WALNUT CREEK, Calif., June 19 /PRNewswire-FirstCall/ -- PMI Mortgage
Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today
released its Summer 2007 U.S. Market Risk Index(SM), which ranks the nation's
50 largest metropolitan statistical areas (MSAs) according to the likelihood
that home prices will be lower in two years. The enhanced index, which gives
additional weight to an area's recent price volatility, shows a shift in risk
toward Florida and California, as well as certain areas of the southwest. For
the 50 largest MSAs, the average score, weighted by population, was 346,
translating into a 34.6 percent chance that prices will be lower in two years.
"We're very pleased to introduce our updated Risk Index model," said Mark
F. Milner, Chief Risk Officer of PMI Mortgage Insurance Co. "Our new model
gives more weight to the recent volatility of an area's price movements and is
better suited for the vastly different market we are in today. Our prior
model, in contrast, was tuned to the rapidly appreciating market we were in
from 2002 to 2006."
An additional feature of the enhanced index is the introduction of risk
ranks, which group areas with consistent characteristics together. Riverside,
CA, Phoenix, AZ, Las Vegas, NV, and West Palm Beach, FL rank highest on the
index, with a 60 percent or greater chance that home prices will be lower in
two years. Five of the 11 MSAs facing a greater than 50 percent chance of a
price decline are in California (Los Angeles, Santa Ana, Oakland, Sacramento,
and San Diego) and four are in Florida (Orlando, Fort Lauderdale, Miami, and
Tampa); the other two are Boston, MA and Washington, D.C.
Texas, Ohio, Indiana, and Pennsylvania MSAs constitute the lowest ranked
group-those facing a less than 10 percent chance of lower prices.
"What the markets with the greatest risk of decline have in common is a
history of price volatility: rapidly rising rates of price appreciation above
the long-term average followed by a recent sharp slowdown in the rate of
appreciation," Milner explained. "Markets with a history of volatility are
more likely to see price declines in the future. MSAs with a history of low to
moderate rates of volatility in house price appreciation have a lower risk of
price declines."
According to information obtained from the Office of Federal Housing
Enterprise Oversight, the rate of price appreciation slowed in all but five of
the 50 largest MSAs, and only five saw appreciation in the double digits in
the first quarter of 2007, down from 26 in the first quarter of 2006. Nine
MSAs-West Palm Beach, FL, Oakland, Sacramento, and San Diego, CA, Boston and
Cambridge, MA, Detroit and neighboring Warren, MI, and Cleveland, OH-saw
slight year-over-year price declines. In most areas, the risk of price
declines continues to be balanced by strong economic fundamentals, including
low unemployment.
"The market's changing tide doesn't mean it is a bad time to buy or own a
house, but it is a reminder that homeownership is a long-term investment,"
said Milner. "For buyers, in many areas it's a much friendlier market than it
was even a year ago, but you need to choose your mortgage product carefully.
If you already own, you need to take the long view and have realistic
expectations about how much your property may appreciate. Building equity in a
home is still a great way to build wealth over the long term."
A complete copy of the Summer 2007 PMI Economic and Real Estate Trends
report, a podcast summarizing results, and an appendix that provides data for
all U.S. MSAs are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-publications.
PMI Summer 2007 PMI U.S. Market Risk Index
Rank MSA Score Rank MSA Score
1 Riverside-San Bernardino 3 Cambridge-Newton
-Ontario, CA 652 -Framingham, MA 336
1 Phoenix-Mesa- 3 Minneapolis-St. Paul
Scottsdale, AZ 646 -Bloomington, MN 322
1 Las Vegas-Paradise, NV 614 3 New York-White Plains,
-Wayne NY-NJ 322
1 West Palm Beach-Boca 3 Newark-Union, NJ 314
Raton-Boynton Beach, FL 607
2 Los Angeles-Long Beach- 4 Detroit-Livonia-
Glendale, CA 586 Dearborn, MI 284
2 Santa Ana-Anaheim- 4 Philadelphia, PA 237
Irvine, CA 577
2 Oakland-Fremont- 4 Warren-Troy-
Hayward, CA 572 Farmington Hills, MI 236
2 Orlando-Kissimee, FL 563 4 Atlanta-Sandy Springs-
Marietta, GA 212
2 Sacramento-Arden- 4 Milwaukee-Waukesha
Arcade-Roseville, CA 560 -West Allis, WI 189
2 San Diego-Carslbad- 4 St. Louis, MO-IL 182
San Marcos, CA 555
