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The PMI Risk Index

The PMI Risk Index is a statistical model based on certain measures of economic activity and conditions that PMI believes is predictive of the likelihood of home-price declines over the next two years. Factors used to derive the PMI Risk Index include the House Price Index from the Office of Federal Housing Enterprise Oversight, labor market statistics from the Bureau of Labor Statistics and the affordability index, which captures changes in the demand for housing as a function of local median household income and interest rates.

The PMI Risk Index scale ranges from one to 1,000, where a higher score indicates a higher likelihood of future home price declines. For example, a PMI Risk Index of 100 indicates a 10% chance of a decline in home prices over the next two years.

Because the PMI Risk Index scale is linear, if the PMI Risk Index for an MSA were to increase by 100%, say to 200 from 100, then, according to the PMI Risk Index model, the risk of home price decline has also doubled. Alternatively, if the score were to decline by 50%, for example to 50 from 100, the risk of home-price decline has also declined by 50%.

A complete copy of the latest PMI Economic and Real Estate Trends report containing the latest PMI Risk Index scores and analysis is available at:
PMI Risk Index by MSA
Risk
MSA Index
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San Jose, CA PMSA 526
Oakland, CA PMSA 485
Nassau-Suffolk, NY PMSA 468
Boston, MA-NH PMSA 467
San Francisco, CA PMSA 439
San Diego, CA MSA 387
New York, NY PMSA 349
Orange County, CA PMSA 344
Sacramento, CA PMSA 317
Detroit, MI PMSA 302
Providence-Fall River-Warwick, RI-MA MSA 264
Los Angeles-Long Beach, CA PMSA 258
Riverside-San Bernardino, CA PMSA 237
Denver, CO PMSA 227
Bergen-Passaic, NJ PMSA 219
Minneapolis-St Paul, ,MN-WI MSA 218
Fort Lauderdale, FL PMSA 180
Newark, NJ PMSA 174
Average 171
Miami, FL PMSA 145
Austin-San Marcos, TX , MSA 128
Dallas, TX PMSA 126
Tampa-St Petersburg-Clearwater, FL MSA 114
Charlotte-Gastonia-Rock Hill, NC-SC MSA 112
Washington, DC-MD-VA-WV PMSA 111
Seattle-Bellevue-Everett, WA PMSA 98
Portland-Vancouver, or-WA PMSA 98
Greensboro--Winston-Salem--High Point, NC MSA 97
Houston, TX PMSA 96
Phoenix-Mesa, AZ MSA 96
Orlando, FL MSA 88
Kansas City, MO-KS MSA 86
Fort Worth-Arlington, TX PMSA 84
Chicago, IL PMSA 84
Atlanta, GA MSA 82
Raleigh-Durham-Chapel Hill, NC MSA 76
Norfolk-Virginia Beach-Newport News, VA-NC MSA 72
Cleveland-Lorain-Elyria, Oh PMSA 71
St Louis, MO-IL MSA 71
Baltimore, MD PMSA 70
Milwaukee-Waukesha, WI PMSA 67
New Orleans, LA MSA 63
Las Vegas, NV-AZ MSA 62
Philadelphia, PA-NJ PMSA 62
Columbus, OH MSA 62
San Antonio, TX MSA 61
Nashville, TN MSA 61
Cincinnati, OH-KY-IN PMSA 59
Indianapolis, IN MSA 58
Salt Lake City-Ogden, UT MSA 58
Pittsburgh, PA MSA 55
 

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The bublle on the coast is just waiting to burst. It's going to be similar to the NASDAQ crash. Housing is overpriced and some suckers will be caught holding the bag...err home. :lol:
 

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Dampyre said:
The bublle on the coast is just waiting to burst. It's going to be similar to the NASDAQ crash. Housing is overpriced and some suckers will be caught holding the bag...err home. :lol:

I agree with you, that is coming soon
 

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surprised...

Im kind of surprised that Detroit is so high--I know these are metro areas--has housing in Detroit metro appreciated to the point that it is in danger of popping?

On the other hand, I've heard recently that the price of real estate in Las Vegas has doubled in the last few years--but by this scale, there is little danger of a significant drop in prices.

Any thoughts?
 

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The city of Detroit and some of the inner-ring suburbs have seen housing values go up significantly over the past few years. However, that's only because they were at rock-bottom prices. (A house that once cost $20,000 can now cost $80,000-$100,000) For example, when my parents bought their house in 1995, they paid $60,000. Right now it's on the market for $210,000.

From the first post it looks like they base these rankings in part on income and employment. Detroit's unemployment rate is one of the highest in the nation. That is probably one of the reasons it is so high.

But then, I don't think Detroit's unemployment rank will necessarily affect the housing market, though I have noticed a lot more "Reduced Price" signs on local real estate.
 

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A PMI Risk Index of 100 indicates a 10% chance of a decline in home prices over the next two years. That suggests that a PMI of 100 indicates a 90% chance of a price increase over the next 2 years. The PMI index would have to be over 500 to indicate a higher probability of decease than increase. Therefore, even the highest priced housing markets (excluding San Jose) have a greater chance of prices increasing over the next two years than prices decreasing. Conclusion - BUY NOW!
 

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Baltimore is right where it should be.

The average home in the State of Maryland costs more than the national average. The weird thing is how fast these numbers have soared. In 2002, a $400,000 home in Wheaton, Potomac, Chevy Chase, or Onley, sub-divsions of the state's priciest county, now cost $659,000.

The average home in the Baltimore Metro area costs about $260,000, 63% more than the same house cost in 1999. Some sub-divisions in certain Baltimore-area counties average home sales exceed $800,000.

The city of Baltimore has alot of catching up to do and it will...eventually. Its just a matter of time. Lots of northeast transients, work in DC or Baltimore and buy new residential properties in Baltimore at lower asking rates than in other northeast cities. For example, a waterfront condo starts at about $800K (thats the price of a entry-level condo at the Residences at the Ritz-Carlton, Inner Harbor and will probably be the starting rate at the Four Seasons Residences at Harbor East.) In Boston, DC, or New York, that same condo would be at least $1 million. Its sort of like Baltimore is the last city to reep the benfits of being in the BoWash corridor and finally its starting to catch up to other cities and its own Metro.
 

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Discussion Starter · #12 ·
tocoto said:
A PMI Risk Index of 100 indicates a 10% chance of a decline in home prices over the next two years. That suggests that a PMI of 100 indicates a 90% chance of a price increase over the next 2 years. The PMI index would have to be over 500 to indicate a higher probability of decease than increase. Therefore, even the highest priced housing markets (excluding San Jose) have a greater chance of prices increasing over the next two years than prices decreasing. Conclusion - BUY NOW!

not really,

some of that 90% might be prices stagnating.
 
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