WALNUT CREEK, Calif.--(BUSINESS WIRE)--Arch Mortgage Insurance Company (“Arch MI”), a leading provider of private mortgage insurance and a wholly owned subsidiary of Arch Capital Group Ltd., today released the Summer 2015 edition of its Housing and Mortgage Market Review, which contains the latest Arch MI Risk Index model results. The state- and metro-level risk indices predict the likelihood that home prices in a region will decrease over the next two years, based on recent economic and housing market data.
“The Summer 2015 edition of Arch MI’s Housing and Mortgage Market Review shows that, while the national average risk of price declines remains unchanged at only 8%, North Dakota and Texas continue to have elevated risks due to exposure to the oil and gas sector and higher home prices relative to incomes than in the past,” said Dr. Ralph G. DeFranco, Senior Director of Risk Analytics and Pricing at Arch MI. “North Dakota and Texas are the two top oil-producing states in the nation and remain the most at risk – with roughly a 1 in 3 chance of home price declines, on the outside chance that energy prices fall materially from here.”
North Dakota and Texas remain in the moderate risk category, with respective risks of price declines of 38% and 32%. In North Dakota, total nonfarm employment fell by 1.8% in the past three months, the worst in the nation, and the state has experienced unusually rapid home price appreciation and population growth in recent years. As a result, North Dakota home prices have risen 15% above the historical trend relative to incomes. Texas’ risk score remains elevated due to home prices that are the second most overvalued (by 13%) nationally relative to incomes but the state is in vastly better economic and financial shape than in the early 1980s.
Within the Arch MI Risk Index for the 50 most populous Metropolitan Statistical Areas (“MSAs”), Texas dominates the moderate-risk category with four MSAs: San Antonio-New Braunfels (39%), Houston-The Woodlands-Sugarland (36%), Austin-Round Rock (34%) and Dallas-Plano-Irving (32%). Home prices in these Texas MSAs are well above their historic long-term trends, so affordability remains a concern. Also, Houston may currently be over-building office space, which could hurt the area in the future if construction slows.
Summer 2015 Arch MI Risk Index
10 Riskiest States and 10 Riskiest Large MSAs
|Highest Risk States||Highest Risk in the 50 Largest MSAs|
|Risk Rank||State||Risk Index||
|Moderate||North Dakota||38||234||Moderate||San Antonio-New Braunfels, TX||39||183|
|Moderate||Texas||32||205||Moderate||Houston-The Woodlands-Sugar Land, TX||36||186|
Austin-Round Rock, TX
|Low||Oklahoma||26||220||Moderate||West Palm Beach-Boca Raton-Delray Beach, FL||30||129|
|Low||Wyoming||23||263||Low||Fort Worth-Arlington, TX||27||240|
|Low||New Mexico||22||167||Low||Fort Lauderdale-Pompano Beach-Deerfield Beach, FL||18||133|
|Low||Mississippi||10||214||Low||San Francisco-Redwood City-South San Francisco, CA||9||55|
Dr. DeFranco will be hosting two webinars to discuss the implications of the latest data during the week of July 20, 2015. Registration is available at archmi.com, under the Resources tab.
More details are available in the Housing & Mortgage Market Review – Summer 2015 edition, available at archmi.com. *The affordability index comes from the National Association of Realtors®.
About Arch MI’s Housing & Mortgage Market Review and Risk Index
The Housing & Mortgage Market Review, which presents Arch MI Risk Index results, is published quarterly by Arch Mortgage Insurance Company. The Risk Index is a proprietary statistical model that measures home price risk by estimating the probability that home prices in a state or one of the nation’s 384 largest metropolitan statistical areas (MSAs) will be lower in two years, times 100 (for example, a score of 25 indicates a 25 percent chance that home prices will be lower in two years.) The Arch MI Risk Index weights various local economic and housing market factors, such as affordability, unemployment rates, economic growth rates, net migration, housing starts, etc. based on a statistical model built on data going back to the early 1980s. It is updated after each quarterly release of the FHFA All-Transactions Regional Housing Price Index (HPI).
ABOUT ARCH MORTGAGE INSURANCE COMPANY
Arch Capital Group Ltd.’s U.S. mortgage insurance operation, Arch MI, is a leading provider of private insurance covering mortgage credit risk. Headquartered in Walnut Creek, CA, Arch MI's mission is to protect lenders against credit risk, while extending the possibility of responsible homeownership to qualified borrowers. Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to write mortgage insurance in all 50 states, the District of Columbia, and Puerto Rico. For more information, please visit archmi.com.
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The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward−looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward−looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward−looking statements.
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