PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc. released its Fall 2007 U.S. Market Risk Index(SM) today. The report ranks the nation’s 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years.
Mark F. Milner, Chief Risk Officer of PMI Mortgage Insurance Co. said “Home price appreciation rates have slowed significantly and have gone negative in some areas. This will cause some pain in the immediate future. But in order to restore a healthy market balance, prices need to come back in line with incomes. The drop in appreciation rates and slight improvements in affordability caused the average risk score to decline 17 points, the first drop since the fourth quarter of 2004. Despite this slight drop, the risk of price declines remains high nationally, and particularly high in California, the Southwest, and Florida.”
The report went on to say that if you are considering purchasing or already own a home, treating it like a long term investment, will probably see you through the decline. If you are an investor, speculator, or developer, the decline in value may erode the perceived equity in the properties you hold or are considering. Not I use the term perceived equity. Often there is a vast difference in the market, usually differentiated by asking price and selling price.
For more information on the news release go to http://media.corporate-ir.net/media_files/irol/63/63356/Fall_2007_ERET.pdf