PMI Expects Lower Housing Prices in 2011
[Update 1: Clarifies timeframe]
Home prices will be lower in two years compared to Q109 for much of the country’s metropolitan statistical areas, (MSAs) according to an economic trends report released by PMI Mortgage Insurance Co.
As many as 324 -- just over 85% -- of the country’s 381 MSAs are facing the risk of lower home prices in 2011. In addition, 28 of the top 50 MSAs are now in the report’s highest risk category.
Florida, California, Nevada and Arizona are home to 36 of the most risky MSAs, but other regions are not immune, according to PMI’s chief economist and strategist David Berson.
“Rapidly rising foreclosure and unemployment rates, continuing declines in house prices, and weakening consumer demand all worked to increase risk in the general economy, and the housing market specifically,” Berson says in a statement today. “As a result of the continued weakness in prices, and the relatively low level of interest rates, improvements in affordability across the nation’s MSAs will continue to incentivize repeat and first-time homebuyers back into the market.”
The MSAs most likely to see decreased prices are the Riverside-San Bernardino-Ontario, California, Miami-Miami Beach-Kendall, Florida, and Los Angeles-Long Beach-Glendale, CA regions.
Nashville-Davidson-Murfreesboro-Franklin, Tennessee, Charlotte-Gastonia-Concord, North Carolina/South Carolina and St. Louis, Missouri are the three MSAs least likely to see lower home prices.
The Economics and Real Estate Trends Report PMI releases every quarter is the only such report that forecasts home prices two years out. While the news from the second quarter edition may be bleak, there’s at least one silver lining – home affordability is up in 98% of the nation’s MSAs.
PMI’s affordability index reading was 133.3 in the first quarter of 2009, an increase from 120.6 in the fourth quarter of 2008. An index reading above 100 shows increased affordability, while anything below shows decreased.
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