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PIMCO's HOUSING PROJECT

In its 4Q06 Market Review & Outlook, PIMCO looks at how housing, and other factors, may affect the economy over the next several quarters

The PIMCO Housing Project in Action

PIMCO’s Housing Project Research Team focuses on three areas to forecast the future of the property market and determine its implications for the firm’s portfolios:

1. Local Data from Key Markets
Members of the Housing Project Research Team went to 20 U.S. cities, looking at properties for sale and developing relationships with real estate brokers, appraisers, and mortgage brokers. PIMCO’s contacts on the ground provide monthly updates on changes in housing prices, the number of days houses stay on the market, trends in sales volume and buyer traffic.

2. High Frequency Economic and Housing Data
The Housing Project collects and analyzes the timeliest public data available on the economy and housing market (known as “high frequency” data). The research team focuses on two specific goals: understanding seasonal factors that influence data and identifying key data that lead consumer behavior.

3. Mortgage Lending as a Barometer of Housing
The finance industry contributed significantly to growth in home prices over the last three years, particularly in expensive areas, by offering new types of mortgages, such as interest-only loans, that made homes more affordable. These are then packaged as securities and sold to institutional investors willing to accept the credit risk in exchange for higher return potential. Every week, PIMCO analyzes a wide range of prices, rates and volumes for indications of changes in demand for credit risk or mortgage lending.

The PIMCO Housing Project Research Team

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