caroline: from bloomberg's world headquarters in new york. a red day for stocks. a record high for the nasdaq. no cigar for the snp. -- for the s&p. we are going to focus on housing. during the pandemic, you could look anywhere in the country and find soaring housing prices. existing home sales data, july come arising for a second month,

indicating actually that housing demand we were worried about may not be the issue at the moment. taylor: indeed. that was some of the actual strongly, data we got this morning. total existing home sales, you are up 2% in july. the median home price fell to just 359,000. you were down about $3000. year-over-year, up about 18%. if you think about some of the rates in blue that were low, that makes it affordable for lending, pushes up the price. in white, you have the home sales, real strength in the pandemic. olivia rockman has been covering the pandemic for bloomberg news. what are you thinking about low rates, affordability, then of

course inventory and supply? olivia: it does seem like from the standpoint of existing homes, that the supply improvement in july is what helped improve sales more generally. there were 1.3 million homes for sale, up almost 8% from the prior month. that seems to have allowed people to kind of get into the market. romaine: what were the regional differences if at all that we saw? olivia: we saw increases in every u.s. region with the exception of the northeast, where sales were unchanged. one challenge for the markets especially in the midwest, the supply of lower-priced homes is falling. the midwest, which is the primary market there, is a little challenging. caroline: it feels that the upper end of the market is doing really well. not enough starter homes available. what about in general the pace at which homes are flying off

the colloquial shelves. they seem to be on the market for hardly any time at all. olivia: real tours would consider anything below five months of supply kind of a tight market. right now, we are at 2.6 months. that implies that we are still kind of in this red-hot demand phase. taylor: dare i ask. lumber prices, they had surged, everyone in the housing market was kind of raising alarm bells for how expensive homes were getting. we have seen lumber him off the highs. have you seen that translate into inventory. producing some of the prices. olivia: we get data on new home sales tomorrow. economists expect that new home sales will rise in july. that is when the impact for home

construction, -- if we do see the bump tomorrow in new home sales, that could imply that the lumber market easing is really helping. romaine: olivia keeping an eye on everything going on in the economy. those existing home sales coming in up about 2%. let's continue this conversation with bank of america security head of economics, michelle meyer. we have been talking about the 2% jump in new home sales, 2.7% if you are just looking at single-family homes. the number i saw that was interesting, cash buyers come up about 16% from the previous year. 23% cash buyers, is that a sign of a healthy market order is there something under the hood that i should be concerned about? michelle: you dig into the

details, kind of sort out what drove this increase. it did not differ what we have seen from mortgage purchase applications which have continued to fall. part of the differential -- it tells us that it is a sellers market. sellers can offer and accepted bids from the best buy are out there and often times, that is a cash buyer. houses become a little bit more of an asset class again given how inflated asset prices are overall, and as a store of wealth, which presumably is attractive to many people out there looking to buy perhaps a second home, renting, for proper investment services. caroline: for those who have to borrow, it is thoroughly depressing in many ways. i am interested in what this all means for consumer sentiment. the university of michigan, consumer homebuying conditions viewed as the most negative on record.

michelle: consumers are looking at the housing market with record low, 2.6 months of inventory. typically you have about five months of inventory. it is extremely limited. the homes that are being sold are at very rapid home price appreciation. the other major concern, what we spoke about, the types of homes now being built, more and more of the higher end homes where builders have a little more wiggle room in terms of their margin, they can attract those cash buyers as well. for a lot of people out there that would like to access the housing market, it is a really hard place. i think that is what is being reflected. they are saying it is a bad time to buy because prices are too high. inventory is too low. at some point, hopefully that will be resolved and you will

see inventory in the market again. you will see home price appreciation and people will once again be able to access homeownership a little more freely. taylor: when you talk about prices, you get comments, only up 17% year-over-year, which is great because last month, we were up 24 percent on home prices year-over-year. i am wondering, does this feel anything near a 2006-2007. some of the sort of frantic, speculative behavior of chasing these prices because you just need a home. you will pay cash because you have not even seen it. does any of that behavior smell familiar? michelle: there are aspects that are similar. when he market is tight, people are more desperate to spend what they need to because they want to move. they will try to make the math work to do so. the price of credit is very low

and that is helping to inflate asset prices. but, a distinct and very important difference from the period heading into the great financial crisis is that credit is not readily available. we are still in a very tight credit environment. the last crisis, what drove part of the massive boom in housing activity is that credit was freely available. they think that distinction is very important because that limits just how much housing can run in excess. romaine: how much do you track the idea that a lot of the homebuying market has been within the rich or well-to-do folks out there. the folks that we have normally wanted to nudge into the housing market don't have an opportunity to get there.

