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April 25, 2003 - Image 67

Resource type:
The Detroit Jewish News, 2003-04-25

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offers that diamonds or gold do not is
that you can live in a house. You take
something, put your money in it and
watch it grow.
"There's no doubt that readily avail-
able mortgage money has helped the
real estate industry by creating an
affordability factor. If you had asked
me this time last year whether interest
rates would go lower, I would have
said it was impossible," said Cohen.
He draws a parallel to the
"should've, could've, would've" people:
those who say they wish they could
have bought Wal-Mart stock when it
was low.
"If I had the opportunity right now
that they have and let it slip past me,
then in three or five years from now
I'd be looking back and saying I wish
I could have bought a house in 2003.
I wish I had this opportunity as a
young person," said Cohen, who
admits he bought his first house when
interest rates were at 22 percent.
Michaelson, of the Farmington
Hills-based Windmill Group, is "very
upbeat" because of interest rates.
Although he conceded some areas of
his business are hurting, essentially
business has been very consistent,
"although our traffic was down a little
bit last quarter.
"It's funny, but in our business, even
though the unemployment rate is
higher, plenty of people are working.
These are people who realized they
can't afford depending solely upon the
stock market, or their 401(k). They've
realized that buying a house is the best
investment you can make because
housing has been going up 3 to 4 per-
cent every year, and even as high as 7
percent, depending upon the area,"
said Michaelson.
"People are getting into new homes
with almost nothing coming out-of-
pocket. They get mortgages that
cover 95 percent and take out a sec-
ond mortgage for the down payment.
Even if interest rates go up slightly by
the end of the year, they'll still be
low," he said.

Pent- Up Demand

Gerald Brody, president of Brody
Homes, builds custom luxury homes

in markets like Birmingham,
Bloomfield Hills, Franklin, West
Bloomfield, on the lakes and in
"My criteria is that I only build
within a 30-minute drive from my
office in Birmingham," said Brody.
He said the high-end luxury market
started a downward cycle over the last
24 to 30 months. "Economic activity
peaked in metro Detroit in September
2000. We've been in the doldrums for
two years. Our lowest point was last
fall, at the end of 2002. The auto
companies weren't paying bonuses to
senior executives or suppliers. And the
international situation just stopped
"That's when I thought if I sold one
house through the year's end, I'd be
happy," said Brody, who kept busy fin-
ishing up what he already had under
"But," he adds, "There are still people
with money, although lots of people
were hurt financially by the economy.
These people are sitting on the sidelines
with money and planning on building."
Brody noticed a change for the bet-
ter between last fall, early winter and
now. "The international situation is
still unresolved, but I believe it will be
within a very short period of time.
What we have to gauge is what is the
depth of that pent-up demand."
He added that people are tired of
moving further and further out. "It's
tough being Jewish," he quipped.
One of the most optimistic builders
is Steven Berger, vice president of
BRG Custom Homes in Southfield.
He said residential sales by the end of
the first quarter are going to turn
around and will start increasing. Why?
Because "people have to start buying.
Mortgage rates are at the level where if
you are not refinancing or buying a
new house, you're not taking advan-
tage of rates that are at a 50-year low.
I don't think the government can do
much more to spur more activity."
Berger compared the pent-up con-
sumer interest to a dam. "The dam
has to break, and when it does, a flur-
ry of sales will happen. That may
bring a spike in prices in the short
run. I don't see any reason why people
shouldn't be buying," said Berger. ❑

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