Price Decline Risk Highest In Coastal Metros

The guys that write private mortgage insurance have a risk index and it is widely reported that the overall risk is down. But the PMI Mortgage Insurance Co.. has bad news for certain Metropolitan Statistical Areas (MSAs). "What jumped out at me," says Wozman, "is the top nine MSAs at risk for price depreciation are coastal -- in California or the Northeast, and these cities increased in their risk index since November."

What areas are we talking about? "(H)ome price declines are most likely over the next two years (in) Boston, San Jose-Santa Clara, San Francisco-Oakland, San Diego, and Providence."

This risk isn't calculated for fun either, it will show up in mortgage insurance premiums. "The Index gives our credit risk analysis professionals a sense of where the likelihood of home price depreciation will be in the next two years," he demurs, "so they account for that in their pricing models."