The risk of housing price declines in the 50 largest U.S. metropolitan areas is growing, appreciation is slowing and affordability has worsened, said a mortgage insurance group’s study released today.

The study, released today by the PMI Mortgage Insurance Co., said 11 metropolitan areas now face a 50 percent or greater risk of price declines, appreciation has slowed in many top markets and yet affordability is still a challenge for many families.

The Winter 2006 PMI Economic and Real Estate Trends report said 19 of the top 20 metropolitan areas saw price increases, but there are now 11 areas with a 50 percent or greater risk of price declines. This is up from 5 last quarter and 3 a year ago. The average across the 50 largest metro areas is 26 percent, up from 22 percent last quarter.

Appreciation is slowing, with 32 of the 50 largest metro areas seeing slowing appreciation compared to just 7 in the previous quarter, the report said.

Affordability decreased in all of the 50 largest metropolitan areas, the report said. In two areas, Riverside, Calif. and Fort Lauderdale, Fla., affordability dropped below the PMI benchmark affordability threshold of 70, and 6 more (San Diego, Calif., Santa Ana, Calif., Oakland, Calif., Sacramento, Calif., Los Angeles and Miami) are between 70 and 75, the report said.

In some good news, the report said a “soft landing” – a subject of much debate as overheated real estate price appreciation begins to slow – is likely. This is because of the continued strength of national and regional economies, according to the report.

The report also includes a map showing house price risk by state, a look at how dependent on the housing boom major metropolitan areas’ economies are, and a comparison of an interest-only mortgage, payment-option adjustable-rate mortgage and fixed-rate mortgage under best- and worst-case interest-rate scenarios.

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Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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