Thursday, July 16, 2009
by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - For home buyers, increased affordability is great. For sellers? Those lower prices? Not so much.
And who says real estate is so local?
Virtually all, 98 percent of the nation's 381 Metropolitan Statistical Areas (MSAs), reveal better home price affordability, but a full 60 percent of the Top 50 Metropolitan Statistical Areas (MSAs) have a greater than 50 percent chance that home prices will tumble further at the onset of 2011.
It gets worse.
According to PMI Mortgage Insurance Co's Second Quarter 2009 Economic and Real Estate Trends Report, as many as 324 -- approximately 85 percent -- of all MSAs are now facing some increased risk of lower home prices in 2011.
Florida, California, Nevada and Arizona continue to have the highest risk scores - 36 of the most risky MSAs are located in these four states - but an increased risk of lower future prices is now spreading across all regions of the nation.
Blame it on continued increases in both unemployment and foreclosure rates.
"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," said David Berson, PMI's Chief Economist and Strategist.
"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 incentivise repeat and first-time homebuyers back into the market," Berson added.
Among the 50 largest population centers, more than half, 28, are at the highest risk of lower home prices in 2011, compared to 2009, according to PMI.
For all 381 MSAs, the average Affordability Index reading was 133.3 in the first quarter of 2009, compared with a reading of 120.6 for the fourth quarter of 2008. At least that's an improvement.
The 10 riskiest cities for home price declines are Riverside-San Bernardino-Ontario, Los Angeles-Long Beach-Glendale and Santa Ana-Anaheim-Irvine, all in California; Miami-Miami Beach-Kendall, Boynton Beach, Orlando-Kissimmee, Tampa-St. Petersburg-Clearwater, Fort Lauderdale-Pompano Beach-Deerfield Beach, and West Palm Beach-Boca Raton, all in Florida; Las Vegas-Paradise (Para who?), Nevada and Phoenix-Mesa-Scottsdale, Arizona.
The 10 most stable areas were Cleveland-Elyria-Mentor and Columbus, OH; San Antonio, Houston-Sugar Land-Baytown, Dallas-Plano-Irving, and Fort Worth-Arlington, TX; Pittsburgh, PA; St. Louis, MO; Charlotte-Gastonia-Concord, NC-SC and Nashville-Davidson-Murfreesboro-Franklin, TN.
PMI's proprietary Affordability Index measures today's housing affordability in a given MSA relative to a 1995 baseline. An Affordability Index score exceeding 100 indicates that homes have become more affordable; a score below 100 means they are relatively less affordable.
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
National Offbeat News Examiner
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National Real Estate Examiner
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