Study: Home prices in Hub at risk to fall

[ckramer]

a new study finds Boston housing remains at its highest risk ever for price declines, with a nearly 60 percent probability that home values will fall during the next two years.

“The pieces are there to say that if there’s an economic shock locally, that could push (the market) over,” said Mark Milner of PMI Mortgage Insurance Co., which released its first-quarter U.S. Market Risk Index yesterday.

PMI, one of the nation’s largest mortgage insurers, put the odds of Hub house prices falling by an unspecified amount between now and 2008 at 58.8 percent.

That ties a local record set one quarter earlier, and also makes Boston the third-riskiest locale among the nation’s 50 largest housing markets.

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[ozone_man]

1. More like a 95 percent probability.

with a nearly 60 percent probability that home values will fall during the next two years

Well they didn't say how far they would fall. Maybe a 60% probability they will fall 40%. ;)

[Warpy]

2. I don't see a 40% decline, not unless there is total panic

but a 20% decline is not out of the question, and that much will still devastate the local economy, tying up paper equity that people have been using to leverage debt.

Lenders will have to take their stupid pills to get it down even that far by foreclosing on anyone who gets into a negative situation, owing more on the house than it is worth on the current market. If lenders panic, that's when a problem will turn into a disaster, preventing borrowers from keeping up the payments and sitting on the property until values rise again.

Values will rise again. We're already beginning another inflationary period, thanks to war (which invariably causes it) and Stupid's profligate spending and borrowing which is causing the dollar to fall in value in world currency markets.

[ozone_man]

3. Here's where I differ.

I think the inflationary aspects of our economy are apt to disappear once the credit dries up. Housing prices will surely rise again, but it may be a long ride down before that happens.

[ShockediSay]

4. Mine fell over 20 % in the 80's

in one of NE's "hot housing markets" after things cooled.