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melonrightcoast
Joined: 22 Feb 2009
Posts: 236
Location: metrowest
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 Posted: Mon Apr 20, 2009 4:40 pm GMT Post subject: Report: US housing market is slightly undervalued |
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Just read this horrible article in the Globe. IHS Global Insight and PNC Financial Services Group say that the US housing market is undervalued... but the article in the Globe does not elaborate on what IHS and PNC base their "undervalued" claim on. The links they provide do not go to the report. Yet another example of horrible reporting by the Globe (reporter Chris Reidy).
The article claims that the Boston Quincy area is UNDERVALUED by 17.3% ... has it even declined that much from the 2005 peak??!! Is that what they are basing the "undervalued" tag on? That the 2005 peak is the "true value" of the market?!
I wonder if it is possible to find our just what organizations fund IHS Global Insight's research. I'll bet it would be NAR, mortgage brokers, banks, etc., that would benefit most from the continued rise in housing prices.
http://www.boston.com/business/ticker/2009/04/report_us_housi.html
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admin
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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Mon Apr 20, 2009 6:44 pm GMT Post subject: Re: Report: US housing market is slightly undervalued |
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| melonrightcoast wrote: |
The article claims that the Boston Quincy area is UNDERVALUED by 17.3% ... has it even declined that much from the 2005 peak??!! |
It was down 22.68% from the peak in real terms at the end of 2008. That's hardly enough to claim a 17.3% undervaluation, unless you deny that there ever was a bubble. The price to income ratio wasn't even back to one standard deviation from the mean at last check either. I am baffled. I can only imagine that their "undervaluation" verdict hinges very heavily on the artificially low interest rates on long term debt which The Fed is manipulating (for the first time ever, I think), and which are surely transient.
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Mon Apr 20, 2009 9:57 pm GMT Post subject: |
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What do they say about incomes? Are they also undervalued? By my estimate, I'm undervalued by about 200% compared to my peers who applied their education to something other than engineering  |
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melonrightcoast
Joined: 22 Feb 2009
Posts: 236
Location: metrowest
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| Posted: Mon Apr 20, 2009 11:04 pm GMT Post subject: undervalued |
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I finally found the original press release from IHS Global Insight:
http://www.globalinsight.com/PressRelease/PressReleaseDetail16479.htm
The last paragraphs give a bit of info about how they determined the "undervalued" tag. You could sign up and read the full report, but you have to sign up for the sight and (IMO) are required to enter too much personal information.
"House Prices in America, a joint effort by IHS Global Insight and The PNC Financial Services Group, Inc. (NYSE:PNC) examines the top 330 U.S. real estate markets, representing 78% of all existing housing units and 91% of all related real estate value to determine what house prices should be, accounting for differences in population density, relative income levels, and historically observed market premiums or discounts. Markets with valuation premiums above 35% were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 79 known local price declines observed since 1985. "
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