PMI’s US Market Risk Index was just released for the fall quarter and the Orlando market maintains a score of 506 meaning Orlando real estate has a better than 50% chance of declining prices in the next 2 years. The state of Florida, alongside California, Nevada, and Arizona showed the largest concentrations of risk according to the index.
The index is published in PMI’s Economic and Real Estate Trends report every quarter. The report is relied upon by lenders to gauge residential lending risk. Factors such as home price appreciation, affordability, volatility, and employment from the 379 most populated metropolitan areas are taken into account to assess market risk. PMI is the provider of mortgage insurance and allows consumers to buy a home with less than a 20% down payment.
This report also took a look at the worst price declines in the past 25 years and found 2 instances where prices rebounded within 1o years and found 1 instance where prices took 15 years. The periods where prices rebounded within 10 years were Los Angles 1990-1997 and Boston 1989-1993. The Texas oil patch crisis caused the real estate market there to be in the dumps for 15 years. The report also found that owning a home for at least 10 years produced a return of 98.9%. So buying a home is a great long term investment vehicle.
Here is the pdf of PMI’s Economic and Real Estate Trends report for the fall quarter.