Three Clowns

In one of the most blatant cheerleading fluff interviews in history, Bloomberg touted a “Housing Panel Discussion Like No Other“. Indeed it was. Click on the link for an audio of what can best be described as a three ring circus act.

Meet The Clowns

1. Chris Kelly (CGK Construction)
2. John Sauro (North Atlantic Mortgage Corp.)
3. Conrad DeQuadros (Bear Stearns)

Clown Excepts

Chris Kelly (CGK Construction)

• Lower home prices are because builders are building smaller homes not because of price cuts.
• On existing home sales, if people drop their prices they are still going to come out ahead.
• It’s not like you are going to get a 3000 square foot house for cheaper price. You will get a 2000 square foot house for cheaper price than a 3000 square foot house.
• Land still costs and materials have not dropped in price.
• The only savings is in the size of the house.
• Looking forward to a strong season.
• The FHA was not giving out enough money to buy a house.
• FHA raising limits would help things out a lot.
• If someone can get $425,000 from the FHA they can buy a home from me.

John Sauro (North Atlantic Mortgage Corp.)

• Chris Kelly is right about home prices.
• People selling existing homes are still making money.
• The market was “very healthy” over the last 3-5 years.
• People pricing their home to sell will still make money.
• Delinquencies will peak in 2007 well below past peaks.
• A lot of subprime lending concerns are very overblown.
• We do not want to see subprime programs go by the wayside.
• Now is an excellent time to buy as home.
• The subprime market helped the first time homebuyer to get a home.
• Rate hikes have gotten the Fed into trouble.

Conrad DeQuadros – Senior Economist – Bear Stearns

• Unusual weather patterns created volatility in housing.
• We are probably near the bottom here.
• Homebuilder sentiment index shows increases in sales are expected this year.
• OTHEO has it right and saw a 6% increase in prices by Q4.
• The economy is on a firm footing.
• The labor market is strong and that will support the consumer.
• We may see a modest moves up in interest rates second half of 2007.

Totally Lame Excuses

• Blaming the FHA for not making enough loans.
• The weather.
• Rate hikes got the Fed in trouble.

Totally Lame Statements

• Home prices are not dropping, rather homes are getting smaller.
• The economy is on a firm footing.
• Subprime concerns are overblown.
• The labor market is strong.

Mike Shedlock / Mish/