PMI Report: Home Prices Fall as Repossessed Home Increases

A report released by the PMI Group Inc, stated that more than 50 percent of U.S. metropolitan areas will experience a drop in home prices until the first quarter of 2011.

The Walnut Creek, California-based mortgage insurer said that the rising unemployment rate and the growing number of repossessed home are the major factors that will put pressure on home prices.

According to the report, 30 out of the 50 cities have a 75 percent possibility of experiencing lower home prices until the end of March 2011. PMI said that the home price drop trend is expected to spread to various regions in the country, including Arizona, California, Nevada and Florida which are the areas severely affected by the repossessed home crisis.

PMI senior economist LaVaughn Henry said that the housing market has been seriously affected by the high unemployment rate and the oversupply of foreclosure properties.

Last month, national unemployment rate increased by 9.5 percent, making a total of 6.5 million people who lost their jobs since December 2007, according to the U.S. Department of Labor.

Additionally, filings for repossessed home peaked at 1.8 million in the first six months of this year as more and more unemployed homeowners found themselves unable to meet their monthly mortgage payments.

Last April, property prices in 20 large U.S. cities declined by 18.1 percent compared with figures for the same month last year. Analysts at Deutsche Bank AG predict that home prices will drop by 41.7 percent from their highest level.

Meanwhile, there are 15 cities in the country that have a 90 percent chance of experiencing lower home prices in 2011. PMI identified them as West Palm Beach, Jackson, Tampa, Miami, Fort Lauderdale and Orlando in Florida, Las Vegas in Nevada, Providence in Rhode Island, Detroit in Michigan, Phoenix in Arizona and California cities of Santa Ana, Los Angeles, Riverside, San Diego and Sacramento.

On the other hand, New Jersey cities of Edison and Newark have a probability of 97 and 96 percent, respectively while Nassau in New York has 92 percent and 88 percent for New York City.

States where the cities with the highest probability of low home prices are also top the areas with the most number of repo home in the country.

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