Risk of delinquencies expected to rise for 18 months
An index that tracks the risk of mortgage delinquencies based on housing prices, local economic conditions and fraud increased in the first quarter of 2008 by 23 percent from the previous quarter and 9 percent from a year ago, and is expected to continue rising during the next 18 months.
The primary factors in the increase in First American CoreLogic's Core Mortgage Risk Index was the tendency for delinquent mortgages to end up in foreclosure and for homes to become real-estate-owned properties, along with flat or declining home-price appreciation and slower job growth, the company said.
Of the 381 markets tracked by First American CoreLogic, 143 are experiencing home-price declines, up from the 121 reported in the fourth quarter of 2007. Home prices are falling at double-digit rates in 36 of those markets -- all in California and Florida, with the exception of Las Vegas and Phoenix.
Home prices continue to appreciate above the rate of inflation in 111 markets, with some markets in Utah and Texas experiencing double-digit home-price increases California and Michigan accounted for eight of the top 10 highest-risk markets, but for different reasons.
In California -- home to five of the top 10 riskiest markets -- First American CoreLogic identified the primary drivers of risk as significant declines in home prices; increasing foreclosure rates; a relatively high proportion of nonconforming alt-A and subprime adjustable-rate mortgages; low housing affordability; and investor speculation. The three riskiest markets identified -- Bakersfield, Stockton and Fresno -- were located in California.
Michigan has three of the top 10 riskiest markets because although home-price declines are more moderate, the state has seen several years of "persistent economic distress and a high incidence of mortgage fraud."
A report market risk index released earlier this month by PMI Mortgage Insurance Co. estimated the probability of declining home prices in the next two years increased in 39 of the 50 largest U.S. markets during the third quarter (see Inman News story).
Ten highest-risk markets
100 largest U.S. MSAs (out of 381)
|
Market |
Rank |
Previous rank |
CMRI Index |
Foreclosure index |
Fraud risk index |
House-price appreciation |
|
Bakersfield, Calif. |
2 |
3 |
2.25 |
1.66 |
0.92 |
-16.91% |
|
Stockton, Calif. |
4 |
8 |
2.21 |
1.68 |
0.41 |
-18.75% |
|
Fresno, Calif. |
6 |
15 |
2.15 |
1.67 |
0.43 |
-16.16% |
|
Warren, Mich. |
8 |
10 |
2.14 |
1.64 |
3.04 |
-7.09% |
|
Grand Rapids, Mich. |
12 |
19 |
2.10 |
1.72 |
2.87 |
-5.79% |
|
Riverside, Calif. |
13 |
26 |
2.09 |
1.66 |
0.51 |
-16.82% |
|
Sacramento, Calif. |
19 |
30 |
2.00 |
1.70 |
0.50 |
-15.06% |
|
Detroit, Mich. |
21 |
14 |
1.99 |
1.59 |
5.31 |
-0.79% |
|
McAllen, Texas |
27 |
32 |
1.89 |
1.80 |
0.85 |
2.56% |
|
Youngstown, Ohio |
29 |
44 |
1.87 |
1.18 |
3.34 |
-9.57% |
Source: First American CoreLogic
Ten lowest-risk markets
100 largest U.S. MSAs (out of 381)
|
Market |
Rank |
Previous rank |
CMRI Index |
Foreclosure index |
Fraud risk index |
House-price appreciation |
|
Baton Rouge, La. |
306 |
312 |
.72 |
0.49 |
2.25 |
8.01% |
|
Birmingham, Ala. |
315 |
334 |
.65 |
1.10 |
2.12 |
-0.32% |
|
Phoenix, Ariz. |
318 |
310 |
.65 |
1.49 |
0.39 |
-11.42% |
|
Albuquerque, N.M. |
328 |
324 |
.59 |
0.51 |
0.51 |
5.13% |
|
Washington, D.C. |
331 |
341 |
.55 |
0.98 |
0.29 |
-7.78% |
|
Virginia Beach, Va. |
343 |
343 |
.44 |
0.18 |
0.42 |
0.33% |
|
Bethesda, Md. |
344 |
347 |
.41 |
0.23 |
0.11 |
-4.84% |
|
Richmond, Va. |
347 |
350 |
.38 |
0.21 |
0.40 |
2.60% |
|
Salt Lake City, Utah |
367 |
372 |
.11 |
1.21 |
0.67 |
10.53% |
|
Honolulu, Hawaii |
368 |
373 |
.10 |
0.24 |
0.30 |
17.10% |
Source: First American CoreLogic
Copyright 2008 Inman News
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