Last week, PMI Mortgage Insurance Co released its Summer 2008 U.S. Market Risk Index, 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 bad news? The Phoenix real estate market has (according to PMI) a 79.6 percent probability of home prices declining over the next two years. This places Phoenix at #11 (and be glad you’re not in Riverside-San Bernadino–Ontario California which sports a whopping 95.5% Risk Index…).
The good news? That’s down from an 82.3% chance in Q4 2007. Overall, 35 of the nation’s 50 largest MSAs and 326 out of all 381 MSAs experienced a decline in Risk Index since Q4 2007. In other, more cheery words, there seems to be less risk of home price declines than when last analyzed in late 2007.
Interestingly, Phoenix and Las Vegas were the only “high risk” MSAs to show a decline in Risk Index. California in fact showed an increased risk in 25 of their 28 MSAs. Ouch.
Of note: Phoenix continues to show a very low unemployment rate (3.67% in this report). High employment levels (or conversely, low unemployment rates) are generally considered a positive economic indicator and bode well for housing demand.
This is an interesting report, jammed full of data. The data is also summarized nicely, though they do say things like this:
But the picture of home price performance changes significantly if the 59 MSAs located in California, Florida, Nevada, and Arizona are removed from the total.
Statements like that are just beyond stupid. Of course things change significantly if you simply ignore 59 MSAs in the four hardest hit states. My college stats professor would be wanting to squish the numbskull that wrote that nugget.
Here is a list of the Top 14 MSA’s with the greatest risk of declining home prices:
The entire Economic Real Estate Trends report in PDF format is available — Chart-o-holic alert!
Go forth and absorb your daily dose of real estate statistics.