WALNUT CREEK, Calif., Oct. 9 /PRNewswire-FirstCall/ -- PMI Mortgage
Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today
released its Fall 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. For the 50 largest MSAs, the average
score, weighted by population, was 329, translating into a 32.9 percent chance
that prices will be lower in two years. The average risk score for the 50
largest MSAs was down 17 points, or 1.7 percentage points, from the previous
quarter. The index shows that declining home prices have improved
affordability, which led to minor decreases in risk scores for most MSAs.
"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," said Mark F. Milner, Chief Risk Officer of PMI Mortgage
Insurance Co. "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."
Eleven MSAs face a greater than 50 percent chance that home prices will
decline, down from 15 MSAs last quarter. Risk remains largely concentrated in
California, Florida, Las Vegas, NV, and Phoenix, AZ, and 29 of the nation's
largest MSAs still have a better than 30 percent chance for future price
declines.
The MSAs that experienced the most significant drops in risk were Boston,
MA (down 101 points to 400), West Palm Beach, FL (down 75 points to 532), and
Phoenix, AZ (down 71 points to 575). However, risk scores for all three
markets remain substantially higher than the national average.
The rate of home price appreciation declined in the second quarter. Since
peaking in the second quarter of 2005, appreciation rates have decelerated in
seven of the last eight quarters. At the end of the second quarter, prices
appreciated at a year-over-year rate of 3.2 percent, a drop from the previous
quarter's year-over-year rate of 4.5 percent.
Affordability improved in 299 MSAs, and in all but two of the 50 largest
MSAs. The average Affordability Index score for the 50 largest MSAs increased
to 88.9 from 86.1 in the first quarter. Improvements in home price
affordability across most MSAs resulted from declines in the rate of home
price appreciation, coupled with steady income growth.
In addition to the PMI U.S. Market Risk Index showing the risk of price
declines, PMI's Fall 2007 Economic and Real Estate Trends(SM) (ERET) also
examines the value of homeownership at the national level and focuses on three
of the worst regional housing price declines over the last 25 years.
"What we found is that owning a home for ten years during that period was
a good strategy to build wealth and increase net worth over the long term,"
said Milner. "The market's changing tide doesn't necessarily mean it is a bad
time to buy or own a house, but it is a reminder that homeownership is a
long-term investment. People who are considering buying, as well as those who
already own, need to take the long-term view."
A complete copy of the Fall 2007 PMI ERET report and an appendix that
provides data for all U.S. MSAs is available at
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-Publications.
PMI Fall 2007 PMI U.S. Market Risk Index
Rank MSA Score Rank MSA Score
Riverside-San
Bernardino-Ontario, Detroit-Livonia-
1 CA 608 3 Dearborn, MI (MSAD) 328
Cambridge-Newton-
Las Vegas-Paradise, Framingham, MA
2 NV 587 3 (MSAD) 323
Santa Ana-Anaheim- Minneapolis-St. Paul-
2 Irvine, CA (MSAD) 579 3 Bloomington, MN-WI 313
Warren-Troy-
Phoenix-Mesa- Farmington Hills, MI
2 Scottsdale, AZ 575 3 (MSAD) 300
Los Angeles-Long New York-White
Beach-Glendale, CA Plains-Wayne, NY-NJ
2 (MSAD) 536 4 (MSAD) 287
West Palm Beach-Boca
Raton-Boynton Beach, Newark-Union, NJ-PA
2 FL (MSAD) 532 4 (MSAD) 274
Sacramento-Arden- Philadelphia, PA
2 Arcade-Roseville, CA 522 4 (MSAD) 227
San Diego-Carlsbad- Atlanta-Sandy
2 San Marcos, CA 521 4 Springs-Marietta, GA 213
Oakland-Fremont- Chicago-Naperville-
2 Hayward, CA (MSAD) 516 4 Joliet, IL (MSAD) 196
Fort Lauderdale-
Pompano Beach-
Deerfield Beach, FL Milwaukee-Waukesha-
2 (MSAD) 507 4 West Allis, WI 191
2 Orlando-Kissimmee, FL 506 4 St. Louis, MO-IL 184
Nashville-Davidson--
Miami-Miami Beach- Murfreesboro--
3 Kendall, FL (MSAD) 466 4 Franklin, TN 179
Tampa-St. Petersburg-
3 Clearwater, FL 462 4 Kansas City, MO-KS 159
Washington-Arlington-
Alexandria, DC-VA-MD-
3 WV (MSAD) 439 4 Denver-Aurora, CO 156
San Jose-Sunnyvale-
3 Santa Clara, CA 433 4 Austin-Round Rock, TX 154
Providence-New
Bedford-Fall River, Cleveland-Elyria-
3 RI-MA 427 4 Mentor, OH 154
Nassau-Suffolk, NY Charlotte-Gastonia-
3 (MSAD) 427 4 Concord, NC-SC 147
Virginia Beach-
Norfolk-Newport News,
3 VA-NC 418 4 Columbus, OH 129
San Francisco-San
Mateo-Redwood City, Cincinnati-
3 CA (MSAD) 405 4 Middletown, OH-KY-IN 127
Boston-Quincy, MA
3 (MSAD) 400 4 San Antonio, TX 121
Indianapolis-Carmel,
3 Jacksonville, FL 377 4 IN 101
Dallas-Plano-Irving,
3 Baltimore-Towson, MD 347 5 TX (MSAD) 95
Seattle-Bellevue- Houston-Sugar Land-
3 Everett, WA (MSAD) 345 5 Baytown, TX 94
Fort Worth-Arlington,
3 Edison, NJ (MSAD) 335 5 TX (MSAD) 89
Portland-Vancouver-
3 Beaverton, OR-WA 333 5 Pittsburgh, PA 85
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: http://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 June 30, 2007.
SOURCE PMI Mortgage Insurance Co.
CONTACT:
Investors,
Bill Horning
of PMI Mortgage Insurance Co.,
+1-925-658-6193,
or
Media,
Nate Purpura
of PMI Mortgage Insurance Co.,
+1-925-658-6247
Web site:
http://www.pmigroup.com
http://www.pmi-us.com
