PMI Releases Winter 2008 Risk Index
WALNUT CREEK, Calif., Jan. 15 /PRNewswire-FirstCall/ -- PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Winter 2008 U.S. Market Risk Index(SM), 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 U.S. Market Risk Index shows that the risk of price declines increased in 39 of these MSAs and did not fall in any. The Winter 2008 Risk Index is based on third-quarter Office of Federal Housing Enterprise Oversight (OFHEO) data. The index has been modified to make foreclosure rates and excess housing supply more explicit components of the model. "We're excited to introduce the enhanced PMI Risk Index," said David W. Berson, Chief Economist and Strategist for The PMI Group. "We've taken a model that was already state-of-the-art and improved it by making these two key factors more predictive components. We expect the new model to provide an improved reading on the chances of house price declines by MSA." Twelve of the nation's Top 50 MSAs are in PMI's highest risk rank, with a greater than 60 percent chance that home prices will be lower in two years. Risk remains largely concentrated in a number of MSAs in California and Florida, as well as in Las Vegas, NV, and Phoenix, AZ. Risk scores translate directly into an estimated percentage risk that home prices will be lower in two years. The MSAs with the highest risk scores were Riverside, CA (94 percent), Las Vegas (89 percent), and Phoenix (83 percent). "We're seeing an increasingly polarized market," Berson commented. "The risk that home prices will be lower in two years has increased for many of the largest cities in the nation, although areas that saw only moderate home price gains during the 2002 to 2005 period still generally have low risks of price declines. The inclusion of supply/demand factors and foreclosure data in our model has highlighted the difference between these areas, generally resulting in lower scores for low-risk areas and higher scores for high-risk areas. It has not significantly changed the assessment of risk. Areas that saw significant price run ups during the 2002 to 2005 period are at a much higher risk of price declines than those that had a more moderate experience. Additionally, the model is showing the impact of a significant third quarter weakening in housing and mortgage markets, principally certain cities in California and Florida."RELATED LINKS
PMI Winter 2008 PMI U.S. Market Risk Index Rank MSA Score Rank MSA Score 1 Riverside-San 4 Warren-Troy-Farmington Bernardino-Ontario, CA 94 Hills, MI-NJ 11 1 Las Vegas-Paradise, NV 89 4 Cambridge-Newton- Framingham, MA 11 1 Phoenix-Mesa-Scottsdale, 4 Portland-Vancouver- AZ 83 Beaverton, OR 10 1 Santa Ana-Anaheim-Irvine, 5 New York-White Plains- CA 81 Wayne, NY 10 1 Los Angeles-Long Beach- 5 Seattle-Bellevue- Glendale, CA 79 Everett, WA 7 1 Fort Lauderdale-Pompano 5 Newark-Union, NJ 7 Beach-Deerfield Beach, FL 78 1 Orlando-Kissimee, FL 74 5 Atlanta-Sandy Springs- Marietta, GA 3 1 Sacramento-Arden-Arcade- 5 Philadelphia, PA 3 Roseville, CA 73 1 Tampa-St. Petersburg- 5 Chicago-Naperville- Clearwater, FL 72 Joliet, IL 3 1 West Palm Beach-Boca 5 Milwaukee-Waukesha-West Raton-Boynton Beach, FL 71 Allis, WI 2 1 San Diego-Carslbad-San 5 Nashville-Davidson- Marcos, CA 69 Murfreesboro-Franklin, TN 2 1 Oakland-Fremont-Hayward, 5 St. Louis, MO-IL 2 CA 65 2 Miami-Miami Beach- 5 Denver-Aurora, CO 1 Kendall, FL 58 2 Providence-New Bedford- 5 Cleveland-Elyria-Mentor, Fall River, RI-MA 46 OH 1 2 San Jose-Sunnyvale-Santa 5 Charlotte-Gastonia- Clara, CA 44 Concord, NC-SC >1 3 Jacksonville, FL 40 5 Kansas City, MO-KS >1 3 Washington-Arlington- 5 Austin-Round Rock, TX >1 Alexandria, DC-VA-MC 37 3 Nassau-Suffolk, NY 33 5 Columbus, OH >1 3 San Francisco-San Mateo- 5 Cincinnati-Middletown, Redwood City, CA 25 OH-KY-IN >1 3 Edison, NJ 23 5 Indianapolis-Carmel, IN >1 3 Boston-Quincy, MA 22 5 San Antonio, TX >1 4 Virginia Beach-Norfolk- 5 Houston-Sugar