Mortgage insurers PMI published their latest home-price risk study … and guess who’s near the top? PMI economists juggle price momentum, affordability, regional economics and mortgage-payment problems to come up with their index, that translates to chance of home-price declines in the next two years in the 50 top U.S. markets. Here’s the dirty dozen, PMI’s riskiest …
1. Inland Empire: 94%
2. Vegas: 89%
3. Phoenix: 83%
4. OC: 81%
5. LA: 79%
6. Fort Lauderdale: 78%
7. Orlando: 74%
8. Sacramento: 73%
9. Tampa-St. Pete: 72%
10. West Palm Beach: 71%
11. San Diego: 69%
12. Oakland: 65%
PMI says: “Are we nearing the end of the current housing downturn? We don’t think so, given the magnitude of the run up in housing (with no significant housing downturn since the recession of 1991–92). That doesn’t mean that the level of housing activity has to fall to 1992 levels—after all there are almost 22 million more households today than there were back then, with higher income levels and lower unemployment rates. But the unsustainable surge of 2002–05 has to be worked off, and that’s what’s going on in the housing market today. The famous economist Herb Stein once noted, ‘If something cannot go on forever, it will stop.’ That is probably the best way to view the housing market today. We know that given the combination of demographics, job and income growth, and the level of interest rates, housing demand can’t fall without bounds.”
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Another vote against a 2008 bottom: “despite lower mortgage rates and continued increases in income growth, the job market is weakening and overall credit conditions in mortgage markets have tightened….we think it is unlikely that house prices will turn around in 2008.” And they actually back up their hypothesis (hint hint),
Just more of the same news that the troll will ignore.
Prices still don’t match lending. Now lenders are adding mandatory mortgage insurance making payments higher still.
“But the unsustainable surge of 2002–05 has to be worked off”
Wow 2002 prices? that’s worse than I thought.
It looks like we are very close to being back in 2004. Deals already appear to be in 2004 territory; the Median should be there soon.
In the 90s people walked when they had 20% down and were under water….. what is going to happen with the 0% down-ers?
Wow look at the inland empire:
Blood in the streets out there right now.
Note to self:
When you buy a house, make sure its next to the Jobs & Ocean.
Here’s another brilliant spin on this: If something has to stop, it won’t go on forever. Did Aristotle say that or was it Plato?
Looks like I have a little longer to wait at least a year maybe year and
a half. I’m gettin good at this patience gig. The more the houses fall the more I save and with the promotion I just got.
OOP’s I forgot no more easy money. Could be even longer till I buy.
2002 prices? No way.
I see 1999 prices.
Julie Lance
Aren’t you just talking about perception? Wasn’t perception that lead to the housing bubble? “Real Estate only goes up” or “if you don’t get in now then you might be priced out forever”? Now maybe the coastal cities might fair well, the likes of NB and Laguna Beach, but most of the southern OC coastal cities really bloomed during the last few yrs so why wouldn’t they have that much trouble? Exotic finance was used to get homeowners into those houses just as they were for the homes in Santa Ana and Anaheim.
Don’t get me wrong, guys. I’m not saying everything’s just peachy on the coast in OC. What I am saying is in comparison to LA and San Diego, we’re a less “risky” market overall.
No doubt “Pop!” went the bubble… just not sure our bubble was as large as some others went it burst.
4 months ago PMI had OC way farther down the list. Private Mortgage insurance companies are the next to go belly up. its easy to say the market sucks when it already sucks - where were the PMI experts when they were insuring jumbo loans with overvalued apprasials and no income documentation? These guys are supposed to be the eyes behind the eyes and they were blinded by the $$$$$.
Julie - what percentage of OC do those cities make up?
case closed
Julie, Many on the coast are overextended also.
It’s hard to keep up with the Jones in Newport, really hard.
Option ARMs made it easy for many to move-up and the day of reckoning is coming.
San Francisco and San Jose and the penninsula cities up north are often left off these lists. The nicer areas up there will get hit hard, too, they are just about two full years behind San Diego, though.
Many of them think their area is immune. In fact, so many thought it was immune, they nudged the prices up to the stratosphere. Now, there are few buyers who can afford to buy, so prices will fall back down to historically “normal” levels, ala just a tad more return per year than inflation, on average. Wait and see…
Where would you put your money (if you being forced to buy)? OC, LA, or SD?