Most practitioners in the industry know and understand the importance of private mortgage insurance as they help support and provide protection to lenders and investors in the event that the borrower of the note defaults. In today's real estate market, it would make good business sense that companies are beginning (some have understood all along) to take a harder look at the economic trends and correlate the data to the national real estate market.
PMI has just released their ERET quarterly report which ranks the top 50 MSA's which you can download a PDF version at the bottom of the page. It becomes interesting when I try to digest many of the Florida markets and how they are ranked in the report. According to the report:
"The risk of home price declines dropped in the second quarter for the first time in 2.5 years. The average risk score for the 50 largest MSAs remains near an all-time high at 329, meaning there is a 32.9 percent chance home prices across the country will decline. This is down from an average score of 346 in the first quarter. The minor reduction in risk is the result of declining home prices, which slightly improved affordability. Despite this drop, the risk for future price declines among the nation's largest MSAs remains high. The largest concentrations of risk are in California, Florida, Las Vegas, NV, and Phoenix, AZ."
"In the second quarter, risk decreased in 28 of the Top 50 MSAs.
California MSAs continue to dominate Risk Ranks 1 and 2. Risk
scores for Miami and Tampa, FL, decreased, causing the MSAs
to drop to Risk Rank 3. Other Florida MSAs are experiencing
rapid price deceleration and volatility, thus keeping them in the
higher risk ranks. MSAs that previously ranked low in the Top 50
saw increased risk scores."
This report does offer a positive short term outlook in the areas that I live and work in, I believe the findings in thereport aligns with much of what I am seeing at ground level in the Orlando MSA. Statistical modeling is not completely accurate but trending over time typically gives us a glimpse of what may be coming down the road. Although I, as an appraiser, sometimes get caught looking at only my small Central Florida market, the need to step back and look at the "bigger picture" helps me put the current market in perspective.