our real estate correspondent diana olick is here now with the rest of the story. diana?> tyler, home prices are recovering. no question. but driving those gains are all cash investors. we saw them push phoenix home prices up over 20% in the past year and don't get me wrong, this is good. investors are cleaning up the mess of foreclosures and some are even starting to see a profit. but regular would-en buyers like chicagons thomas and michelle grant are still left out. >> we've been there where we tried to get places, but because of our credit, i mean we're not bad people. we just had some struggles. >> the grants both have jobs and have the desire to be homeowners. what they don't have is good credit. after thomas lost his job during the recession. so they are renting. but rentinging to own. it is a program offered by some of today's new breed of foreclosure investor like the mack companies in chicago. mack bought the home in foreclosure and rehabbed it. to see what it looked like before, check out the foreclosure right next door. mack now puts aside 300 of the grants' $

our real estate correspondent diana olick joins us from washington.hat struck you about what bernanke said? >> the thesis statement was very clear. housing is recovering and he said it's adding to growth and jobs. that's how he began. but the whole rest of the speech really went through every part of the housing sector that is recovering and then talked about how far still into the woods it still is. it's all about the data we got today. still on underwater borrowers, still 14 million there. improving but still too many. mortgage delinquencies, still 11.7% of all loans delinquent or in the foreclosure process, improving but still not there yet. that's what chairman bernanke kept hitting on was that we need to do more to get out of the housing problem. he also said that it was up to borrowers and lenders, and it was not just up to the government. he expressed a high level of concern over stubbornly high unemployment. as we all know, this housing recovery is dependent on more robust job growth. we are starting to see more household formation but we need

we had an example before i came on from diana olick.alking about the consequences of getting rid of the mortgage interest deduction. the housing sector, housing industry, very worried about that. people are going to have to give up things of value to get this done. charitable deductions are another. i'm not saying those will specifically be part of the solution. anything that is done to resolve debt and deficit problems is going to cost somebody money and the orchestration of getting a majority support in both houses of congress and with the american people to do what's necessary on taxes and on spending is not easy. a month is not a lot of time. >> john, the white house has just now announced that tomorrow the president is going to have a private lunch in the white house with mitt romney. i'm wondering to what degree does that move the ball forward? >> mitt romney is not as defeated presidential nominees go, he does not have large amount of influence within his own party. we saw it after the election some of the comments he made. repub

diana olick is there what are you seeing and hearing right now? >> reporter: remember this state voted republicans for 40 years for president until 2008, when barack obama came in and won this state, largely with support right here in northern virginia and we are seeing great voter turnout on a gorgeous day here in northern virginia. this is why this race is so close it is north versus south and these two candidates and their running mates have made over 90 appearances in their state this year, barack obama holding nine rally, governor romney holding ten rallies, just since august 31st, the have spent over $131 million just in television advertising alone, all to get those crucial 13 electoral votes. doubt math, you can look at ohio and say that's important, of course, but virginia very important for governor romney to win this to make business hist way to the white house. and as eamon was talk about democrat tim cocaine running against george allen, a seat vacated by a democrat, the senate so important right now, looking at economic issues, talki

diana olick has more. >> reporter: that's right, brian. it is not something that you would think about immediately, but these self-storage facilities like this one are huge part of rebuilding. we saw it after katrina and sandy will be no different. why? of course, because people are trying to salvage what they can from their homes before they rebuild or repair and they need someplace to put it. plus, you've got builders, contractors, clean-up crews, they need somewhere to put their equipment. again, self-storage. what are the reits that will see the most action? extra space storage where we are today, sovereign self-storage, and cube smart, to name a few. demand from sandy will drive revenue growth in the first half of 2013. extra space storage which has high exposure in new york and new jersey will see the biggest effect. perhaps as much as 33% of its portfolio. sovereign, up to 24%. this all according to analysts at cantor fitzgerald. now these reits are already up between 3% an 6% just since sandy hit. public storage is the largest of t

diana olick with how housing could fall off the cliff. she is live in d.c. diana?> reporter: the main drivers are short sale, the bank let's you sell for less than the mortgage and lope modifications where the bank slashes principal. now you banks have done close to $11 billion worth of this debt relief just this year and that's why foreclosures are dropping and overall home prices are recovering. debt forgiveness, though, is usually taxable, but not since the debt relief passed under george w. bush, but it expires december 31st of this year and it is in big fiscal cliff play. if it is not extended and people are suddenly faced with paying taxes on their short sales and load lone modifications debt relief, all that is dry up and you will see a new spike in foreclosures. now, here's the twist, that obviously hurts housing but it could actually benefit home retailers, like home depot, which reported great earnings today. that's because much of its gapes lately are from investors rehabbing foreclosures. investors have been inhaling distressed properties, fixing them u

diana olick has the letter and she joins us with washington with more of the details on that. , diana. >> sue, you're right. five largest banks in this nation have already wiped out more than $6 billion of mortgage principle debt for thousands of borrowers under that giant mortgage settle many that just went into effect early this year. they've also wiped out according to the monitor of the settlement more than $13 billion worth of debt involved in short sales. that, say the nation's state attorney general provide rerelief to homeowners trying to get back on their feet. that quote comes to a letter signed by 43 state ags urging congress to extend the mortgage debt relief act that's been in effect for the last five years but which expires at the end of next month. mortgage debt relief is usualally taxable. if it is not extended, all future debt relief -- that is your principal write-down, even foreclosures, becomes taxable resulting in $1.3 billion in tax increases on the very families who can least afford it. in a conference call with reporters last week, secretary of housing a

