PMI Says Orlando Home Values May Decline Through 2010

Written by admin on 23 January 2009

The news from PMI Mortgage Insurance Co. on January 14 was not encouraging. The company’s report on Winter 2009 Economic and Real Estate Trends indicates a risk of housing prices continuing to decrease nationwide for the next two years. PMI reports that 50 percent of the country’s Metropolitan Statistical Areas (MSAs), such as the Orlando-Kissimmee region, could see home values drop through all of 2009 and into the third quarter of 2010. With no improvement predicted in foreclosures or unemployment in the near future, the sun may be setting on homeowners’ hopes for improved home values for some time.

According to David Berson, PMI’s Chief Economist and Strategist, declining sales prices are affected by two primary factors, foreclosures and unemployment. “These factors will put additional upward pressure on risk, with increases in affordability and lower mortgage rates providing some offset.”

PMI’s analysis of 381 major MSAs is translated into a Market Risk Index with scores revealing the amount of risk PMI estimates for each area. The higher percentage indicates a higher risk that a particular MSA will have falling home prices for two more years. Of the 50 largest areas studied, 23 exceeded the 50 percent score, meaning the odds of lower home prices continuing to fall in those metro regions was better than 50 percent. Riverside-San Bernardino-Ontario California had the highest risk factor at 99.9 and Dallas-Plano-Irving Texas had the lowest at a negative 1. Six Florida MSAs made the list of 10 Riskiest of the 50 Largest MSAs: Miami-Miami Beach-Kendall topped that group with 99.9 percent. Orlando-Kissimmee was rated 8 out of the top 10 with an index factor of 98.7.

If PMI’s estimates are correct, Orlando area homeowners have little relief in sight, and sellers may be forced into short sales. Homeowners who need to sell in 2009 and were waiting for prices to rebound may now find a short sale is their only option. For sellers who owe more than the current value of their homes, finding a Realtor® experienced in short sales and negotiating a reduced mortgage payoff is the first step towards a successful sale.

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