Magazine article Mortgage Banking

Risk of Home-Price Declines Up in Most Metro Areas

Magazine article Mortgage Banking

Risk of Home-Price Declines Up in Most Metro Areas

Article excerpt

The risk of a home-price decline within the next two years increased last year in 39 of the nation's 50 largest metropolitan statistical areas (MSAs), while the risk of price declines did not fall in any MSAs, according to a survey by Walnut Creek, California-based PMI Mortgage Insurance Co.

PMI's Winter 2008 Risk Index also noted that 12 of the nation's top-50 MSAs are in PMI's highest risk rank, with a greater than 60 percent chance that home prices will be lower in two years.

Risk remains largely concentrated in a number of MSAs in California and Florida, as well as in Las Vegas, Nevada and Phoenix. Risk scores translate directly into an estimated percentage risk that home prices will be lower in two years, according to David W. Berson, chief economist and strategist for The PMI Group, also based in Walnut Creek, California.

"We're seeing an increasingly polarized market," said Berson. "The risk that home prices will be lower in two years has increased for many of the largest cities in the nation, although areas that saw only moderate home-price gains during the 2002-to-2005 period still generally have low risks of price declines."

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The MSAs with the highest risk scores were Riverside, California, at 94 percent; Las Vegas at 89 percent; and Phoenix at 83 percent, noted PMI. …

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