PMI's Winter 2007 Risk Index Reflects Slowing Housing Market

    WALNUT CREEK, Calif., Jan. 24 /PRNewswire-FirstCall/ -- Continued
 deceleration in home price appreciation and decreased affordability caused
 the risk of home price declines to rise in cities across the country, PMI
 Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (
 PMI) reported today. Economic fundamentals remain strong in most areas,
 however, with historically low unemployment rates and strong job growth,
 which helps mitigate the risk of price declines.
     "Years of rapid appreciation have made homes less affordable in many
 areas, and that's not sustainable over the long term, so what we are seeing
 is not unexpected," said Mark F. Milner, Chief Risk Officer of PMI Mortgage
 Insurance Co. "Over time, moderating appreciation will bring prices back in
 line with economic fundamentals, particularly incomes, bringing the market
 back to a healthy balance."
     PMI U.S. Market Risk Index(SM) scores increased for 34 of the nation's
 50 largest metropolitan statistical areas (MSAs), resulting in an increase
 in the average score from 328 to 342, which translates into a 34.2 percent
 chance that home prices will decline in two years. Nineteen MSAs face a
 greater than 50 percent chance that home prices will decline, up from 18
 last quarter.
     While year-over-year appreciation remained in the double digits in 14
 of the 50 largest MSAs, the rate of appreciation slowed in 43. Three
 MSAs-Detroit and neighboring Warren, MI, and Cambridge, MA-saw slight year
 over year price declines.
     The risk of price declines continues to be concentrated in California
 and along the Eastern Seaboard. Of the 19 MSAs facing a greater than 50
 percent chance of a price decline, eight are located in California, eight
 are in the Northeast, and two are in Florida.
     In addition to the PMI U.S. Market Risk Index showing the risk of price
 declines, PMI's Fall 2006 Economic and Real Estate Trends(SM) (ERET)
 examines major regional trends, as well as statistics commonly used to
 judge the housing market's current health and future prospects.
     In most areas, the risk of price declines continues to be balanced by
 strong economic fundamentals. With the exception of the upper Midwest,
 unemployment remains low in most of the country and job growth is positive.
 Of the top 50 MSAs all but four-Detroit and Warren, MI, Cleveland, OH, and
 Indianapolis, IN-saw employment growth. New Orleans led the nation in
 employment growth at 8.37 percent over the past year, followed closely by
 Las Vegas, NV at 5.38 percent.
     A complete copy of the Winter 2007 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 .
                     Winter 2007 PMI U.S. Market Risk Index
 
     Sacramento-Arden-Arcade-                Detroit-Livonia-
      Roseville, CA             604           Dearborn, MI             389
 
     San Diego-Carlsbad-                     Warren-Troy-
      San Marcos, CA            603           Farmington Hills, MI     247
 
     Oakland-Fremont-
      Hayward, CA               603          Philadelphia, PA          206
 
     Santa Ana-Anaheim-                      Portland-Vancouver-
      Irvine, CA                602           Beaverton, OR-WA         197
 
     Nassau-Suffolk, NY         601          Atlanta-Sandy Springs-
                                              Marietta, GA             190
 
     Riverside-San Bernardino-
      Ontario, CA               600          Denver-Aurora, CO         188
 
     Los Angeles-Long Beach-                 Seattle-Bellevue-
      Glendale, CA              597           Everett, WA              167
 
     Boston-Quincy, MA          595          Milwaukee-Waukesha-
                                              West Allis, WI           143
 
     Providence-New Bedford-                 Chicago-Naperville-
      Fall River, RI-MA         595           Joliet, IL               140
 
     San Jose-Sunnyvale-
      Santa Clara, CA           592          St. Louis, MO-IL          137
 
     San Francisco-San Mateo-
      Redwood City, CA          588          Kansas City, MO-KS        114
 
     Edison, NJ                 586          Austin-Round Rock, TX     107
 
     Fort Lauderdale-Pompano                 New Orleans-Metairie-
      Beach-Deerfield Beach, FL 579           Kenner, LA               106
 
     Washington-Arlington-                   Charlotte-Gastonia-
      Alexandria, DC-VA-MD-WV   568           Concord, NC-SC           97
 
     New York-White Plains-                  Nashville-Davidson-
      Wayne, NY-NJ              566           Murfreesboro, TN         83
 
     Cambridge-Newton-                       Houston-Sugar Land-
      Framingham, MA            563           Baytown, TX              82
 
     Las Vegas-Paradise, NV     550          Dallas-Plano-Irving, TX   82
 
     Newark-Union, NJ-PA        549          Cleveland-Elyria-
                                              Mentor, OH               78
 
     Miami-Miami Beach-
      Kendall, FL               535          San Antonio, TX           75
 
     Baltimore-Towson, MD       498          Columbus, OH              74
 
     Tampa-St. Petersburg-
      Clearwater, FL            494          Fort Worth-Arlington, TX  73
 
     Virginia Beach-Norfolk-                 Cincinnati-
      Newport News, VA-NC       491           Middletown, OH-KY-IN     71
 
     Phoenix-Mesa-
      Scottsdale, AZ            448          Memphis, TN-MS-AR         68
 
     Orlando-Kissimmee, FL      447          Indianapolis-Carmel, IN   64
 
     Minneapolis-St. Paul-
      Bloomington, MN-WI        402          Pittsburgh, PA            62
     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. ( PMI). The Risk Index is a
 proprietary statistical model that measures geographic house-price risk by
 predicting the probability of a regional decline in home prices in the
 nation's 50 largest metropolitan statistical areas (MSAs) and metropolitan
 statistical area divisions (MSADs) over the next two years. The PMI U.S.
 Market Risk Index is based on the House Price Index from the Office of
 Federal Housing Enterprise Oversight (OFHEO), labor market statistics from
 the Bureau of Labor Statistics, and the PMI Affordability Index, which uses
 local median household income, home price appreciation, and the price of a
 conventional mortgage 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 1,000 and
 translates to a percentage. For example, a score of 100 indicates a 10
 percent chance of a decline in home prices over the next two years. A
 higher score indicates a higher likelihood of future home price declines.
 The Risk Index scale is linear. In other words, an increase in risk index
 score of 100 percent (for example, from 100 to 200) indicates that the risk
 of home price decline has doubled. Conversely, a decline in Risk Index
 score by 50 percent (from 100 to 50) indicates that the risk of home price
 decline has declined by 50 percent. The Affordability Index score is linear
 against a baseline of 100 in 1995. For example, an Affordability Index
 score of 85 means that the median home in that area is 15 percent less
 affordable than it was in 1995.
     About PMI Mortgage Insurance Co.
     PMI Mortgage Insurance Co. (PMI US), a subsidiary of The PMI Group,
 Inc. ( 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 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, 2005 and Form 10-Q for the quarter ended September 30,
 2006.
 
 

SOURCE The PMI Group, Inc.

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