diana olick is on it. what is this? >> mandy, one word. investors.ealtors just reported the median home price in the u.s. rose 7.6% from a year ago. other reports show smaller price gains. prices up just 2% year over year for the nation's top 20 markets. others show prices up nationally from 3% to 5%. the realtors' number is so high because they use a median price comparison. that means half the homes sold for more and half for less. when all the action in the market is on the low end, i.e. investors buying foreclosures, the median price skews lower. what's happening now is that investors can't find enough distressed homes to buy because of all the bank delays and loan modifications. the numb berp er of homes in th foreclosure process hasn't moved. investors are suddenly a smaller share of the market. in fact, down to 23% from 30% last year. the median price skews higher. >>> if you followed all that, you want to know is your home gaining value. right now as we speak, probably. but it depends more than ever now where you live and if investors are hea

diana olick joins us from washington with some details on that. >> reporter: hi, sue. look, rising home prices are good. don't get me wrong. 1.3 million borrowers came back above water because of rising home equity, according to core logic. but that's why i it was so struck by this warning from very well respected analysts at capital economics. they say the big threat to this housing recovery is its dependence on investors who are looking for those cheap great deals. investors made up 20% of october home buyers according to the national association of realtors and they are largely all cash. they're looking for rental yields and they've been getting anywhere from 8% to 12% thanks to high demand. but capital economics warns the worry with investment demand is that the very recovery and prices that it is driving will eventually reduce rental yields and undermine the investment case. in certain cities such as phoenix, this has already happened. home prices in phoenix are up over 20% from a year ago on the s&p case schiller home price index. prices are also rising fast. in

diana olick has the numbers. >> reporter: the two are intimately connected. the builders are seeing greater demand because of a big drop in supplies of existing homes. existing home sales are improving but supplies are still dropping. just 2.14 million homes for sale or a 5 hadn.4 month supply. that's down from a year ago. thanks to more aggressive loan modifications and fewer homes for sale. add to that one-fifth of the market is still investors. that number rose in on the. one-third of the market is all cash. that's just way too much competition for your first time home buyers who are still lagging and your owner occupants who need a mortgage. on the flip side, the home builders are benefiting. that's why you see the sentiment number edging up. finally up into the positive. why? they're getting those first-timers and they're not getting investors so owner occupants just don't have to compete. current sales jumped eight points on the sentiment scale and sales expectations up to into the positive. again a lot of this thanks to that mortgage servicing settleme

cnbc's diana olick explains how and why. good morning, diana. >> good morning, carl.s took an unexpected leap in october which led us to ask if the fiscal cliff had any hand in it. specifically around short sales which have been an ever increasing share of the housing market. now tax relief on these sales could be in jeopardy and that may be why they're revving up. let me explain. a short sale, where the bank lets you sell your house for less than the mortgage, is debt forgiveness, right? the bank is eating part of the mortgage in order to avoid a more costly foreclosure. debt forgiveness is usually taxable but not under a tax relief law passed five years ago that, yes, expires at the end of next month. if it is not extended because of the fiscal cliff, debt relief will become taxable again and that will affect thousands and thousands of short sales and principal reduction loan modifications many under the big robo signing mortgage settlement. that settlement is why short sales have skyrocketed, surpassing foreclosure sales last june and keep on going. in nevada they

diana olick has more on that. good morning. >> good morning. that's right. governors, democrat tim kaine and republican george allen vying for the seat being vacated by jim webb. allen lost to webb in 2006. tim kaine has outspent allen so far. analysts say we would need to see a romney victory here for allen to pull it off. again senate leadership, so crucialle with so many things facing the economy now. what's at stake in the senate? of course you have the fate of the bush tax cuts, number one. you also -- nothing larger than the debt ceiling and the fiscal cliff. part of that sques radiatieques. that's a potential $50 billion in defense cuts. look to the south and you have norfolk and the shipbuilding industry. you have the pentagon located in virginia. it's all these issues in the economy that are bringing virginia voters to the polls today. >> my big issue is job security for my husband. >> economy. it's the main and the debt. >> i want to reduce regulation. >> when we look at it, it was over 40 years virginians didn't put a democrat into the white house

diana olick has more. >> this is one of the most popular and well known tax breaks in america and forit's a real incentive to buy a home. with now several proposals in play, we want to look at what we may be losing. as deduction stands now and it only applies to you if you itemize. for those making less than $40,000 a year, the average savings is 100 bucks in taxes. less than a quarter of folks in that itbracket itemize any way. for those earning $250,000, average savings 1,500 bucks a year. for those making more than $250,000, you bump that up to $5,400 a year. cap the deduction at $500,000 of the home value only for primary residen residences. down from a million. another is to limit it to just $25,000 worth of mortgage interest. another, only eliminate the deduction for taxpayers in the 250 k or higher income bracket. limit the total amount of all of the deductions by anyone to $25,000. that was mitt romney's plan. it's starting to get traction with democrats. you could end the benefit on second homes and vacation properties or you could eliminate the whole thing all together. obvi

i'm diana olick. breaking news from the national association of realtors.his morning. existing home sales for october and home builder sentiment from november. we're just waiting to hit that 10:00 mark. existing home sales rose 2.1% to a seasonally adjusted annual rate of 9.7 million homes. sales still up 10.9% year over year. this marks the 16th straight month of year over year sales gains. median home price 178,628 up 11.1% year over year. it's median price so it's about mix of home selling. homes over $500,000 have seen 40% gains in sales from a year ago. inventories at 1.24 million. now to the home builder sentiment number up five points. a big jump to 46. that's the highest reading since may of 2006 for the home builder sentiment number from national association of home builders. 50 is the line between positive and negative. a big jump and the segment that current sales jumped eight points. that's the highest level in six years. also sales expectations jumped two points so sales expectations in the positive. big news for the home builders seeing much m