Pulte: Big metro areas, not Detroit, recover soon
NEW YORK (Reuters) - Large U.S. metropolitan areas with tight housing supplies should recover relatively quickly from the nation's housing crisis, but the auto industry's problems will keep Detroit in the doldrums for years, the chief executive of the No.2 U.S. home builder said on Monday.
Speaking at the Reuters Global Real Estate Summit in New York, Pulte Homes Inc (PHM.N) Chief Executive Richard Dugas also said the beaten-down Florida, Las Vegas and Phoenix markets can offer great values for homebuyers, including those looking for second homes.
"On a relative basis, I think the big job centers, the big metro areas will see a recovery first," he said. "If you're defining New York as Manhattan, maybe not. If you're defining it as the metro area, or the Boston metro area, or the metro San Francisco area, probably so. The supply problems that plagued a lot of the rest of the country did not exist."
Detroit, on the other hand, will lag the others, given its dependence on the fast-shrinking auto industry. General Motors Corp GMGMQ.PK is in bankruptcy, while some of Chrysler Group LLC were bought this month by Italy's Fiat SpA (FIA.MI) after its own bankruptcy reorganization.
"It's as bad as you can possibly imagine, and I don't see any signs of improvement," Dugas said about Detroit. "It's by far the most dependent metro economy on one industry ... I don't see any significant recovery for years. Quite frankly, the new home statistics and resale statistics point to that."
Pulte is nation's most geographically diverse building with operations in 25 U.S. states. It expects to be the largest U.S. home builder after it merges with rival Centex Corp CTX.N, in an all-stock transaction valued at $1.3 billion that is expected to close in the third quarter.
Dugas said a more general housing market recovery will depend more a recovery in consumer confidence, which he expects to occur before the nation's unemployment rate peaks. But he said it will take more than low borrowing costs to get there.
On Monday, the Mortgage Bankers Association cut its 2009 mortgage lending forecast by more than $700 billion to $2.03 trillion, citing a nearly one percentage point rise in benchmark lending rates since March. It expects new home sales to fall 27 percent this year to 352,000 units.
Dugas noted that 30-year mortgage rates still hover in the 5.25 percent to 5.50 percent area.
"Rates are still incredibly good, and I think most buyers know that," he said.
(Reporting by Jonathan Stempel)
