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Jumbo mortgage slowdown sparks fears of new housing crisis - YouTube
Channel: Fox Business
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a chilly number from the housing market
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jumbo mortgages sliding 12% last year in
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dollar volume and that signals a sign of
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caution for high-end home buyers here
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now to discuss in Michael Franzen Tony
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Mortgage Bankers Association chief
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economist Ellie lens from Delhi Lynne's
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real estates and I guess we have to
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explain what jumbo mortgages are these
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are these mortgages above 400,000 and in
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very expensive markets like New York
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they're usually above 700 thousand so
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dolly I'll start with you because I feel
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like you know everything about New York
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real estates if jumbo mortgages are
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slowing down does that mean sales are
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coming down and along with braces sales
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are coming down prices aren't coming
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down enough to kind of Goose sales and
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that's a big problem we also have lots
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of other problems besides affordability
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we have student loans is a big example
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so a lot of Millennials want to jump in
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like you right
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like my daughter want to jump in and buy
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a property they can't afford it they
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have huge student loans they're trying
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to get a mortgage and and it's just too
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expensive and salt really is a big
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killer to the mortgage market that's a
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state and local tax deduction exact was
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changed in the Trump tax cut so Michael
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given that we still have prices home
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prices on the rise you know people are
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saying that it's not the right pricing
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for the inventory on sale that's the
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problem right now so let me try to give
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a little bit of a picture bigger picture
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here
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you know nationally we're still
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guardedly optimistic for this year we're
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expecting an increase in home sales at
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two and a half to three percent and as
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you said home prices are still rising
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they're just not rising as quickly last
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year nationally home prices were up 6%
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this year we think that'll be closer to
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4% now certainly as was mentioned at the
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high end of the market were seeing some
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weakness in december of 2018
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jumbo purchase applications were down 10
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percent relative to the year prior but
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the middle of the market and
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particularly for first-time buyers those
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millennials you're talking about we're
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seeing strong growth right I mean we
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look I was looking at 30-year fix and
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mortgage rates are down the 13 month
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lows dollie does that encourage someone
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to get into the market you don't be at
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the high end but if you're the middle to
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low it definitely is encouraging for for
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time homebuyers or even trade up buyers
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right maybe they could sell their house
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and still get a decent mortgage on the
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way in so it's definitely a good move
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and encouraging for everyone but we have
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so many headwinds with regard to the
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housing market that it's just difficult
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to get them all done at one time but the
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salt is really giving everyone the
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biggest pause right you can't deduct
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your state and local income taxes over
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$10,000 an increase for every one new
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york everyone's home is you're deducting
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more than ten thousand exactly yeah so
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great news for Florida though right yes
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for Florida so there is good news yes
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where do you live Michael is that true
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why'd you take it out the rest of the
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country I mean where the pockets of
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strength where home prices are on the
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rise or strengthen homes where and the
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weaknesses in different states
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you know honestly we're seeing a home
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volume sales volume increase in much of
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the country the one exception would be
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as dolly mentioned the high end in New
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York and then in the West Coast we
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really had a period of time the last
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couple of years where home prices were
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growing 8 9 percent per year when
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incomes were growing 3% that just can't
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persist for very long now I think we're
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in a much healthier market we're seeing
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home prices go go up you know like I
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said maybe 4% and because the
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unemployment rate is at near a 50-year
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low we're seeing wage growth pick up and
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you're particularly seeing wage growth
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pick up in the bottom half of the income
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distribution for that first time I want
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$1 you tell me where the best bargains
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are in 10 seconds if you can the best
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bargains definitely areas remote Florida
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so not coastal Florida but remote
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Florida people are getting great deals
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they're moving there in order to set
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themselves up for the future so they
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don't have to pay ridiculous taxes and
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and I think that has great growth
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potential the other thing is we're
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finding a lot of all-cash buyers lately
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in the very high end because they're
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finding they can't get as much as they
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used to get on their hedge fund returns
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okay
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so the big so there's not as big a
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spread between the mortgage they're
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getting and the hedge fund return Wow so
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they're buying in cash yeah yeah but
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it's huge okay
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dollie you guys know everything thank
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you so much for sharing it today thank
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you
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