WALNUT CREEK, Calif. – April 12, 2016 – The likelihood of home price declines across the United States over the next two years remains low at 5 percent, according to Spring 2016 Housing and Mortgage Market Review published by Arch Mortgage Insurance Company (Arch MI). For most of Florida, the risk is even lower.
The report by Arch MI attempts to gauge the likelihood that home prices will be lower in two years based on recent economic and housing market data. Despite the low overall risk of home price declines, however, some areas in the "Energy Patch" states (coal-, oil- or natural gas- producing) remain at heightened risk. While home prices probably won't decline even there, they may experience slower than normal economic and home price growth, according to Arch.
Statewide, Florida's risk of a price decline over the next two years is only 2 percent in 24 Florida counties, including Miami-Dade and Broward. And the likelihood in a handful of other places, such as Palm Beach County, is only 3 percent.
"Apart from a subset of energy extraction states, home prices should rise faster than inflation thanks to strong fundamentals," says Dr. Ralph G. DeFranco, Arch MI's Chief Economist. "Positives include strong affordability, home prices generally below their historical relationship with incomes, U.S. job growth of more than 2 million jobs a year, and a low levels of construction relative to growing demand."
On a state level, Alaska, North Dakota, Wyoming and West Virginia currently have the highest risk of home prices declines. Total employment continues to weaken in those states, even as home prices continue to rise.
Report risk highlights
North Dakota has the highest Arch MI Risk Index value at 47 (a 47 percent change of any-sized price decline over the next two years), primarily due to a 4 percent drop in year-over-year total employment, the largest decline in the nation. North Dakota's home prices are estimated to be overvalued by 22 percent relative to historic norms, likely due to the once-roaring oil fracking boom.
Wyoming has an Arch MI Risk Index value of 40. The state is the nation's largest coal producer and, as recently as late 2014, mining jobs represented 10 percent of the state's total employment. Since then, mining employment has fallen 20 percent and workers are now leaving the state.
West Virginia has an Arch MI Risk Index value of 35 and registered the nation's second largest year-over-year decline in total employment (-1.5 percent). Housing in the state is weakening, with falling existing-home sales and an uptick in foreclosures.
Alaska's Arch MI Risk Index value came in at 31. Low energy prices have pushed the nation's most oil-dependent economy into recession and government layoffs. In spite of this, home prices and sales have held up well to date.
Louisiana has an Arch MI Risk Index Score of 30. While the unemployment rate fell to 5.8 percent, the total employment rate fell 0.3 percent. Additionally, home sales have fallen.
New Mexico registered a score of 30 on the Arch MI Risk Index due to the potential risk of recession caused by government- and energy-related job losses.
Oklahoma posted an Arch MI Risk Index Score of 24. The state is less diversified than neighboring Texas and total employment is falling slightly. Home price growth is below national averages, but accelerated in the fourth quarter of 2015.
Texas registers the lowest risk of the Energy Patch states with an Arch MI Risk Index Score of 19, thanks to a more diversified economy. Employment in Texas remains positive but has weakened in recent months. Home prices continue to grow faster than the national average, leading to heightened risk scores for several Texas communities.
Author:Salvatore Defrisco Phone: 561-644-0052 Dated: April 13th 2016 Views: 202 About Salvatore: ...
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