i wonder if there is a longer-term issue or concern that might raise. romaine: -- michelle: that is one of the things that change. when you think about the 1990's into the early 2000, the expansion of homeownership for a broader part of the population, which was seen to be a real positive because people can use their homes has a store of wealth, the housing stock is not depreciated as much. a lot of thought around how an expanding housing market could be beneficial. then the crisis happened, people lost a lot of their wealth, went through difficult deleveraging. ever since then, credit standards have been tight, which means part of the population has not had access to the housing market, certainly to the extent they had that in the late 1990's, early 2000's. there has been more of a rental society built upon that.

i think the bigger issue is just affordable housing full stop. able to have enough supply out there, affordable supply that people can feel very comfortable in terms of their living situation and monthly payment. that has been a real struggle and i think is one of the reasons for the policy initiative when you look at the legislation being moved through the biden administration. caroline: from the federal reserve policy perspective, are you expecting anything to be discussed over the course of jackson hole? it has been an area of discomfort for them. michelle: there are some fed officials. president rosengren, concerns over asset price inflation in housing and some instability in housing. but i don't think that is a core concern for fed chair powell. he has not talked very much

about an area of risk in the market, in the economy. the last press conference, when he was asked, he talked about how fundamentals are a bit out of bounds right now and once supply picks up, we would see a healthy market. i don't think housing is a driving factor right now for monetary policy. i don't think it will come up in a specific way. for me, the focus will be ensuring a full labor market recovery given the conference. taylor: there has been a lot of debate, i have heard it on both sides. one would argue that you taper mbs first. the other is, steady as she goes, like 2013, because we have a path and it works. would tapering nbf fix the housing issues we are currently

experiencing? michelle: not really. the big challenge with the housing market is that inventory would be very low. it is a matter of getting enough time. and that should happen. in time. to me, in terms of the level of interest rates. but i think that is a small part of it. it is much more about payment supply in the market. caroline: great to have some time with you. michelle meyer, bank of america securities head of u.s. economics. coming up, we turn to the rental market. rental demand soaring income and everyone wants to come back to the cities. but will that be put on hold with delta? this is bloomberg. ♪ ♪

romaine: welcome back. today, we are focused on the u.s. housing market. a lot of attention we have been paying to home purchases. but what about the rental market. we have been seeing a lot of inflation spillover. caroline: 17% higher in july versus what the previous tenants had been paying as an average across the u.s.. apparently that is a record. of course, we don't see if you are getting months free, for example. but a member when we were all thinking about whether you would return to the city or not. in the spring, months free, 20% discounts.

the minute i tried to get a new rental, they were all gone. taylor: 18 months of the rent and six months of that are free and you are thinking, do the math, that kind of sounds like a good deal. all of those deals have escaped us. let's do that with beth friedman, from one of the largest real estate firms in the country. the world does exist outside of new york city. but, within new york city, tell us what you are seeing on the ground. it certainly seems like there has been a recovery. >> there has been an extraordinary comeback in the rental market, considering that january was very quiet, the vacancy rates are very high, fast forward to today, we are seeing record numbers. a last to do with the fact that new york state has done incredibly well getting people vaccinated. we have one of the highest

vaccination rates in the country. people are feeling safe and returning to new york city. companies are mandating that people come back and that they be vaccinated. people are running here to find apartments. caroline: tell us about what you are feeling on the ground in the past 2, 3 weeks. it does seem there was a rush to come back to the cities. companies saying, we rather prefer you in the office. now with the delta variant, people pushing back the return to the office date, is any of that feeding into sentiment at all? bess: i think that the overarching theme is that people are being careful and concerned about the delta variant creeping up. we don't want to go back into a restrictive economy. companies are sort of navigating safely. people are coming back. it is august, but people are still here. and we want to do this safely,

