Housing Report

The PMI Group has published a quantitative report on the housing market. It is available here. The report is definitely worth the read if you are interested in the state of the housing market. If you live in nearly any global market, housing should be a concern as real estate has had a "bubble" type run in the last five years in nearly every country.

PMI has done a risk analysis of all markets in the U.S. and there are few surprises as to which markets may possibly decline. The thing I find interesting is the most overheated markets have only a 60% of declining based on their modeling. While I find this highly optimistic, one most take into consideration that housing is not the same as stocks and rather than a significant drop in prices, we could simply see a flat market over a period of years until wages catch up. ie, There are two ways to achieve more affordable housing and declining prices is only one. Personally, I tend to think we will see significant price declines in some markets as wages would need to rise well beyond historical norms to rectify the affordability problem. Regardless, it appears to be somewhat of an unbiased attempt to scientifically quantify the risks and probabilities of a topic on nearly everyone's mind.

In a few days I will post another study which tends to be more encompassing of the probabilities in the housing arena.