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xfdls BLOOMBERG-TV-06

<Show: BLOOMBERG TV>

<Date: June 23, 2009>

<Time: 10:00:00>

<Tran: 062306cb.550>

<Type: SHOW>

<Head: Milton Ezrati of Lord Abbett on Bloomberg TV>

<Sect: News; Domestic>

<Byline: Deirdre Bolton>

<Guest: Milton Ezrati>

<High: Milton Ezrati of Lord Abbett on Bloomberg TV speaking with Deirdre Bolton about mortgage rates and the housing market>

<Spec: Mortgage Rates, Real Estate Market, Recession>

MILTON EZRATI OF LORD ABBETT ON BLOOMBERG TVJUNE 23, 2009

SPEAKERS: MILTON EZRATI, CHIEF ECONOMIST, LORT ABBETT

DEIRDRE BOLTON, BLOOMBERG NEWS

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

DEIRDRE BOLTON, BLOOMBERG NEWS: Our next guest says that home sales have stabilized. Milton Ezrati is joining us, he is Chief Economist at Lord Abbett in Jersey City. He is joining us now with his take on the recent data. So, Milton, I'm going to guess, back-to-back gains the first time since 2005, is this a good sign to you?

MILTON EZRATI, CHIEF ECONOMIST, LORT ABBETT: I think it is a good sign. I was not looking for very strong sales but the important thing is that they work up. That means we're erasing still more of the inventory of unsold houses. That is how this market will clear itself and this is a good sign.

BOLTON: Talk to us a little bit about this figure verses tomorrow's figures. In other words, existing home sales, you have always said more important than new home sales. But you say that's now more than ever the case in the turn around story. Is that right?

EZRATI: Well, it is. The existing home sales market is 10 times the size of the new market. Builders have cut back dramatically. The inventory of unsold houses, new homes, has been falling. What we have to do is work off that inventory for existing homes nationally. That is going to allow this market, the housing market, to form a bottom. That is what we are looking for.

BOLTON: So, if we are in the process of forming a bottom, how long do we stay at this current level? At least another year?

EZRATI: I think we will be here for quite some time. Mortgage rates have ticked up, people are very wary. There is not a lot of credit available even for people with good credit ratings. Even people who are willing to pay the price, and the price is still very low. There's not a lot of credit available. It will be 2010 before this market can show real growth. The important thing for the economy is that it stops declining and we are getting that sign.

BOLTON: What is the biggest macro factor, if you like, influencing the pace of the turnaround? Is it unemployment?

EZRATI: Unemployment I think will factor in. Right now, the issue is affordability. The price of housing has come down. Mortgage rates have come down. Ticked up a little in the last month but still way down from where they work a year ago. That has made housing affordable to anyone who can get credit. That is the important thing right now. Unemployment, if it slows, then we will be able to sustain this.

BOLTON: So, if we sort of break it down, you have foreclosures glutting the market with supply. That is bringing prices down. As you mention, historically low mortgage costs, historically low loan rates and also tax breaks we have to point out for first time buyers thanks to the Obama administration. And then on the other side, if you're going to look at push and pull factors, you have unemployment and the slight rise in mortgage prices. Are those the push and pull factors you see?

EZRATI: I think you summarized it superbly.

BOLTON: All right, Milton Ezrati, we thank you so much, coming to us there from Lord Abbett.

END OF TRANSCRIPT

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