WALNUT CREEK, Calif., Jan. 24 /PRNewswire-FirstCall/ -- Continued
deceleration in home price appreciation and decreased affordability caused the
risk of home price declines to rise in cities across the country, PMI Mortgage
Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI) reported
today. Economic fundamentals remain strong in most areas, however, with
historically low unemployment rates and strong job growth, which helps
mitigate the risk of price declines.
"Years of rapid appreciation have made homes less affordable in many
areas, and that's not sustainable over the long term, so what we are seeing is
not unexpected," said Mark F. Milner, Chief Risk Officer of PMI Mortgage
Insurance Co. "Over time, moderating appreciation will bring prices back in
line with economic fundamentals, particularly incomes, bringing the market
back to a healthy balance."
PMI U.S. Market Risk Index(SM) scores increased for 34 of the nation's 50
largest metropolitan statistical areas (MSAs), resulting in an increase in the
average score from 328 to 342, which translates into a 34.2 percent chance
that home prices will decline in two years. Nineteen MSAs face a greater than
50 percent chance that home prices will decline, up from 18 last quarter.
While year-over-year appreciation remained in the double digits in 14 of
the 50 largest MSAs, the rate of appreciation slowed in 43. Three MSAs-Detroit
and neighboring Warren, MI, and Cambridge, MA-saw slight year over year price
declines.
The risk of price declines continues to be concentrated in California and
along the Eastern Seaboard. Of the 19 MSAs facing a greater than 50 percent
chance of a price decline, eight are located in California, eight are in the
Northeast, and two are in Florida.
In addition to the PMI U.S. Market Risk Index showing the risk of price
declines, PMI's Fall 2006 Economic and Real Estate Trends(SM) (ERET) examines
major regional trends, as well as statistics commonly used to judge the
housing market's current health and future prospects.
In most areas, the risk of price declines continues to be balanced by
strong economic fundamentals. With the exception of the upper Midwest,
unemployment remains low in most of the country and job growth is positive. Of
the top 50 MSAs all but four-Detroit and Warren, MI, Cleveland, OH, and
Indianapolis, IN-saw employment growth. New Orleans led the nation in
employment growth at 8.37 percent over the past year, followed closely by Las
Vegas, NV at 5.38 percent.
A complete copy of the Winter 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 .
Winter 2007 PMI U.S. Market Risk Index
Sacramento-Arden-Arcade- Detroit-Livonia-
Roseville, CA 604 Dearborn, MI 389
San Diego-Carlsbad- Warren-Troy-
San Marcos, CA 603 Farmington Hills, MI 247
Oakland-Fremont-
Hayward, CA 603 Philadelphia, PA 206
Santa Ana-Anaheim- Portland-Vancouver-
Irvine, CA 602 Beaverton, OR-WA 197
Nassau-Suffolk, NY 601 Atlanta-Sandy Springs-
Marietta, GA 190
Riverside-San Bernardino-
Ontario, CA 600 Denver-Aurora, CO 188
Los Angeles-Long Beach- Seattle-Bellevue-
Glendale, CA 597 Everett, WA 167
Boston-Quincy, MA 595 Milwaukee-Waukesha-
West Allis, WI 143
Providence-New Bedford- Chicago-Naperville-
Fall River, RI-MA 595 Joliet, IL 140
San Jose-Sunnyvale-
Santa Clara, CA 592 St. Louis, MO-IL 137
San Francisco-San Mateo-
Redwood City, CA 588 Kansas City, MO-KS 114
Edison, NJ 586 Austin-Round Rock, TX 107
Fort Lauderdale-Pompano New Orleans-Metairie-
Beach-Deerfield Beach, FL 579 Kenner, LA 106
Washington-Arlington- Charlotte-Gastonia-
Alexandria, DC-VA-MD-WV 568 Concord, NC-SC 97
New York-White Plains- Nashville-Davidson-
Wayne, NY-NJ 566 Murfreesboro, TN 83
Cambridge-Newton- Houston-Sugar Land-
Framingham, MA 563 Baytown, TX 82
Las Vegas-Paradise, NV 550 Dallas-Plano-Irving, TX 82
Newark-Union, NJ-PA 549 Cleveland-Elyria-
Mentor, OH 78
Miami-Miami Beach-
Kendall, FL 535 San Antonio, TX 75
Baltimore-Towson, MD 498 Columbus, OH 74
Tampa-St. Petersburg-
Clearwater, FL 494 Fort Worth-Arlington, TX 73
Virginia Beach-Norfolk- Cincinnati-
Newport News, VA-NC 491 Middletown, OH-KY-IN 71
Phoenix-Mesa-
Scottsdale, AZ 448 Memphis, TN-MS-AR 68
Orlando-Kissimmee, FL 447 Indianapolis-Carmel, IN 64
Minneapolis-St. Paul-
Bloomington, MN-WI 402 Pittsburgh, PA 62
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 of a regional decline in home prices in the nation's 50 largest
metropolitan statistical areas (MSAs) and metropolitan statistical area
divisions (MSADs) over the next two years. The PMI U.S. Market Risk Index is
based on the House Price Index from the Office of Federal Housing Enterprise
Oversight (OFHEO), labor market statistics from the Bureau of Labor
Statistics, and the PMI Affordability Index, which uses local median household
income, home price appreciation, and the price of a conventional mortgage 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 of a decline in home prices over the next two years. A higher score
indicates a higher likelihood of future home price declines. The Risk Index
scale is linear. In other words, an increase in risk index score of 100
percent (for example, from 100 to 200) indicates that the risk of home price
decline has doubled. Conversely, a decline in Risk Index score by 50 percent
(from 100 to 50) indicates that the risk of home price decline has declined by
50 percent. The Affordability Index score is linear against a baseline of 100
in 1995. For example, an Affordability Index score of 85 means that the median
home in that area is 15 percent less affordable than it was in 1995.
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, 2005 and Form 10-Q for the
quarter ended September 30, 2006.
SOURCE The PMI Group, Inc.
01/24/2007
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
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Web site: http://www.pmigroup.com
(PMI)
