J.P. Morgan Chief Executive James Dimon likes what he sees right now in the U.S. housing market.
Mr. Dimon has a pretty good forecasting track record this year, at least as far as housing goes. Consider that in January, Mr. Dimon said he thought that housing was nearing a bottom, and the bulk of the data out so far this year have supported that call.
“Every single thing about housing is flashing green,” he said in an interview with CNBC-TV on Friday. “There’s not one thing that’s flashing red.” Household formation is up, housing inventory is down, and housing affordability is at an all-time high, he said.
Mr. Dimon also noted that while the much-ballyhooed “shadow inventory” of properties that could one day become foreclosures is high, that shadow inventory is declining at a time that banks are getting smarter about foreclosure alternatives such as short sales, where a homeowner is allowed to sell his or her home for less than the amount owed.
Housing isn’t going to recover in the absence of a strong economy, he said. “But if we get the economy going, housing has clearly turned,” he said. If housing construction moved back to a more normal level of around 1.4 million new units being built every year—something he said would have to happen “soon” given demographic trends—then housing could begin creating many more jobs.
Mr. Dimon did have one concern: mortgage credit is still too tight. Getting regulators, lawmakers, and industry officials to hash out a bevy of new regulations would help provide clarity for the market.
“Fix what are the new rules around mortgages because I think it is too tight,” he said. “[Property] appraisal is too tight, income appraisal is too tight, underwriting is too tight, and we don’t know the new rules on capital requirements,” he said. “If we get that finalized, it will help housing not hurt it.”
Nick Timiraos – wsj.com
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to buy and not a bad time to sell”