U.S. housing price declines will probably double to a national average of 20 percent by next year, according to a report from PMI Group Inc., the second-largest mortgage insurer.
The drop from the mid-2006 peak won't be evenly distributed, according to PMI's market risk index, published today by the Walnut Creek, California-based company in its quarterly real estate trends report. Metropolitan areas where home prices are most likely to be lower are all in California, Florida, Arizona and Nevada.
"The decline in house prices is only about one-third to one-half over, due primarily to the magnitude of the supply/demand imbalance," David Berson, PMI's chief economist, wrote in the report. "That assumes that the current economic downturn is both short and modest," said Berson, who previously was chief economist at Fannie Mae, the world's largest mortgage finance company.
The price decline from 2006 is measured by the S&P/Case- Shiller home-price index which covers 20 metropolitan areas. The supply of single-family homes for sale is the highest in more than 20 years, Berson said.
There's a 93 percent likelihood of lower prices in the Riverside-San Bernardino, California area, followed by Las Vegas, at 91 percent, according to PMI's model. Orlando and Fort Lauderdale, Florida and Phoenix, Arizona round out the top five.
Metropolitan areas where values are most likely to hold up are the central and southern U.S. They include Dallas, Houston and Fort Worth, in Texas; Cleveland and Columbus, Ohio; and Memphis, Tennessee and Charlotte, North Carolina, with less than a 1 percent chance of lower prices in two years.
PMI insures lenders against borrowers who fail to repay their loans.
The drop from the mid-2006 peak won't be evenly distributed, according to PMI's market risk index, published today by the Walnut Creek, California-based company in its quarterly real estate trends report. Metropolitan areas where home prices are most likely to be lower are all in California, Florida, Arizona and Nevada.
"The decline in house prices is only about one-third to one-half over, due primarily to the magnitude of the supply/demand imbalance," David Berson, PMI's chief economist, wrote in the report. "That assumes that the current economic downturn is both short and modest," said Berson, who previously was chief economist at Fannie Mae, the world's largest mortgage finance company.
The price decline from 2006 is measured by the S&P/Case- Shiller home-price index which covers 20 metropolitan areas. The supply of single-family homes for sale is the highest in more than 20 years, Berson said.
There's a 93 percent likelihood of lower prices in the Riverside-San Bernardino, California area, followed by Las Vegas, at 91 percent, according to PMI's model. Orlando and Fort Lauderdale, Florida and Phoenix, Arizona round out the top five.
Metropolitan areas where values are most likely to hold up are the central and southern U.S. They include Dallas, Houston and Fort Worth, in Texas; Cleveland and Columbus, Ohio; and Memphis, Tennessee and Charlotte, North Carolina, with less than a 1 percent chance of lower prices in two years.
PMI insures lenders against borrowers who fail to repay their loans.
Bloomberg
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