Real Estate Economist Gary Watts #57

Bruce Norris and economist Gary Watts of Impact Real Estate continue their conversation from last week. This week they discuss when this current real estate downturn began, what statistic told us we were headed into a downturn, if Southern California is different from the rest of California, what percentage of the market was second home purchases, what has changed in the lending industry, the Federal Reserve and why they waited so long to do anything about the lending troubles, the new rules of being a lender, how certain minority groups stand to be hit hardest and how it happened, Bruce and Gary’s differing opinion on affordability, resets in 2008, lenders stalling on resets, if banks can truly be proactive and what choices they have in dealing with delinquent borrowers, due-on-sale clause, the media misleading the public on foreclosure rates, how the media’s lack of experience and understanding of the topics lead to bad reporting, press and its impact on real estate in an up market, consumers and attention paid to news articles, Orange County foreclosures, what cities are most affected, did builders overbuild in Orange County, how builders make mistakes, state-wide foreclosures and the never-before-seen sales ratio for Southern California, forecasting in 2008, why California wins migration, and how some areas in California are almost ready to cash flow.

Gary Watts has long been recognized as a forecasting expert by the real estate industry. His long-term analysis has also drawn the attention of the media due to his consistent accuracy. His Economic Outlook has been spotlighted in regional newspapers, including the Orange County Register and the Los Angeles Times. He has been seen on the PBS TV program Real Orange, he has been heard on the radio at KNX Money Talk and was featured in Fortune magazine. He holds a degree in economics with advanced studies in psychology from California State University at Sacramento. Gary's economic forecast and lecture notes are among the information pieces most widely circulated by real estate agents in Orange County. Gary's last speaking season drew over 17,000 real estate agents. His talks are also available in DVD and an English or Spanish CD format

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Real Estate Economist Gary Watts #56

Bruce Norris is joined this week by economist Gary Watts. Bruce and Gary discuss Gary’s long history of forecasting in California, what surprised him in 2007, how the financing industry put the breaks on the low and high end inventory in California, psychology playing a role in the California real estate market, how this cycle was different from previous cycles, renting versus buying in the mind of a buyer, how much of the loan pool is subprime, how much of the subprime is really a problem, collateralized debt and the mess it has created, FHA and VA loans, how the new loan limits for FHA will hopefully help, how the change might hurt the median price, pent-up demand in certain parts of California, who make up these new buyers, the FED and the solutions they’ve tried to implement, how freezing the subprime might help or hurt the market, foreign markets and lending practices, which foreign country buys the most real estate in the United States, foreigners betting on a short-term weak dollar and a good potential for a rebound, and how the election could effect real estate.

Gary Watts has long been recognized as a forecasting expert by the real estate industry. His long-term analysis has also drawn the attention of the media due to his consistent accuracy. His Economic Outlook has been spotlighted in regional newspapers, including the Orange County Register and the Los Angeles Times. He has been seen on the PBS TV program Real Orange, he has been heard on the radio at KNX Money Talk and was featured in Fortune magazine. He holds a degree in economics with advanced studies in psychology from California State University at Sacramento. Gary's economic forecast and lecture notes are among the information pieces most widely circulated by real estate agents in Orange County. Gary's last speaking season drew over 17,000 real estate agents. His talks are also available in DVD and an English or Spanish CD format

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John Burns of John Burns Real Estate Consulting #55

Bruce Norris is joined this week by builder consultant and founder of John Burns Real Estate Consulting, John Burns. Bruce and John discuss how busy John has been consulting investors and builders who have never experienced a downturn, what industries these new investors are coming from and if it’s cyclical, if builders had a chance to do it over what they might choose to do differently, land shortages, debt strategies of builders, options versus cash, land value decrease in California, portfolio deals, supply of homes the builders are currently holding, construction starts, how lending has changed the game, who the typical buyer is in 2008, the possibility of builders constructing smaller homes, if the cities like that idea, why do builders repeat the same mistakes, are those in trouble the old or new companies, Northern versus Southern California market, affordability changes in the coming years, if affordability will help the housing market, if any of the FED actions will come to the rescue, how the freezing of foreclosure won’t change anything, how interest rates might help, the California employment picture for 2008 and its effect on housing demand, recession in California, migration, presidential elections and possible tax law changes, the state of the commercial industry, commercial foreclosures in 2008, and the new loan limits proposed by the FED.

Prior to founding the Company, John Burns was at KPMG Peat Marwick for 10 years, where he was a Senior Manager in the Real Estate Consulting group. He was also a Principal and Vice President for four years at a national consulting firm, where he completed custom consulting assignments and developed several market monitoring subscription products for the 75 largest housing markets in the United States.

John Burns is a frequent speaker, and has been quoted as an expert by CNN, ABC World News Tonight, The Wall Street Journal, The Associated Press, USA Today, Bloomberg, The Los Angeles Times, The Washington Post, Builder magazine, and others. He designed and authored a weekly e-mail received by more than 25,000 industry participants, and authored the U.S. Housing Markets publication. He also created and edited several highly successful market research subscription reports.

John has a M.B.A. from the University of California, Los Angeles and a B.A. in economics from Stanford University. He is also a Certified Public Accountant. He is a full member of the Urban Land Institute and a board member of the Building Industry Association.

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Mark Kiesel of PIMCO #54

This week Bruce Norris is joined by Executive Vice President of PIMCO, Mark Kiesel. PIMCO is one of the largest specialty fixed income managers in the world, with $746.3 billion in assets under management and more than 900 employees in offices globally. Bruce and Mark talk about the strategies of PIMCO going forward into 2008, how PIMCO is more defensive on certain products in 2008, bonds compared to stocks, why bonds instead of stocks, muni bonds, what happens when cities go bankrupt, corporate bonds markets in 2007 and its growth, how bonds fair in recessions, PIMCO’s position on mortgages and housing, PIMCO’s position on housing price drops, AAA ratings and subprime, credit cycles compared to the economy, emerging market stocks, good areas for investment, what happens when ratings are lowered from AAA, how lenders will have to adjust, three major obstacles that could end our positive business cycle, the root of real estate price declines, housing inventory nation wide, rate resets in 2008-2009, increases in real estate vacancy, the shell-shocked consumer, corporate profits in 2008, hiring and unemployment, how it won’t be as bad as 2000-2001, and whether consumers have real wealth or just more stuff.

Mr. Kiesel is an Executive Vice President, generalist portfolio manager, and a senior member of PIMCO's investment strategy and portfolio management group. He also heads the investment-grade corporate desk and manages corporate portfolios for the firm. Previously, Mr. Kiesel served as PIMCO's head of equity derivatives and as a senior credit analyst. Mr. Kiesel joined PIMCO in 1996, previously having been associated with the sales and trading divisions of Merrill Lynch and JP Morgan. He has twelve years of investment experience and holds a bachelor's degree in economics from the University of Michigan and an MBA in finance, economics and international business from the University of Chicago Graduate School of Business.

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