Recently, Dennis wrote a blog post about seeing the long range picture when considering purchasing. As fate would have it, I have stumbled upon more information to support that fact AND I think buying prior to September might be a good idea. Read on:
PMI Mortgage Insurance Co., the primary U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Summer 2008 U.S. Market Risk Index(SM), which ranks the nation’s 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years. To put it simply, the higher the score, the greater the chance that home prices will decline in the next 2 years.
Here’s an example where bigger is NOT better. For instance, the number one position is held by Riverside-San Bernardino-Ontario, CA with a 95.5% chance prices will be lower. That is amazing to me and I feel sorry for the sellers that are attempting to sell in that area. Most buyers would be extremely leery of investing their money in a home that has a less than 5% chance of being worth what they paid for it in 2 years.
“Compared with a year earlier, there has been a significant increase in the number of existing single-family homes for sale relative to the number of buyers, even beyond the normal increase in the spring home sales season. April’s ratio is the highest since 1985. Given the magnitude of the inventory overhang, we expect national home price declines to continue into at least 2009.” – David Berson, PMI’s Chief Economist and Strategist
I hope that you have made it this far, because I am about to deliver some really good news—the Seattle-Bellevue-Everett area has a 1.7% chance of price declines. Or said another way, a 98.3% chance that what a buyer purchases today will be worth at least what they paid in two years. Those are great odds!!!
Another interesting factoid—the greater Seattle area is the only area on the west coast where the risk index is lower than 8%. The next closest on the west coast is Portland-Vancouver-Beaverton with a risk index of 8.2%. To see the entire PMI table, click HERE.
In other news, in Europe they just raised their interest rate which will put further pressure on the US dollar. There is talk that the FED will raise rates in September and that a 30 mortgage will be around 6.75%. If you are waiting to purchase, you might want to move your timeline up a bit.