Industry News

Risk for home-price declines up in latest survey

California, Eastern Seaboard continue to carry greatest risk

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

The risk for home-price declines increased in cities nationwide due to continued deceleration in home-price appreciation and decreased affordability, according to an industry report this week. 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., which issued the report. "Over time, moderating appreciation will bring prices back in line with economic fundamentals, particularly incomes, bringing the market back to a healthy balance." In 34 of the 50 metro areas surveyed, there is a 34.2 percent chance that home prices will decline in two years. Nineteen metro areas face a greater than 50 percent chance that home prices will decline, u...