Posted by The Tim at 7/3/08 2:35 p.m.

I've been finding it difficult to really put much credence in PMI's reports lately, because they keep changing around their models and reporting methods.

For example, Seattle's Risk Index for the Winter of '06-'07 was 167. Then they changed their model, and our RI shot up to 343. Then as of the second-most-recent report, they changed the model yet again, and it's on a 1-100 scale. They have effectively made it impossible to tell whether a city's PMI is increasing or decreasing.

Also, they're basing their predictions on the OFHEO All Transactions House Price Index, which I have an entirely different set of problems with (the main one being that it includes refinances, not just actual sales).

In short (too late), PMI frustrates me.

Posted by Mack McCoy at 7/3/08 2:47 p.m.

Time will tell, won't it? I'm still not sure what purpose these researchers serve - is there anybody who would make a decision to buy, sell, or invest based on what The PMI Group has to say?

Posted by mhays at 7/3/08 3:24 p.m.

Many people, if not the majority, seem to base their opinions on emotion, heresay, and anecdote rather than actual market information. That makes it all the more helpful to get doses of the latter.

Posted by Leanne Finlay at 7/3/08 4:41 p.m.

Many buyers buy because it is a lifestyle choice, and plan to stay for many years. To those buyers, it's not about 'risk', it is more about when the time if right for them to own that first home, second home, or maybe even 3rd or 4th.

Plain and simple, there are some very nice homes on the market right now, good interest rates and sellers who are willing to dicker with buyers. That's something buyers haven't had in Seattle for many years.

Happy 4th of July weekend!

Posted by Kary L. Krismer at 7/3/08 5:53 p.m.

Yawn. Another prediction. Sort of.

Posted by You Big Weirdo at 7/3/08 8:04 p.m.

"according to mortgage insurer PMI Group."

LOL!

Another delightful bit of flackery.

Cohen should be replaced by The Tim, I don't always agree with The Tim's analysis of certain economic fundamentals, but he always makes a whole lot more sense than Mr. Cohen's boosterism.

Posted by unregistered user at 7/3/08 9:36 p.m.

The most telling anecdote I've heard was while looking at a condo. The agent mentioned that it had been appraised at $20k more 1 year ago, when the seller first considered listing it. One only needs to watch Redfin and compare the # of price drops now to the # 18 months ago.

Posted by unregistered user at 7/4/08 7:00 a.m.

From the sites own explanation - "Price volatility is calculated as the standard deviation of quarterly two-year house price appreciation rates for the previous five years. In general, higher price volatility indicates a greater risk of future home price declines"
This seems a bit counterintuitive for real estate, at some point just because your price has dropped doesn't mean that it will continue to.

Posted by Kary L. Krismer at 7/4/08 7:30 a.m.

UR wrote: "From the sites own explanation - 'Price volatility is calculated as the standard deviation of quarterly two-year house price appreciation rates for the previous five years. In general, higher price volatility indicates a greater risk of future home price declines"

I think what this is saying is that the more it's gone up, the more likely it is to go down. Over a 5 year period most the areas would be flat or up. They aren't yet hardly dealing with any of the present declines (but that will be coming more and more as we move through time).

But anyway, that's what you're seeing in CA, NV, AZ and FL. Declines that followed very fast run ups. Volatility works in both directions.

Posted by Mack McCoy at 7/4/08 10:36 a.m.

I'm not sure whether it matters whether the "risk" is increasing or decreasing; they're saying that last fall, the odds were 14-1 against prices being lower two years out; now the odds are 60-1 against.

Except that, of course, they're not taking bets.

Unlike Tim Ellis, I'm not committed to spinning the reports, being disturbed by the methodologies of the organizations whose reports do not support a particular mindset. I don't care about any of them!

If you can afford to buy the house you want, and you're letting some national research firm dissuade you, then I'm guessing you didn't earn that money in the first place. Conversely, if you have the money, don't want to buy a house, but find yourself convinced to do because of one these national firm's reports, I suggest that you consider placing control of your assets with a conservator. At the very least, I hope you're not lighting off any explosives!

Happy 4th!

Posted by unregistered user at 7/6/08 11:40 a.m.

Wow - personal attacks on someone that actually read the report and presents a valid analysis. Jealous much, there Mack?