so little by little, people are returning. they want to be in the office. they are showing up here. i think we just have to tread lightly because we don't want to go back to a place where things were shut down. romaine: what about sort of the balance here. we are still seeing relatively strong numbers for sales of suburban homes and the demand seems to be there. i think if you buy into the narrative of a year ago, everyone was looking for a little bit more space, a different quality of life given the options to work from home, how does that balance out in a world where maybe we don't go back to 100% in the office. where employers are willing to offer a little more flexibility down the road. bess: i think there is a hybrid of sorts. we have that, we are asking people to be in the office at least three days a week and then they can work from home the other two days.

we are being flexible because we are not out of the woods yet. we all saw today that the pfizer vaccine has fda approval. i think that will encourage more people, and people will get vaccinated and feel safe about it. there is still a lot of unknowns. i have heard stories of people who had covid coming unvaccinated, got covid again. but because they got vaccinated, their symptoms were like. i think new york city will tread lightly and we will sort of have a hybrid work environment until things are back at full speed. taylor: in terms of the tax and regulatory perspective, how many of your clients are coming to you and may be feeling more optimistic about the salt tax deduction, where you can only deduct now $10,000 and before i believe it was unlimited. at least this cap is putting some pressure on the market.

our clients coming to you and saying they are more optimistic given that the dems in the house say they want that cap lifted. bess: some of the tax legislation has been driving people out. a lot of people have moved to lower tax states like florida because of that. that is still a concern. we are hoping we will get some more responsible legislation from albany so that people come back to new york and want to live here and invest here. that remains something that has not been resolved as of yet. i don't think abel will up and leave just because of the cap on the deductions. it will be many factors including other things. we have to have some sponsor bowl legislation in albany. that makes a big difference to new york's survival. caroline: i am interested in what people are demanding when they are purchasing or indeed

renting at the moment. and felt last summer that unless you had outside space, of no interest. is that the desire or are people understanding that they are happy to go back to just an end part -- an indoor apartment without any access to the outside? bess: i think universally, people have tried to reimagine their space. in new york city, because we were the epicenter of the pandemic, when people came back or decided to move, they thought, i need outerspace or i wanted home office. people are being a little bit more flexible. it is of primary importance to some but it is not always the most important thing. romaine: for all the folks who fled the city, they said new york was dead, it would never come back, the next great town would be in the middle of ohio somewhere. what do you say to them? bess: i say absolutely not.

new york has made an incredible comeback. we have done very well getting people vaccinated. where new york has not done well has been with the rental assistance program. one thing i would broadcast, to the landlords and tenants, there is federal aid available. please go online, fill out those forms, talk to your landlord. i am aware of the greater sort of realities of new york city, not just the discretionary luxury market. there are people struggling. i hope that people will go online and fill out those forms. they fixed a lot of the glitches. we want to make sure people are not out on the street. romaine: rate insights. bess freedman, the ceo of brown harris stevens. the only thing more rare in this city than in affordable apartment is in affordable

parking space. how much would you pay to park your smart car? we are going to talk about exactly what the price tag is for a car in manhattan. i think here it is going to cost a lot. this is bloomberg. ♪ . ♪

caroline: the red-hot u.s. housing and rental market, and then there is the parking market. $350,000, some of them are costing. the kicker, you then pay $3000 per year in property taxes on a car parking space. it is pretty though. romaine: i have never seen a garage like that. is this real or a rendering? taylor: you get 185 square feet for $300,000. but, your favorite, there is room for your golf clubs.

and your stroller. romaine: i feel like $350,000. haven't there been spaces that have gone for close to a million? caroline: they are trying to blame the poor restaurants for white there is not enough parking. -- for why there is not enough parking. this is bloomberg. ♪ rg. ♪

>> from the heart of where innovation, money, and power collide in silicon valley and beyond. this is "bloomberg technology" with emily chang. emily: coming up in the next hour, a judge throws out a critical california law backed by the biggest gig economy companies. prop 22 allowed uber, lift,