LOS ANGELES (Reuters) – California and Florida cities top the list of those under the risk of future plummeting home prices in the next two years, a report said Wednesday.
According to the PMI Fall 2008 U.S. Market Risk IndexSM, 17 of the top 50 metropolitan housing markets ranked in the highest-risk category were in California, Florida, Nevada and Arizona. These markets experienced an unprecedented boost in prices during the housing boom, and were consequently worst hit by the mortgage crisis.
Increases in foreclosure and unemployment rates have intensified the risk of home prices dwindling further, economists at PMI said .
The index, published since 2002 by a subsidiary of the PMI Group, Inc., ranks the nation’s largest metropolitan areas according to the likelihood that home prices will fall in the next two years.
The risk of future price declines shot up by at least 10 percent in these 16 metropolitan areas from the previous quarter.
The index predicted the highest risk of future price declines in California’s Riverside-San Bernardino-Ontario, (99.5 percent), and Florida’s Fort Lauderdale-Pompano Beach-Deerfield Beach (99.5 percent), Orlando-Kissimmee (99.4 percent), Miami-Miami Beach-Kendall (99.3 percent), Tampa-St. Petersberg-Clearwater (99 percent).
“The risk of future home price declines increased in 94 percent of all 381 metropolitan statistical areas in the country this quarter,” said David Berson, PMI’s chief economist and strategist.