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PMI Mortgage Insurance Co. Releases Autumn Risk Index

November 11, 2004

WALNUT CREEK , Calif.-- (BUSINESS WIRE)-- --PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE:PMI), 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 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 , Oakland, and San Francisco are three of the top five MSAs at the top of the risk index list. The three high-risk Northern California 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 Index

 

 

San Jose , CA PMSA

509

Boston , MA-NH PMSA

483

Oakland , CA PMSA

473

Nassau-Suffolk , NY PMSA

470

San Francisco , CA PMSA

419

San Diego , CA MSA

405

New York , NY PMSA

383

Orange County, CA PMSA

357

Sacramento , CA PMSA

355

Los Angeles-Long Beach, CA

333

Providence-Fall River- Warwick, RI-MA MSA

330

Detroit , MI PMSA

318

Riverside-San Bernardino, CA PMSA

264

Denver , CO PMSA

255

Minneapolis-St Paul, ,MN-WI MSA

251

Bergen-Passaic , NJ PMSA

248

Fort Lauderdale , FL PMSA

217

Miami , FL PMSA

193

Newark , NJ PMSA

191

Average

186

Washington, DC-MD-VA-WV PMSA

137

Charlotte-Gastonia-Rock Hill , NC -SC MSA

136

Tampa-St Petersburg- Clearwater, FL MSA

135

Austin-San Marcos, TX MSA

133

Dallas, TX PMSA

131

Seattle-Bellevue-Everett , WA PMSA

120

Greensboro --Winston-Salem-- High Point, NC MSA

119

Houston, TX PMSA

109

Kansas City , MO-KS MSA

107

Phoenix-Mesa , AZ MSA

105

Portland-Vancouver, or-WA PMSA

105

Orlando, FL MSA

103

Atlanta , GA MSA

99

Fort Worth - Arlington, TX PMSA

94

Chicago, IL PMSA

92

Norfolk-Virginia Beach- PMSA Newport News, VA-NC MSA

87

St Louis , MO-IL MSA

86

Baltimore, MD PMSA

86

Raleigh - Durham- Chapel Hill, NC MSA

84

Cleveland-Lorain-Elyria , OH PMSA

76

New Orleans , LA MSA

75

Milwaukee-Waukesha , WI PMSA

71

Columbus, OH MSA

69

San Antonio , TX MSA

69

Philadelphia , PA-NJ PMSA

67

Las Vegas , NV-AZ MSA

66

Cincinnati, OH-KY-IN PMSA

64

Nashville , TN MSA

64

Salt Lake City-Ogden, UT MSA

61

Indianapolis , IN MSA

60

Pittsburgh , PA MSA

58

Source: PMI



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