Transcript: Real Estate Watch

This is a partial transcript from "Your World with Neil Cavuto," February 9, 2006, that was edited for clarity.

NEIL CAVUTO, HOST: When the spring flowers begin to bloom, will we see the real estate market begin to crumble? Inventory is climbing in major cities, and some reports say that buyers are showing signs of simply holding back. And that is worrying some sellers. So, will the next three months make or break the housing market?

Let us ask Barbara Corcoran, the founder of Corcoran Group, and our senior correspondent Terry Keenan, the host of "Cashin' In."

Barbara, you worried?

BARBARA CORCORAN, FOUNDER, THE CORCORAN GROUP: I'm not worried, because there has been so much babble about the bubble that it has scared buyers off.

What we are going to see this year is a late spring market. It's typical that people come to the market in the January season to list their houses. But, this year, the buyers are holding back. They are hoping for a good deal, and I don't think they are going to get it.

CAVUTO: All right, Terry, what do you make of that?

TERRY KEENAN, FOX NEWS SENIOR BUSINESS CORRESPONDENT: Well, I certainly — I defer to Barbara, but one thing that concerns me is, if you look at some of these housing stocks. And we had Toll Brothers (TOL) selling off and — on that warning a few days ago. It's down again today. It's down 40 percent in the last six months.

And, lots of times, these stocks lead the rest of the housing market. And the way they have been behaving should certainly raise some red flags.

CAVUTO: What about that, Barbara? I know you generally don't like to look at these stocks, but they have been swooning led by Toll, Hovnanian (HOV), and some of the others. Are they signaling trouble?


No, Toll Brothers, I think, had the single largest decrease in new homes ordered. And I don't think that's a surprise, because the hardest-hit section of our entire U.S. market are the higher-priced homes. And the reason for that is, the minute someone with a lot of money in their pocket thinks they are going to get a better deal next year, they hold back. They are purely discretionary sales.

But, when you look at the other developers that build across the board, you will find that the middle end, the lower end, of that market has had no decline. So, Toll Brothers is a good indicator for the top market, but certainly not an indicator for the entire U.S. market.

CAVUTO: All right, let's look at the top end of the market.

CORCORAN: How did that sound, Neil? Are you buying it?


CAVUTO: No, I'm not buying a word of it.

CORCORAN: Doggone it.


CAVUTO: But, Terry, you know Manhattan very well. I'm also in a very pricey neck of the woods today, in Pebble Beach, and the surroundings areas, where the homes are — well, only Barbara can buy them.


CAVUTO: But the fact of the matter is, this top end of the market seems fairly resilient to me. What are you noticing?

KEENAN: Yes. I mean, I think so.

You just look at the bonuses. Goldman Sachs, the average employee made $500,000 — that includes secretaries — net average, made $500,000 last year. The bonuses, just on Wall Street, $120 billion — so, a lot of that goes straight into the real estate market.

So, I think the high end is probably the most secure, except for maybe the high end in some of these regional markets, where Toll sells.

CAVUTO: You know, Barbara, one thing that you mentioned that I think is intriguing — and I would agree with you this much — when everyone says there is going to be a housing collapse, generally, that would tell you it's wrong.

And when I have seen this story preached out on the cover of BusinessWeek magazine or Fortune, or leading The New York Times, that alone tells me it is not going to happen. Should the contrarian in you say, defy the skeptics?

CORCORAN: What I can say — and it's true of every single housing market — is, you shouldn't buy with a crowd. People feel very secure when they see a lot of people rushing to get the same house, because, in real estate, everyone wants what everyone wants.

And the minute the crowd thins, people shy away. That's always the time when sellers are vulnerable. It's always the time where you will get the biggest incentive from any new development. It's always the time to be in the market and buy.

But it takes a tremendous amount of courage. And a lot of people just don't have that kind of chutzpah, I'm afraid. So, people will all come out in droves late this year, a late spring market, but they will all be back out pushing those prices up. Mark my words.

CAVUTO: And if that's the case, Terry, then we have been head-faked.

KEENAN: Yes. If that is the case, all bets are off.

But, Neil, we're now in an environment where it looks like the Fed could raise short-term interest rates up to, say, 5 percent. So, if you're looking for an adjustable-rate mortgage...

CAVUTO: And maybe more — maybe more.


KEENAN: Bad news, yes.

CORCORAN: Still under 12.


CAVUTO: All right, Barbara, real quickly, the Fed did indicate today, at least an official did, that we could have more hikes than earlier thought. Are your bets off, if that's the case?

CORCORAN: Who cares? As long as that interest rate stays under 10 percent, double digits, people feel comfortable. Interest rates are cheap. To measure them against a one-point gain, forget it. Don't even worry about it. It's a cheap interest climate.

CAVUTO: All right. Barbara, we know where you're coming from, at least.

CORCORAN: Obviously.

CAVUTO: But thank you very much.


CAVUTO: Terry Keenan, thank you.

Content and Programming Copyright 2006 FOX News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2006 Voxant, Inc. (, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, Inc.'s and Voxant Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.