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  • 00:00OF PRICE ADJUSTMENTS, MOSTLY ON PRICES THAT -- WE ARE SEEING A DRAMATIC LEVEL OF PRICE ADJUSTMENTS. THERE IS ESSENTIALLY MORE THAN ONE BUYER, WHICH IS HEALTHY. DAVID: SO IS THIS BECAUSE THE DOLLAR HAS STRENGTHENED SO MUCH? LEONARD: THE MOOD OF THE MARKET IS EVERYTHING. SO ON THE HIGH-END LUXURY, THE BUYER IS MORE DRIVEN BY THE MOOD THAN THE MONEY. WALL STREET AND THE WEALTHY ARE INTERCONNECTED. WHEN YOU SAW ISSUES IN CHINA IN LATE SUMMER, THAT IMMEDIATELY IMPACT OF THE CHATTER. SINCE THE YEAR BEGAN, WE HAVE SEEN A CORRECTION AROUND 10%. THAT IMPACTS THE MOOD OF THE MARKET. BUT WE ARE EARLY INTO THE YEAR. GIVEN THE SUBSTANTIAL VOLUME OF PRICE ADJUSTMENTS, THEY ARE MOSTLY ON CRAZY PRICES. STEPHANIE: HOW ABOUT LUXURY REAL ESTATE USED TO PARK CASH? SUPER HIGH-END BUYERS WILL ALWAYS WANT EXTRAORDINARY PROPERTIES TO LIVE IN. BUT WE SAW CHINESE AND RUSSIAN BUYERS BUYING APARTMENTS JUST TO PARK CASH. LEONARD: I THINK THAT MARKET IS A WAIT AND SEE. BUT THERE IS SOMETHING TO BE SAID ABOUT THE RESALE YEN'S REAL ESTATE -- ABOUT THE RESILIENCE OF REAL ESTATE AS AN ASSET CLASS. IN SOME COUNTRIES, WHERE YOU HAVE SEEN TRAUMATIC DROPS -- DRAMATIC DROPS IN THEIR CURRENCY, REAL ESTATE SEEMS TO BE A WISE INVESTMENT. THE WEALTHY ARE SPECULATING IT IS A BETTER TERRITORY THAN PEOPLE WHO DO NOT HAVE THE MONEY TO SPECULATE. LISA: WHAT ARE YOU TALKING ABOUT THE PRICE RANGE WITH ALTRA HIGH-END - ULTRA HIGH-END? LEONARD: LUXURY IS A MISUSED WORD. LUXURY IS A RICH AND NOBLE -- IS A REGIONAL PROSPECT. LUXURY IN DIFFERENT CITIES STARTS IN DIFFERENT PRICE POINTS. IN MANHATTAN, PEOPLE THINK IT IS ABOVE $5 MILLION. ABOVE THAT AND ABOVE $10 MILLION, YOU WILL HAVE AREAS OF CORRECTIONS. BUT THE MILLENNIAL AUDIENCE IS LOOKING FOR UNDER $3 MILLION. STEPHANIE: AND BIDDING WARS ARE STILL HAPPENING THERE. KRISHNA: IT IS FAIR TO KEEP THIS UP HER FROM THE U.S. HOUSING MARKET. HOUSING IS PROBABLY ONE OF THE POCKETS OF STRENGTH AND THE ECONOMY. CONSUMER EMPLOYMENT IS BETTER. INTEREST RATES ARE LOWER. PRICES HAVE COME BACK. IF YOU TALK TO BUILDERS, THERE IS DECENT STRENGTH IN THE REGULAR U.S. HOUSING MARKET. IF THAT CRASHES, THEN WE WILL HAVE A PROBLEM. STEPHANIE: SO CROCS WE ARE LOOKING FOR -- LIKE MIAMI. IN 2006, 2007, IT WAS THE SUPER HIGH-END MARKET THAT CRACKED. BUT BACK IT WAS A WINDOW INTO THE REST OF THE HOUSING MARKET. KRISHNA: THERE ARE TWO THINGS THAT WERE GOING ON BACK THEN THERE ARE NOT HAPPENING NOW. IN THE REGULAR HOUSING MARKET, THERE IS NOT A SPECULATIVE BUBBLE. PEOPLE ARE NOT BUYING TO SLIP THEIR PROPERTIES. WHAT IT SHOWED IS THAT WHEN THAT STOPPED, WHOEVER IS SPECULATING WOULD BE LOOKING TO GET OUT. WE ARE NOT THERE YET. THE STRENGTH OF THE U.S. HOUSING MARKET DEPENDS ON WHETHER ALL OF THESE PEOPLE WHO HAVE BEEN IN MULTI FAMILY AND LIVING WITH THEIR PARENTS, WILL THEY SET THEIR OWN FAMILIES OF AND BUY A NEW HOUSE. ON THAT FRONT, WE WERE SEEING PROGRESS. IF THAT STOPS, WE WILL HAVE A PROBLEM. DAVID: THERE IS A NEW U.S. TREASURY REGULATION THAT PREVENTS PEOPLE FROM BEING ANONYMOUS EYES THEY BUY THESE 100 MILLION -- EYES THEY BUY THESE $100 MILLION HOMES. DOES THIS HAVE AN IMPACT? LEONARD: IT WILL BE SO FRACTIONAL AS TO BE INSIGNIFICANT. ONE THING DIFFERENT IS THAT THE BANKS HAVE BEEN MORE TOUGH IN LENDING PRACTICES. IF YOU LOOK AT WHAT IT TAKES FOR A WEALTHY PERSON TO OBTAIN A MORTGAGE, IT IS NOT EASY. THAT WILL HELP WITH THE MARKET. STEPHANIE: HOW? ARE PEOPLE AT THAT LEVEL MARKERS DEPENDENT -- AT THAT LEVEL MORTGAGE DEPENDENT? LEONARD: THE VOLUME OF CASH THAT EXISTS IN THE MARKET IS EXTRAORDINARY. KRISHNA: I THINK THE POINT OF MORTGAGES AND BANKS IS IMPORTANT. THE CONDITIONS IN THE MORTGAGE MARKET IS NOT ANYWHERE CLOSE TO WHERE THEY WERE IN 2006 AND 2007. IT IS THE LEAST OF OUR WORRIES. STEPHANIE: WHAT IS YOUR BIGGEST WORRY? KRISHNA: THAT PEOPLE GET SCARED AND STOP BUYING NEW HOUSES. BECAUSE THEY GET WORRIED ABOUT THE OF FACT -- ABOUT THE FACT THAT THE ECONOMY IS SLOWING. THAT IS THE BIGGEST RISK. DAVID: LEONARD STEINBERG HER, THE PRESIDENT OF CONGRESS. KRISHNA MEMANI IS STAYING WITH US. WHEN WE COME BACK, THE TOP MOMENTS OF OUR PROGRAM. ♪
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Is the Luxury Real Estate Boom Going Bust?

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