One on One with Jim Gillespie, President and CEO of Coldwell Banker
Tuesday, September 09, 2008
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SUSIE GHARIB: More news today about the housing market and it's not good. The National Association of Realtors says pending home sales fell 3.2 percent in July, a sign that the real estate market could be weak over the next few months. Joining us now to talk more about the outlook: Jim Gillespie, president and CEO Of Coldwell Banker, one of the nation's largest realtors. Mr. Gillespie, welcome back to NIGHTLY BUSINESS REPORT.
JIM GILLESPIE, PRES. & CEO, COLDWELL BANKER REAL ESTATE: Susie, thanks for inviting me back.
GHARIB: Big question is, have you seen any surprises, any changes in the real estate market since the announcement of the bail out of Fannie and Freddie?
GILLESPIE: Well, actually, we tried to poll our affiliates across the country. We're hearing that there is a little bit of increased activity, but again, I think we'll know a whole lot more in the next week or two to see if the activity is there and then in the next 30 to 60 days to see if we have sales and closings. But I'm very encouraged by what the federal government did this weekend. I think we already are seeing that reflected in interest rates that Friday evening where 30-year fixed rates were in the mid-6s and right now I think the average 30-year fixed rate is 5.88 percent. So that's very encouraging.
GHARIB: Do you think that buyers will be encouraged by? Do you expect to see more buyers coming in now that mortgage rates are dropping?
GILLESPIE: Well, I think it is certainly going to get their attention. The action of the federal government this weekend and then going back six or seven weeks when the federal government announced some positive things for the real estate industry, the most positive being up to a $7,500 tax credit for first-time home buyers. So we're encouraged by what's going on with the federal government in trying to shore up the mortgage industry and trying to make sure that our economy gets back into high gear because real estate is very important to the economy, 20 to 23 percent of the gross domestic product. And I think five of the last six downturns, our country has been led out by out of that by the real estate industry.
GHARIB: So if there are more buyers coming into the market, can they get mortgages? Are banks going to be more willing to give out loans? Is that something that you expect to see happen?
GILLESPIE: Well, I'm not a mortgage expert, all I can tell you is what I've read. And I think that from what I've read the last couple of days, mortgages are not going to be easier to obtain. And I don't think that that's a bad thing because I don't think we don't need to get back to what happened a few years ago. But I think that -- again, I'm just very encouraged by what has taken place this last weekend.
GHARIB: Mr. Gillespie, what's the trend line on home prices? Many of the forecast post-Fannie and -Freddie was that the bailout would help stabilize home prices. Is that something you expect to see happen?
GILLESPIE: Well, again, I'm not -- I don't have a crystal ball, so I don't make predictions. But I would think that home prices are going to level out once we burn off the inventory. And I'm seeing some encouraging signs in like Florida, California, Arizona, Nevada, Michigan, Ohio, areas where we've had a lot of foreclosures. The price point has been met in many, many of those markets where now buyers are back into the market and actually California, I believe, the California Association of Realtors this last month reported that the most recent month year-over-month-year, there was an increase in number of sales. So once we start to reach that price point which we're reaching in many parts of the country, then it is going to be a while before the inventory burns off. And once the inventory burns off, then prices should start to rise again.
GHARIB: So just to wrap it up in a few seconds, what would you say is the mood of both buyers and sellers post this big announcement from the government yesterday?
GILLESPIE: Well, I think it's up to the real estate industry and the media to make sure that everybody understands that first-time homebuyer credit out there, and that they understand what is taking place in the mortgage industry with interest rates now below 6 percent. These are all positive things and buyers should never time the market. You know, if you're going to buy a home, it's a lifestyle purchase with great write-offs that our federal government gives us. And I think there's an awful lot of pent-up demand out there. Our Web site, coldwellbanker.com, the hits on our Web site are up this year.
GHARIB: All right.
GILLESPIE: So it's an encouraging sign. And there is a lot of pent-up demand out there, Susie.
GHARIB: All right. Well, that's great to hear. Thank you so much, Mr. Gillespie. Appreciate you coming on our program this evening.
GILLESPIE: Thanks, Susie.
GHARIB: Our guest tonight, Jim Gillespie, president and CEO of Coldwell Banker.
