Risk Scores Reflect Price Declines/Gains in Florida Housing Markets

Despite a cooling Florida real estate market, the strong national economy is helping to maintain home prices at a reasonable level.; so says a report by PMI Mortgage Insurance Co., which released its U.S. Market Risk Index this week.

The index is based on risk scores, which work as follows: a score of 100 means the area has a 10% chance its home prices will decline over the next two years. Higher scores mean a greater risk of home price declines in the future.

How risk scores reflect Florida home appreciation

The average risk score for the country’s largest metropolitan statistical areas was 288 in the first quarter, one point up from the last quarter and 70 points up from a year ago. This slight jump goes along with the transition to a buyer’s market in The Sunshine State, as Florida home loans are becoming more affordable.

“This quarter’s data signals that in many areas the expansion of the housing balloon has slowed substantially,” said Mark Milner, chief risk officer of PMI Mortgage Insurance Co. “The Risk Index also shows that slowing price appreciation is balanced by underlying economic strength. In the absence of an unexpected economic shock, this makes a gradual cooling of the market the most likely outcome.”

Thirteen metropolitan areas had risk scores higher than 500 - indicating a 50% or greater risk of home price declines in the next two years. Miami, for example, had a 32-point increase in risk over the quarter. This would explain why sellers in the area have been offering incentives to those seeking a Florida home mortgage loan.

Certain Florida cities enjoy increased home values:

Of the six nationwide markets that saw appreciation of more than 20% over the year, THREE were located in Florida:

1. Orlando saw appreciation of 27.7%
2. Fort Lauderdale saw appreciation of 25.7%
3. Miami saw appreciation of 24.7%

Buyers and sellers alike benefit from learning these figures. It gives everyone a clear idea of how to price a house for sale or what to arrive at when coming up with a Florida mortgage loan offer.