The top executive at Coldwell Banker said this is the best time in ten years to buy a house because interest rates remain low, inventory is high and prices have stabilized.
“It’s still a buyer’s market,” Jim Gillespie told CNBC’s “Squawk Box” on Tuesday. “This is absolutely the best time to buy.”
Sales of new homes fell in February to the lowest level in about seven years, while inventories of unsold houses rose to a 16-year high. Also, Lennar, the nation's biggest homebuilder, said quarterly profit plunged, prompting it to back away from earnings guidance for the year. All this suggests that the housing market is weakening just before the spring buying season.
But Gillespie remains optimistic.
“You’ve got demographics that are overwhelming,” he says. “There are 78 million baby boomers, their kids and minority home ownership has grown to about 50% from 40% in the last ten years. Interest rates are near historic lows, unemployment is under 5% and, overall, the economy is good. So, I think the long-term outlook for real estate is solid.”
Gillespie brushed aside suggestions that the current real estate market is the worst ever, recalling that interest rates hit 21% in the late 1970s and nationwide home sales were below three million.
“Last year, sales were just under 6.5 million,” he told CNBC. “I would say that the last ten years were a little unusual in that we had ten great years in a row. Usually, you go five, six or seven years and then cycle down for a year or two before picking up again. Real estate has been a solid investment – a consistent winner in terms of appreciation.”
Gillespie says he expects sales this year to rank as the third, fourth or fifth best in history. He said the sales figures released Monday tracked sales contracts written in December and January and closed last month.
“I don’t have a crystal ball,” he says. “The National Association of Realtors says things will start to pick up in the second half of the year and Fannie Mae says early 2008…We’re back to a traditional real estate market – things aren’t hot 12 months out of the year. December and January were very strong – just under 6.7 million annualized. Again, I don’t have a crystal ball – maybe things will start to pick up in the spring.”
Coldwell Banker is part of Realogy and has about 3,500 franchised brokerages in the United States, Canada, the Caribbean, Central America and Singapore. Realogy’s holdings also include Century 21 Real Estate, ERA, NRT and Sotheby’s International Realty Affiliates.