Terry Loebs of Pulsenonics, on the Real Estate Market locally and nationally

And I do a lot of yapping here during this hour and have a question for you are listening audience. This is the question do you think we hit the bottom of the real estate market or do you think it's gonna get worse. For real statement talk about residential real estate He is gonna get worse before it gets better or do you think we hit the bottom real estate here in New England. Our tech's number 68680. That's -- every text to let me know your opinion about whether or not we've hit the bottom for real state 68680. Is our number. Eight let's go to our guest name's -- loads from he's managing member at -- -- XL LC Terry welcome to the show are you don't. I'm doing well there are -- Good they let's talk about real state. How far have home values fall and since the peak of their value back in 2005. Well let's look at it. -- national basis. First. Actually that He can the national market -- a little bit later than it did it Austin nationally prices peaked. But just about five years ago which unit. And since that -- Prices nationally are down almost there. And that's in contrast by the way to do. The period. Leading up to the peak -- the bubble years six and a half year period over which oil prices nationally. Appreciate it 90%. Should. He have had a 34%. Decline in properties in a five year -- time how has New England -- specifically interest in. Eastern Massachusetts. New Hampshire southern Maine. Sure. Let's see in new England and accused of Boston as a proxy for delinquent. -- was September 2005. And since that time roughly that five year period price they're down. Approximately. 50%. That's in contrast to 70% run up. It be. In the bubble. So we are better than us. In New England you think you could get worse than. If -- -- and to appoint and and you know that is important to keep. Regional. Perspective. There there's quite a bit of variability across -- the New England states but for example. Rhode Island is probably. The worst performer. Over the last year and prices are down roughly 5%. In Rhode Island. Maybe around 3% -- 2% Hampshire. Massachusetts -- 2%. So how much longer use you think you could continue. Here in New England it is it gonna continue another year two years three years what's your -- what's your prediction. I don't have a crystal ball a lot policy and why would actually get picked us to do what. -- started the ouija board -- The have to really does depend on what market looking out but overall. Professional market forecasters. Are calling for a whole lot of sunshine in the coming. So we yours unfortunately and I think when He went to commute to from now. Com for example like for a pulse comics conducts quarterly study. -- americorps markets -- expectations certainly what we do is collect projections from over 100 experts regarding. Where home prices are headed in the coming five years and the average forecast. From these experts implied that. Nationally. The bottom it's unlikely to arrive until -- -- twelve or maybe maybe early -- -- The thing that occurs to -- and maybe you can correct me if I'm on the wrong track here but. When we do exhaust the existing inventory in the studies I've read indicate that there -- we won't do that until. 2016. Meaning that you run through all this excess inventory that we have. But once we put the shovels in the ground and start to build new homes in 2017. Other studies that I say. That -- say that the cost of the materials steel lumber silver glass everything that goes into the construction of new home. Will be markedly higher and we're going to see a rapid escalation. In construction costs in the year 20162017. Is that consistent with your research. Well we don't steady beat. The commodity markets. It directly but certainly there has been a lot of concern in the last year to eighteen months around. You know quotable spiking commodity prices obviously a lot of that has been attributed to. Extraordinary group -- -- our economy including. Of course China and India and Brazil so that scenario is certainly possible to. Now why are -- mortgage rates are the lowest that I remember I'm 51 years old I never remember seeing mortgage rates this low. Why are they not having a more positive and stimulative effect on home purchases in home refinancing. That's a great question. And there are a number reasons were. First ball. Rates have been at -- -- historical. Few years and so what that means is that those with an ability to reconnect with the have already done so support. The second. There are a couple of structural. Issues. That relate to of that vehicle orders that we can't we why why but -- recent one. Being that. There's -- on that it and number. Homeowners were under water which -- Were of course negative equity collateral typically means that even an underwater -- -- borrower. Has the ability to. Don't want to -- extent some sort government assistance. That on top of that. You have. The lenders who have been badly burned by the past. Have really tightened underwriting policy response to experience as well as in response to cover. -- Have they over tightened they I've I've heard. Philosophy your theory that you know that the banks are down too difficult on refinancing particularly with the Jumbo loans. That that's a very very difficult. A question to answer. Because as many people would say that lenders getting squeezed from both on the one hand. There are basically being -- liberalize their underwriting. A standard. Facilitate the flow or its capital but on the other hand if they do that -- parallel to the trouble that got everyone in the -- predict right now and now also you have you know regulators -- or increasingly scrutinizing. Lending practices. Mortgage -- so all over the country. So it's it -- sounds like there's a large segment of the population perhaps as many as 20% of homeowners who have a mortgage they cannot refinance. That. Probably slight understatement unfortunately. There's. The good sources. The negative equity. Information. Or -- -- in the most recent reported that. About 22%. Of homeowners across the country. Are basically on the water and unfortunately. There's another two would have in so or as. Less than 5% equity so. That child is not quite a quarter yet. But the problem. Group here that total. Are you talking about her that. -- -- can say that's 2530%. But that's only homeowners who have a mortgage -- what percentage of homeowners. Have mortgages -- it is it 80% 70% there -- And I'm not sure I believe it's something closer to 60%. That -- figure also has been. In coming. Years. Became increasingly. Easy. War borrowers to older homes outright them to take those irresistible for -- -- You know I do notice that because I see people in their seventies and they still have home equity lines of credit home equity loans -- mortgages you know in place. Where is that used to be taboo you know the old idea was unity retire at age 65 and you have your mortgage paid off when you retire. The true and I am. You know again. Mortgage financing not a bad thing or say home equity loans are bad things are safe and just when there like everything else. He used to access. Impacted or are people. All right Terry thank you very much for your time sure appreciate it. That's Terry -- folks he's the managing member at -- comics LLC joining us today on lunch money. Talking to us about real state and we got a number of text in -- and I would you can continue to send your tax but. Do you think we've bottomed out on real state or do you think it's gonna get worse before it gets better my text number 68680. Not 50 -- says when the world gets better so will the real estate market. Seven anyone says location location location has never had so much meaning finally it's still dropping will get to more of your text. In a couple minutes.