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*** PMI Risk Index by MSA ***

Hi Joe,
Of interest?


PMI Mortgage Insurance Co. Releases Autumn Risk Index

Thursday November 11, 8:05 am ET

WALNUT CREEK, Calif.--(BUSINESS WIRE)--Nov. 11, 2004--PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE:PMI - News), today released its autumn 2004 Risk Index. PMI's Risk Index represents PMI's view on geographic house-price risk and the probability of a regional home-price decline as measured over the next two years.
Based on PMI's Risk Index model, as of November 2004, the average risk value of the 50 largest MSAs is 186. This implies that on average, there exists an 18.6 percent probability of an overall house price decline, as measured within the next two years and across the 50 largest housing markets.

The autumn 2004 average risk value of the 50 largest MSAs increased sequentially, quarter-over-quarter, by 8.8 percent. As of August 2004, PMI Risk Index data showed that the average risk value of the 50 largest MSAs was 171, which implied a 17.1 percent probability of an overall house price decline, measured within the next two years and across the 50 largest housing markets.

Analysts at PMI have attributed the average risk value's sequential increase to homebuyers' anticipation of mortgage interest rate increases from historically low levels, which have spurred home sales and home prices. PMI analysts suggested that slow income growth was another factor. PMI analysts conclude that lower affordability may eventually have an impact on the demand for housing and the sustainability of record appreciation, though their degrees and effects will vary by region.

The 5 lowest ranked, least risky MSAs are Cincinnati, Nashville, Salt Lake City, Indianapolis and Pittsburgh. In these markets, homes have become more affordable relative to three years ago, mainly because of the impact of lower interest rates on affordability.

The Northeast and Southern California MSAs registered the biggest change, as their Risk Index values and ranking have risen compared to the previous quarter. These two regions have experienced especially strong appreciation in recent quarters. Boston and Nassau-Suffolk, NY are the second and fourth riskiest MSAs. Affordability, which is one of the key variables in measuring the Risk Index model, declined the fastest in four Southern California MSAs.

San Jose, Oakland, and San Francisco are three of the top five MSAs at the top of the risk index list. The three high-risk Northern California MSAs have slightly lowered their risk from the previous quarter. While experiencing stagnant economic growth in high-tech sectors, economic conditions in San Jose, Oakland, and San Francisco have slightly improved with lower unemployment rates and less negative employment growth. The region, however, continues to lead the nation in house-price risk with slower job growth and lower housing affordability compared to the national average.

PMI Risk Index by MSA


Risk Risk
MSA Index MSA Index
--- ----- --- -----
San Jose, CA PMSA 509 Greensboro--Winston-Salem--
High Point, NC MSA 119
Boston, MA-NH PMSA 483 Houston, TX PMSA 109
Oakland, CA PMSA 473 Kansas City, MO-KS MSA 107
Nassau-Suffolk, NY PMSA 470 Phoenix-Mesa, AZ MSA 105
Portland-Vancouver, or-WA
San Francisco, CA PMSA 419 PMSA 105
San Diego, CA MSA 405 Orlando, FL MSA 103
New York, NY PMSA 383 Atlanta, GA MSA 99
Fort Worth-Arlington, TX
Orange County, CA PMSA 357 PMSA 94
Sacramento, CA PMSA 355 Chicago, IL PMSA 92
Los Angeles-Long Beach, CA Norfolk-Virginia Beach-
PMSA 333 Newport News, VA-NC MSA 87
Providence-Fall River-
Warwick, RI-MA MSA 330 St Louis, MO-IL MSA 86
Detroit, MI PMSA 318 Baltimore, MD PMSA 86
Riverside-San Bernardino, CA Raleigh-Durham-Chapel Hill,
PMSA 264 NC MSA 84
Cleveland-Lorain-Elyria, OH
Denver, CO PMSA 255 PMSA 76
Minneapolis-St Paul, ,MN-WI
MSA 251 New Orleans, LA MSA 75
Bergen-Passaic, NJ PMSA 248 Milwaukee-Waukesha, WI PMSA 71
Fort Lauderdale, FL PMSA 217 Columbus, OH MSA 69
Miami, FL PMSA 193 San Antonio, TX MSA 69
Newark, NJ PMSA 191 Philadelphia, PA-NJ PMSA 67
Average 186 Las Vegas, NV-AZ MSA 66
Washington, DC-MD-VA-WV PMSA 137 Cincinnati, OH-KY-IN PMSA 64
Charlotte-Gastonia-Rock
Hill, NC-SC MSA 136 Nashville, TN MSA 64
Tampa-St Petersburg- Salt Lake City-Ogden, UT
Clearwater, FL MSA 135 MSA 61
Austin-San Marcos, TX MSA 133 Indianapolis, IN MSA 60
Dallas, TX PMSA 131 Pittsburgh, PA MSA 58
Seattle-Bellevue-Everett, WA
PMSA 120


The PMI Risk Index

The PMI Risk Index is a statistical model based on certain measures of economic activity and conditions that PMI believes is predictive of the likelihood of home price declines over the next two years. Factors used to derive the PMI Risk Index include the House Price Index from the Office of Federal Housing Enterprise Oversight, labor market statistics from the Bureau of Labor Statistics and the affordability index, which captures changes in the demand for housing as a function of local median household income and interest rates.

The PMI Risk Index scale ranges from one to 1,000, where a higher score indicates a higher likelihood of future home price declines. For example, a PMI Risk Index of 100 indicates a 10% chance of a decline in home prices over the next two years.

Because the PMI Risk Index scale is linear, if the PMI Risk Index for an MSA were to increase by 100%, say to 200 from 100, then, according to the PMI Risk Index model, the risk of home price decline has also doubled. Alternatively, if the score were to decline by 50%, for example to 50 from 100, the risk of home price decline has also declined by 50%.

A complete copy of the latest PMI Economic and Real Estate Trends report containing the latest PMI Risk Index scores and analysis is available at:

http://www.pmigroup.com/lenders/eret.html

http://biz.yahoo.com/bw/041111/115131_1.html