This is a partial transcript from "Your World with Neil Cavuto," September 29, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: This is a FOX News Alert, brushfires still burning out of control in California, threatening these multimillion-dollar homes along the San Fernando Valley, some 3,000 firefighters battling the Santa Ana winds. And officials hope to contain more than 5 percent of the fire over the next several hours.

My next guests are certainly keeping a pretty close eye on this. Joining me now in San Diego is Roni Telmosse, the president of the San Diego Association of Realtors (search), and, in New York, Bruce Karatz, the chairman and CEO of KB Home (search), one of the largest home builders in the United States and in the state of California. Roni, to you first. How big an issue is this going to be?

RONI TELMOSSE, PRESIDENT, SAN DIEGO ASSOCIATION OF REALTORS: The fires, is that what you are talking about? It depends on how far that they get into the housing area and, of course, into the areas where people work, the employment aspect of it as well.


CAVUTO: So far, it has not gone much beyond that immediate area, but it could, right?

TELMOSSE: I am not familiar with where the fire is at this time. But I would say that any time you have got fires within an area of the residential or commercial area, you are going to have to take into consideration how it can impact everyone’s lives and livelihood.

CAVUTO: Bruce Karatz, do you have homes at any of these affected areas?

BRUCE KARATZ, CEO, KB HOME: No, we don’t, Neil. Luckily, so far, at least our communities are saved.

CAVUTO: All right. What do you make of this, these horrible fires, notwithstanding, Bruce, the whole state, the whole country, for the most part, continues to see booming real estate values. How long do you suspect that continues?

KARATZ: Well, it’s a story that you and I have been talking about, I don’t know, for five or six years. I think that a good, solid demand will continue. And the markets that everybody says have been to hot I think will continue to be good. And, so, I wouldn’t — absent some economic event that I think has a low probability of occurring, I think that housing demand will remain very solid.

CAVUTO: Would you, in light of these fires, Bruce, look askance at building in areas that are either susceptible to brushfires, or, for that matter, as we learned around much of the Southeast, in hurricane-prone areas?

KARATZ: I wouldn’t. I think, every fall we have, seem to have hurricane issues in the Southeast and fires in California, particularly Southern California. And these are just one of the acts of nature that afflict beautiful areas. And, luckily, we have not had any really important fire damage since I can remember in California.

CAVUTO: Roni, I know you are in the San Diego area, but do you fear that people look at something like this, like brushfires, which was a big issue for this area a couple of years ago...



CAVUTO: ... that they are going to think say, you know what, maybe not the San Diego area, maybe not Southern California?

TELMOSSE: Well, I believe that there are places throughout the country that have their own issues, whether it would be the hurricanes. I happen to be from Kansas, so tornadoes.

CAVUTO: Tornadoes, sure.

TELMOSSE: I believe every area has its own potential risks. We did have a definite slowdown of the market right after the fires back in October, a couple of years ago.

CAVUTO: Right. When you say a slowdown, people didn’t want to build in the area, didn’t want to buy in the area?

TELMOSSE: Exactly.

CAVUTO: Right.

TELMOSSE: And, also, a lot of the local economy was affected there for a time. But what we found was, right after the 1st of the year, with that pent-up demand, the buyers really came out of the shoot and our market took off. We had one of the best springs we have had in a long time.

CAVUTO: Well, Bruce, that has always been your argument, that these dips or the reaction you get when everyone is saying it is going to be bad for real estate, be it the boom in buying and all of that, it is always all short-lived. But I know I keep repeating this to you, Bruce. Eventually, there is going to be a reaper to pay, right, for housing, I mean, that people with these — with these 125 percent loans or all equity loans, they are going to pay for that, aren’t they?

KARATZ: Well, I don’t know anybody who is borrowing 125 percent on their home purchase. But I think that what we have to keep in mind is the stories about the no-equity loans are a small percentage of the market. We read this morning that the major lenders are tightening up their standards, lending standards, for these kind of loans...


KARATZ: ...which I think is wise. I don’t think there has to be...

CAVUTO: All right.

KARATZ: ... any reason for a dramatic fall in the market, Neil.

CAVUTO: All right, Bruce, final word. Roni, want to thank you as well.

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