The Riskiest Housing Markets

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waitingtill08_IHB

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PMI Mortgage projects a 57.7% chance for drop in home values in Santa Ana/Anaheim/Irvine. Here's the article:





http://realestate.msn.com/Buying/Article2.aspx?cp-documentid=5124615&GT1=10233
 
<p>I don't know what kind of research they are doing, but with foreclosures running at a multiple of 2006 when we are only half way thru 2007, and inventories still higher than last year, I'd say it's not rocket science to say we have a >50% chance of home values dropping. </p>

<p>57.7% actually seems pretty mild. That would mean 42.3% chance we remain flat or increase in price. That's pretty optimistic, actually.</p>
 
Prices have already fallen in most of these markets and are continuing to do so. As you say, with the rising foreclosures and tightening of credit further price reductions is inevitable. We've all known this and been discussing it on this and other forums since about 2005, but I guess that the more the media covers these projections the more it will sink in with the general public that prices are going down and are likely to continue on that path. Hopefully, the coverage will encourage sellers to lower their prices instead of holding to their fantasy prices.
 
I also thought the advice in the article was funny. Note that they didn't say that sellers should lower the price, just offer closing help and use the internet, lots of pictures, and virtual tours to advertise.
 
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