Land- Newport News, VA-NC 19 Baytown, TX >1 4 Minneapolis-St. Paul- 5 Pittsburgh, PA >1 Bloomington, MN 19 4 Detroit-Livonia-Dearborn, 5 Dallas-Plano-Irving, TX >1 MI 17 4 Baltimore-Towson, MD 12 5 Fort Worth-Arlington, TX >1 Housing affordability was largely unchanged during the third quarter, according to PMI's proprietary Affordability Index(SM), which measures how affordable homes are today in a given MSA relative to a baseline of 1995. An Affordability Index score exceeding 100 indicates that homes have become more affordable while a score below 100 means they are less affordable. Nationally, the weighted average Affordability Index reading was 95.53, compared to the second quarter reading of 95.96. All told, some 161 MSAs saw improvements in affordability while 220 experienced a decline. In addition to the PMI U.S. Market Risk Index showing the risk of price declines, PMI's Winter 2008 Economic and Real Estate Trends(SM) (ERET) also examines the issue of how long the current downturn in the housing market may last, using historical examples. A complete copy of the Winter 2008 PMI ERET report and an appendix that provides data for all U.S. MSAs is available at: http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-Publications. About PMI's Economic & Real Estate Trends(SM) (ERET) and U.S. Market Risk Index(SM) The PMI Economic and Real Estate Trends (ERET) containing the US Market Risk Index is published quarterly by PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE: PMI). The Risk Index is a proprietary statistical model that measures geographic house price risk by predicting the probability that home prices in the nation's 381 largest metropolitan statistical areas (MSAs) and metropolitan statistical area divisions (MSADs) (as measured by the House Price Index from the Office of Federal Housing Enterprise Oversight (OFHEO)) will be lower in two years. The PMI U.S. Market Risk Index is based on data including the OFHEO House Price Index, labor market statistics from the Bureau of Labor Statistics, and the PMI Affordability Index, which uses local per capita household income, home price appreciation, and a blended mortgage rate to calculate the local share of mortgage payment to income relative to its baseline year of 1995. The PMI U.S. Market Risk Index scale ranges from one to 100 and translates to a percentage. For example, a score of 50 indicates a 50 percent chance that home prices will be lower in two years. About PMI Mortgage Insurance Co. PMI Mortgage Insurance Co. (PMI US), a subsidiary of The PMI Group, Inc. (NYSE: PMI), provides residential mortgage insurance to mortgage lenders, capital market participants, and investors throughout the United States. PMI US is incorporated in Arizona, headquartered in Walnut Creek, CA, and licensed in all 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. By mitigating default risk, residential mortgage insurance expands home ownership opportunities and assists financial institutions in reducing the capital they are required to hold against low down payment mortgages. PMI US is rated AA by Standard and Poor's, Aa2 by Moody's, and AA by Fitch. For more information: http://www.pmi-us.com. 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 of 1995. These forward-looking statements include, but are not limited to, PMI's U.S. Market Risk Index, Affordability 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. Readers are cautioned that any statements with respect to future economic and housing market conditions are based upon current economic conditions and, therefore, are inherently uncertain and highly subject to the changes in the factors enumerated above. Other risk and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including our report on Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter ended September 30, 2007. Media: Nate Purpura (925) 658-6247 Investors: Bill Horning (925) 658-6193
SOURCE PMI Mortgage Insurance Co.