Posted by Mack McCoy at 7/6/08 12:42 p.m.

You'll survive, pal.

Posted by unregistered user at 7/6/08 4:36 p.m.

? 147538 unreg, did you read the comments? Everyone has their own opinions - that is why they are called opinions. There were no personal attacks from anyone, except perhaps you .... and yours was more a tirade instead of a attack.

Posted by Mack McCoy at 7/8/08 6:34 p.m.

Thanks, uu; to be fair, maybe I did bump Tim a bit.

But, honestly, who uses the term "fear-mongering" (outside of the Bush Administration) more than bubble bloggers? Point out the possibility that prices or interest rates may go up, and what's their response? Is it a reasoned, Well, it's possible, but we don't think so?

Uh huh.

I'm a licensee. What am I supposed to tell people who want to buy now - I guarantee you, just wait a while, you'll save a bunch of money? You know what a guarantee is, right?

I could say that I wouldn't buy now, but that isn't true. I might very well buy now.

But really, do you know why many of us think it's always a good time to buy? (You want the commission?) Sure, but, frankly, because it always has been.

Every one of us with a real estate license who dreams of retirement wishes we had bought back when. In 1973, right out of high school, average price $25,597 and rates in the mid eights. In 1983, $82,225 with rates at 13%. Silly buyers, they were. Ha ha ha. Five years later, it's at $105,451. Fast forward to five years ago, $357,000. Average sales price for a house in Seattle. Peak of the market. What fools they wuz!

2004, it's a bubble! Average is $405,000. Two years later, it's ready to pop! $520,000. Last year, $572,418. Peaked at just over $600,000.

Time will tell. We all wish we bought 'way back when. And at the time, we all thought each other was crazy for buying for investment.

And every step of the way, the prospective buyer faced the same question - is this the top of the market? And there were always people around to tell them, "Yes, it is." And they'd turn around, and there'd be people to tell them, "Nah! No Problem!"

This is Life 1.0 - got a bet, lay it down.

Where will you be in five years? Ten years? Twenty years? This same discussion will probably be happening, on yet-uninvented devices beyond our imagination.

Posted by Kary L. Krismer at 7/9/08 8:13 a.m.

Mack wrote: "But really, do you know why many of us think it's always a good time to buy? (You want the commission?) Sure, but, frankly, because it always has been."

But beyond that, real estate agents are not able to predict the future. Things looked bad last January, but right now people that bought then are looking pretty smart.

And as Mack sort of alludes to, if an agent said: "No don't buy now!" there isn't going to be any sort of compensation if prices go up after that point in time.

Finally, I think one point people really miss is that agents don't talk people into buying or selling. By the time they're dealing with an agent they've typically already made that decision.

Posted by Mack McCoy at 7/9/08 9:33 a.m.

Funny about that, isn't it, Kary?

People actually do want to buy and sell real estate, and the overwhelming majority seek out an agent to help them accomplish that goal.

Of course, they ask our opinion about all sorts of things - what would this rent for, is there wood underneath the vinyl (no, it's cement with asbestos), which way is the market heading . . .

And therein lies the rub. We can represent the bubble bloggers, or we can tell them what the stats say. And the thing is, if we tell them what the stats say, the bubble bloggers call us fear-mongers and immorral commission-hungry shills.

Both the Times and P-I have been full of data, and it conflicts. So the truth is, the prognosis is: mixed.

As I posted elsewhere, Seattle resale is headed up again. Doesn't mean it'll get there, but it's been up since March. The PMI group, regardless of accuracy, declare that Seattle has a 1-in-60 chance of a sustained price drop. "Do you feel lucky? Well, do you?"

CSI sez we're down 8% from our peak. Or we were in April or March or whatever. This stat, that stat -- put 'em all together, and today's price is still today's price.

Things look bad at the bottom. Maybe January was the bottom. Maybe the bottom is ahead. Sixty-to-one odds against, they said.

Posted by unregistered user at 7/29/08 6:30 p.m.

Price drops of 20 to 30% so far sounds like a lot but not enough to get back to rational pricing. Basic math. If price goes up 100%, it needs to fall 50% to get back to start (like around year 2000). Incomes haven't gone up so affordability dictates.It's even harder to buy now with much tougher mortgage terms.