas, wall street generated the sovereign wealth funds, and they are filling the void where commercial banking is still grappling with the legacy issues of our prior problems.

You are looking for people hungry for returns and this is sort of the wild west.

Build it and they will come.

It is interesting you bring that up to cousin looks like 3 world trade center will be finished using private financing.

Larry silverstein had a lease on the original buildings before they were destroyed on 9/11. according to people familiar with the matter, he will work to line up private financing.

This is the trend.

There is money in people's pockets burning to be lent, we see that with rental and condominiums.

There seems to be shadow banking that is growing, this has been very damaging to the chinese property market, what does this mean to us?

A product being built in most of the urban markets around the country is skewed heavily towards the high-end of the market.

I think that the chinese situation is much more broad-based, what is being dealt here is 10% of the market is being addressed and the balance of the market is extremely devoid of new products coming into the markets.

This is a challenge and that has

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


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