I’ve had several requests for my appearance on the popular Fox News program hosted by Glenn Beck. I haven’t changed my mind on any of these comments since I first appeared a few weeks ago. Here’s the transcript:
In Chicago, John Wasik, columnist for “Bloomberg News” and the author of the upcoming book “Cul-De-Sac Syndrome.” How are you doing, sir?
JOHN WASIK, “BLOOMBERG NEWS” COLUMNIST: Good. How are you doing, Glenn?
BECK: Very good. Are you are in shape? Do you work out?
WASIK: I wish I was.
BECK: Yes, yes. I don’t. See, I don’t even have that going for me. Don’t really even wish I was in shape. Anyway, John, you know what? I hear the television and people - all the commentators and everybody else - everybody is saying, “Oh, my gosh. I think we might be through this thing. I think we’re on the other end. Look, the economy is going to start coming back up.”
Can you please set us straight on just at least the housing market that we’re not near the bottom yet?
WASIK: Well, I think we’ve got a long way to go. Really, what people were reacting to were the pending home sales from the National Association of Realtors. And really, what that tells you is that there is a little bit of a bump in the west, a little bit of a bump in the south. The northwest and east are down. So overall, I think we’ve got a long way to go.
BECK: OK. Hang on just a second. When you say the northeast and Ohio are down, could you put that into perspective on down? For instance, Fort Myers, Florida, or West Columbus, Ohio.
WASIK: Well, first of all, Glenn, there is no such thing as a national real estate market. It is all local and regional markets. If you look at Columbus, Ohio or Akron or Cleveland or Detroit, they are getting hammered right now, mostly because of the auto industry.
If you look at Fort Myers, if you look at Miami, they’re also getting clobbered. Central California, southern California are all in really bad shape. Some markets are stable. Dallas seems to be doing OK. Austin, Houston - they seem to be holding up. You really have to look at it regionally.
BECK: OK. But correct me if I’m wrong, in California they’re bulldozing homes. Why are they bulldozing homes?
WASIK: Well, it’s a simple economic principle. The builders or the banks have decided, “Look, there’s no way we’re going to finish this house and make money on it.” The land is worth more with nothing on it than with a house they can’t finish and they don’t want to spend the money to finish it. And there is such an oversupply on the market right now, it makes more sense just to level it.
BECK: So John, me, personally, I think that this glee on, “Oh, my gosh, we’re almost through this,” is ridiculous, because we haven’t even hit the commercial real estate or credit card bubble, which both of them are coming to an economy near you.
I personally think if everybody is going to get on this bandwagon of, “Oh, my gosh, it’s over,” I think you should sell your house right now. If somebody will buy it - oh, OK, because this recovery of home prices is not going to happen in the next year, is it? The next two years? When do we - when do we really -
WASIK: It’s going to take a long time.
BECK: How long?
WASIK: You know, it’s hard to tell.
BECK: Come on!
WASIK: You know, there’s such an inventory - it is a supply and demand thing. And they are not going to push these homes in markets where there are foreclosures continuing.
BECK: I have been told that you believe that we are looking at a decade of prices trying to reset back to where we were.
WASIK: Well, here is the grim reality. A lot of baby boomers are hitting this age where they’re not going to buy an upgraded home. They’re not going to move up to the McMansion. They’re looking at downscaling. They’re looking at condos. They’re looking at ranches. So all these mega- subdivisions that were built out in the hinterlands - they’re going to be going empty.
BECK: OK. Thank you very much. I appreciate it.