[quote=sdrealtor]ocr,
I cant resist as this is quite a departure from your prior position to “demand 1999 nominal pricing”. My times have changed.[/quote]
I said 2000 nominal or 1997 inflation adjusted.
what is quite interesting is if you adjust 2000 nominal pricing with the interest rate difference, even without using that income adjustment, you get a good adjustment as well.
for example, using the same example earlier purchased at $450k. we get $1800/month mortgage payment. but if we use nominal 2000 price of $290k but at 7.5% interest rate, we end up with $1620/month mortgage payment. slightly overshooting but very close to payment that most would consider a reasonable purchase price that is at rental cost.
one key issue ultimately is we had dramatic government intervention, including the exceptional interest rate, which helped prop up home prices. therefore, pre-government-intervention predictions need to be adjusted, either with Rich’s 50% income adjustment or the interest rate adjustment or combination of both. logically the combination does sound like the best approach imho.
BMIT was always a product of pragmatic fluid approach to the constantly changing market environment, the pricing prediction was never meant to stay as a permanent matrix. in fact, I did mention as well that the nominal 2000 pricing approach would only work for a short time period, with inflation adjusted pricing approach being more of a long term approach. as I mentioned with my earlier post, I very much am open to better approaches and do find Rich’s income adjustment a lot more.
