Ele vem a caminho...mas quando? The risk of price declines has increased in 36.

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July 28:Industry Risk - Risky US Housing Markets Becoming Riskier

Author: Beth Haiken
Date: 2005-07-28


The risk of price declines has increased in 36 of the nation's 50 largest housing markets.

The risk of price declines has increased in 36 of the nation's 50 largest housing markets, according to the PMI US Market Risk Index, issued yesterday.

Joining Boston , MA and Long Island (Nassau-Suffolk), NY, four California markets -- San Diego , San Jose , Santa Ana , and Oakland -- crossed the 50 percent mark, raising to six the number of regions with a greater-than-50 percent chance of experiencing price declines. Nationwide, there exists a 21.3 percent probability of an overall house price decline, as measured within the next two years and across the 50 largest housing markets, up marginally from 20.2 percent last quarter.

"The latest PMI Market Risk Index numbers show that house price risk continues to be concentrated along the coasts, as it has been for some time," said Mark Milner, chief risk officer with the PMI Mortgage Insurance Co. "But what we are seeing with these numbers is that risk has increased in many non-coastal markets as well." Marco Van Akkeren, an economist with PMI Mortgage Insurance Co., explained, "We are continuing to witness record-pace home price appreciation in many markets without the necessary gains in income, home affordability and rent inflation. This is causing the current home price environment to diverge from long-term economic fundamentals, which cannot be sustained indefinitely."

The PMI US Market Risk Index is published quarterly by PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE: PMI ) as part of its Economic and Real Estate Trends (ERET) report. The Summer issue reports that:

Boston, MA and Long Island (Nassau-Suffolk), NY continue to top the list with scores of 553 and 540, respectively, up from 534 and 511 last quarter.
San Diego has jumped to third place, with a score of 528, up 61 points from last quarter's score of 467.
                    PMI US Market Risk Index by MSA

Boston-Quincy, MA                                            553
Nassau-Suffolk, NY                                            540
San Diego-Carlsbad-San Marcos, CA                     528
San Jose-Sunnyvale-Santa Clara, CA                     513
Santa Ana-Anaheim-Irvine, CA                              512
Oakland-Fremont-Hayward, CA                              509
Cambridge-Newton-Framingham, MA                       469
San Francisco-San Mateo-Redwood, CA                  459
Providence-New Bedford-Fall River, RI-MA                432
Riverside-San Bernardino-Ontario, CA                      422
Los Angeles-Long Beach-Glendale, CA                     421
Sacramento-Arden-Arcade-Roseville, CA                  419
Edison, NJ                                                          364
New York-Wayne-White Plains, NY-NJ                     326
Detroit-Livonia, Dearborn MI                                  295
Newark-Union, NJ-PA                                            251
Minneapolis-St Paul-Bloomington, MN-WI                  249
Fort Lauderdale-Pompano Beach- Deerfield Beach, FL 219
                Average                                                             213

Washington-Arlington-Alexandria, DC-MD-VA-WV       209
Denver-Aurora, CO                                               169
Warren-Farmington Hills-Troy, MI                            168
Miami-Miami Beach-Kendall, FL                                166
Tampa-St Petersburg-Clearwater, FL                        166
Las Vegas-Paradise, NV                                         130
Baltimore-Towson, MD                                           124
Austin-Round Rock, TX                                          116
Virginia Beach-Norfolk-Newport News, VA-NC            109
Atlanta-Sandy Springs-Marietta, GA                        106
Dallas-Plano-Irving, TX                                          99
Portland-Vancouver-Beaverton, OR-WA                    95
Orlando, FL                                                         94
Houston-Baytown-Sugarland, TX                            93
Chicago-Naperville-Joliet, IL                                   92
Phoenix-Mesa-Scottsdale, AZ                                92
St Louis, MO-IL                                                   90
Charlotte-Gastonia-Concord, NC-SC                        89
Kansas City, MO-KS                                             89
Fort Worth-Arlington, TX                                      80
Philadelphia, PA                                                  76
New Orleans-Metairie-Kenner, LA                           71
Milwaukee-Waukesha-West Allis, WI                       70
Cleveland-Elyria-Mentor, OH                                 69
San Antonio, TX                                                 68
Columbus, OH                                                    66
Seattle-Bellevue-Everett, WA                               64
Nashville-Davidson-Murfreesboro, TN                      64
Cincinnati-Middletown, OH-KY-IN                           60
Indianapolis, IN                                                  59
Memphis, TN-MS-AR                                           58
Pittsburgh, PA                                                    56
The MSAs that experienced the biggest change since last quarter are in Southern California: Riverside-San Bernardino-Ontario, which increased 83 points to 422; and Santa Ana-Anaheim-Irvine, which increased 81 points to 512. San Francisco-San Mateo-Redwood City saw the next biggest increase, up 64 points to 459.
In some areas house price appreciation has moved from center cities to surrounding areas, which may indicate a new trend. Riverside, CA; Providence, RI; Newark, NJ; and Edison, NJ all saw higher increases this quarter than their metropolitan centers (Los Angeles, CA; Boston, MA; and New York). 
The risk scores of some areas have dropped, including New York (which moved from 331 to 326), Detroit (379 to 295), Minneapolis-St. Paul-Bloomington, MN-WI (251 to 249), Fort Lauderdale-Pompano Beach (236-219), Denver-Aurora (208-169), and Miami (181-166). 
Seattle is the only West Coast MSA among the Risk Index's bottom ten, with a decrease from 84 last quarter to 64 this quarter. 
The five least risky areas remain Nashville-Davidson-Murfreesboro , TN ; Memphis, TN-MS-AR; Cincinnati-Middletown, OH-KY-IN; and Indianapolis , IN , with Pittsburgh last on the list with a score of 56, up marginally from last quarter (55)