Count on the folks at Realtor.com to look on the bright side. PMI, the mortgage insurance folks, released a report on July 1 entitled, "PMI Summer 2008 Risk Index Indicates Risk Intensifying in Areas With Previous Rapid Home Price Growth". Rather than focusing on that increased risk however, Realtor.com decided to focus on the bottom of the list and title their article, "14 Markets With Nowhere to Go but Up ". They state:
PMI identifies these areas as having a less than 1 percent risk of home prices declining further:
Milwaukee-Waukesha-West Allis, Wis.
Cleveland-Elyria-Mentor, Ohio
Austin-Round Rock, Texas
Denver-Aurora, Colo.
Charlotte-Gastonia-Concord, N.C.-S.C.
Kansas City,Mo.-Kan.
Columbus, Ohio
Cincinnati-Middletown, Ohio-Ky.-Ind.
Indianapolis-Carmel, Ind.
San Antonio, Texas
Houston-Sugar Land-Baytown, Texas
Pittsburgh, Pa.
Dallas-Plano-Irving, Texas
Fort Worth-Arlington, Texas
The logic behind the list?
The highest risk is in areas where home price growth was the greatest during the housing boom. The lowest risk of prices declining further is in areas where affordability has increased.
I disagree. The highest risk for price declines is not a previous run-up in prices, but current supply and demand. Detroit has seen significant declines in their housing market in recent years, not because of previous record increases, but because supply has increased due to deteriorating economic conditions. Other communities that did not have a price bubble are hurting as well.