2 Fort Lauderdale-Pompano 4 Nashville-Davidson-
Beach-Deerfield Murfreesboro-
Beach, FL 542 Franklin, TN 177
2 Miami-Miami Beach- 4 Chicago-Naperville-
Kendall, FL 524 Joliet, IL 175
2 Tampa-St. Petersburg- 4 Denver-Aurora, CO 156
Clearwater, FL 506
2 Boston-Quincy, MA 501 4 Austin-Round Rock, TX 136
2 Washington-Arlington- 4 Kansas City, MO-KS 136
Alexandria, DC-VA-MC 500
3 San Jose-Sunnyvale- 4 Charlotte-Gastonia-
Santa Clara, CA 491 Concord, NC-SC 125
3 Virginia Beach-Norfolk- 4 Cleveland-Elyria-
Newport News, VA-NC 476 Mentor, OH 121
3 Nassau-Suffolk, NY 445 5 San Antonio, TX 102
3 San Francisco-San Mateo- 5 Cincinnati-Middletown,
Redwood City, CA 411 OH-KY-IN 97
3 Baltimore-Towson, MD 400 5 Columbus, OH 93
3 Providence-New Bedford- 5 Indianapolis- 84
Fall River, RI-MA 397 Carmel, IN
3 Jacksonville, FL 394 5 Houston-Sugar Land-
Baytown, TX 79
3 Portland-Vancouver- 5 Dallas-Plano-
Beaverton, OR 389 Irving, TX 75
3 Edison, NJ 362 5 Fort Worth-
Arlington, TX 74
3 Seattle-Bellevue- 5 Pittsburgh, PA 64
Everett, WA 343
About PMI's Economic & Real Estate Trends(SM) (ERET) and U.S. Market Risk
Index(SM)
The PMI Economic and Real Estate Trends (ERET) containing the US Market
Risk Index is published quarterly by PMI Mortgage Insurance Co., a subsidiary
of The PMI Group, Inc. (NYSE: PMI). The Risk Index is a proprietary
statistical model that measures geographic house price risk by predicting the
probability that home prices in the nation's 379 largest metropolitan
statistical areas (MSAs) and metropolitan statistical area divisions (MSADs)
(as measured by the House Price Index from the Office of Federal Housing
Enterprise Oversight (OFHEO)) will be lower in two years. The PMI U.S. Market
Risk Index is based on the OFHEO House Price Index , labor market statistics
from the Bureau of Labor Statistics, and the PMI Affordability Index, which
uses local per capita household income, home price appreciation, and a blended
mortgage rate to calculate the local share of mortgage payment to income
relative to its baseline year of 1995. The PMI U.S. Market Risk Index scale
ranges from one to 1,000 and translates to a percentage. For example, a score
of 100 indicates a 10 percent chance that home prices will be lower in two
years.
About PMI Mortgage Insurance Co.
PMI Mortgage Insurance Co. (PMI US), a subsidiary of The PMI Group, Inc.
(NYSE: PMI), provides residential mortgage insurance to mortgage lenders,
capital market participants, and investors throughout the United States. PMI
US is incorporated in Arizona, headquartered in Walnut Creek, CA, and licensed
in all 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin
Islands. By mitigating default risk, residential mortgage insurance expands
home ownership opportunities and assists financial institutions in reducing
the capital they are required to hold against low down payment mortgages. PMI
US is rated AA by Standard and Poor's, Aa2 by Moody's, and AA+ by Fitch. For
more information: www.pmi-us.com.
Cautionary Statement: Statements in this press release that are not
historical facts or that relate to future plans, events or performance are
'forward-looking' statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, but
are not limited to, PMI's U.S. Market Risk Index and any related discussion,
and statements relating to future economic and housing market conditions.
Forward-looking statements are subject to a number of risks and uncertainties
including, but not limited to, the following factors: changes in economic
conditions, economic recession or slowdowns, adverse changes in consumer
confidence, declining housing values, higher unemployment, deteriorating
borrower credit, changes in interest rates, or a combination of these factors.
Readers are cautioned that any statements with respect to future economic and
housing market conditions are based upon current economic conditions and,
therefore, are inherently uncertain and highly subject to the changes in the
factors enumerated above. Other risk and uncertainties are discussed in the
Company's filings with the Securities and Exchange Commission, including our
report on Form 10-K for the year ended December 31, 2006 and Form 10-Q for the
quarter ended March 31, 2007.
SOURCE The PMI Group, Inc.
CONTACT:
Investors,
Bill Horning of The PMI Group, Inc.,
+1-925-658-6193,
or
Media,
Beth Haiken of The PMI Group, Inc.,
+1-925-658-6192
Web site: http://www.pmigroup.com
