PMI Mortgage Insurance Co. Releases Autumn Risk Index.WALNUT CREEK Walnut Creek, residential city (1990 pop. 60,569), Contra Costa co., W Calif., in the San Francisco Bay area; inc. 1914. It is the trade and shipping center of an extensive agricultural area where walnuts are among the major product. , Calif. -- PMI See Private Mortgage Insurance. Mortgage Insurance Co., a subsidiary of The PMI Group The PMI Group (NYSE: PMI) is a provider of credit enhancement products that promote homeownership and the provision of services essential to the building of strong communities. , Inc. (NYSE NYSE See: New York Stock Exchange :PMI), today released its autumn 2004 Risk Index. PMI's Risk Index represents PMI's view on geographic house-price risk and the probability of a regional home-price decline as measured over the next two years. Based on PMI's Risk Index model, as of November 2004, the average risk value of the 50 largest MSAs is 186. This implies that on average, there exists an 18.6 percent probability of an overall house price decline, as measured within the next two years and across the 50 largest housing markets. The autumn 2004 average risk value of the 50 largest MSAs increased sequentially, quarter-over-quarter, by 8.8 percent. As of August 2004, PMI Risk Index data showed that the average risk value of the 50 largest MSAs was 171, which implied a 17.1 percent probability of an overall house price decline, measured within the next two years and across the 50 largest housing markets. Analysts at PMI have attributed the average risk value's sequential increase to homebuyers' anticipation of mortgage interest rate increases from historically low levels, which have spurred home sales and home prices. PMI analysts suggested that slow income growth was another factor. PMI analysts conclude that lower affordability may eventually have an impact on the demand for housing and the sustainability of record appreciation, though their degrees and effects will vary by region. The 5 lowest ranked, least risky MSAs are Cincinnati, Nashville, Salt Lake City, Indianapolis and Pittsburgh. In these markets, homes have become more affordable relative to three years ago, mainly because of the impact of lower interest rates on affordability. The Northeast and Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, MSAs registered the biggest change, as their Risk Index values and ranking have risen compared to the previous quarter. These two regions have experienced especially strong appreciation in recent quarters. Boston and Nassau-Suffolk, NY are the second and fourth riskiest MSAs. Affordability, which is one of the key variables in measuring the Risk Index model, declined the fastest in four Southern California MSAs. San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Oakland, and San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden are three of the top five MSAs at the top of the risk index list. The three high-risk Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern MSAs have slightly lowered their risk from the previous quarter. While experiencing stagnant economic growth in high-tech sectors, economic conditions in San Jose, Oakland, and San Francisco have slightly improved with lower unemployment rates and less negative employment growth. The region, however, continues to lead the nation in house-price risk with slower job growth and lower housing affordability compared to the national average.
PMI Risk Index by MSA
Risk Risk
MSA Index MSA Index
--- ----- --- -----
San Jose, CA PMSA 509 Greensboro--Winston-Salem--
High Point, NC MSA 119
Boston, MA-NH PMSA 483 Houston, TX PMSA 109
Oakland, CA PMSA 473 Kansas City, MO-KS MSA 107
Nassau-Suffolk, NY PMSA 470 Phoenix-Mesa, AZ MSA 105
Portland-Vancouver, or-WA
San Francisco, CA PMSA 419 PMSA 105
San Diego, CA MSA 405 Orlando, FL MSA 103
New York, NY PMSA 383 Atlanta, GA MSA 99
Fort Worth-Arlington, TX
Orange County, CA PMSA 357 PMSA 94
Sacramento, CA PMSA 355 Chicago, IL PMSA 92
Los Angeles-Long Beach, CA Norfolk-Virginia Beach-
PMSA 333 Newport News, VA-NC MSA 87
Providence-Fall River-
Warwick, RI-MA MSA 330 St Louis, MO-IL MSA 86
Detroit, MI PMSA 318 Baltimore, MD PMSA 86
Riverside-San Bernardino, CA Raleigh-Durham-Chapel Hill,
PMSA 264 NC MSA 84
Cleveland-Lorain-Elyria, OH
Denver, CO PMSA 255 PMSA 76
Minneapolis-St Paul, ,MN-WI
MSA 251 New Orleans, LA MSA 75
Bergen-Passaic, NJ PMSA 248 Milwaukee-Waukesha, WI PMSA 71
Fort Lauderdale, FL PMSA 217 Columbus, OH MSA 69
Miami, FL PMSA 193 San Antonio, TX MSA 69
Newark, NJ PMSA 191 Philadelphia, PA-NJ PMSA 67
Average 186 Las Vegas, NV-AZ MSA 66
Washington, DC-MD-VA-WV PMSA 137 Cincinnati, OH-KY-IN PMSA 64
Charlotte-Gastonia-Rock
Hill, NC-SC MSA 136 Nashville, TN MSA 64
Tampa-St Petersburg- Salt Lake City-Ogden, UT
Clearwater, FL MSA 135 MSA 61
Austin-San Marcos, TX MSA 133 Indianapolis, IN MSA 60
Dallas, TX PMSA 131 Pittsburgh, PA MSA 58
Seattle-Bellevue-Everett, WA
PMSA 120
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 labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience statistics from the Bureau of Labor Statistics Bureau of Labor Statistics (BLS) A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices and many other variables. and the affordability index, which captures changes in the demand for housing as a function of local median household income The median household income is commonly used to provide data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more. 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 (Metropolitan Service Area) An urban area with at least 50,000 people plus surrounding counties. There are 306 MSAs and 428 RSAs (rural service areas) in the U.S. MSAs and RSAs are used to allocate cellular licenses. were to increase by 100%, say to 200 from 100, then, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. 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: http://www.pmigroup.com/lenders/eret.html About The PMI Group, Inc. The PMI Group, Inc., headquartered in Walnut Creek, California Walnut Creek is a largely affluent suburb several miles east of Oakland in Contra Costa County, California, USA, in the East Bay region of the San Francisco Bay Area. While not as large as the neighboring Concord, Walnut Creek serves as the business and entertainment hub for the , is an international provider of credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing products that promote homeownership and facilitate mortgage transactions in the capital markets. Through its wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. and unconsolidated strategic investments, the company offers residential mortgage insurance and credit enhancement products domestically and internationally, financial guaranty and financial guaranty reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. . 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements include, but are not limited to, PMI's 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. Other risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including our report on Form 10-Q Form 10-Q See 10-Q. for the period ended June 30, 2004. |
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