Houston among Top 5 Riskiest Cities for Declining Home Prices

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Houston’s housing market is at a greater risk for declining home prices amid the oil downturn, according to a new national report.

Houston has a 38 percent chance of having lower home values in two years, according to Arch Mortgage Insurance Co.’s spring 2015 housing and mortgage market review. The Bayou City’s risk for lower home prices jumped by 13 percentage points from Arch’s winter report.

As a result, the Walnut Creek, California-based mortgage insurance firm elevated Houston’s risk rating from “low” to “moderate” between its winter and spring reports.

In fact, Houston ranked No. 2 among the 50 largest metropolitan cities with the highest risk for lower home prices, according to Arch’s spring report. The Bayou City climbed two spots in the national ranking from Arch’s winter report.

Texas ranked No. 3 among states with the highest risk for lower home prices, according to Arch's spring report. The Lone Star State has a 33 percent chance of having lower home values in two years.

“Our data show that states with high levels of employment in the oil extraction and related industries continue have high risk scores,” Ralph DeFranco, senior director of risk analytics and pricing at Arch, said in a statement. “While the national average risk score remains stable and at a low level of 8 percent, North Dakota, Oklahoma and Texas continue to have elevated risks due to their focus and exposure to the oil sector.”

Arch's risk model is based on several economic and housing market factors, including unemployment rate, affordability, net migration, housing starts and the share of delinquent mortgage payments.

Here are the top five riskiest cities nationally for lower home prices:

  1. Dallas and San Antonio: 42 percent, moderate risk for lower home prices
  2. Houston: 38 percent, moderate
  3. West Palm Beach, Florida: 35 percent, moderate
  4. Austin: 32 percent, moderate
  5. Irvine, California: 27 percent, low

Here is a link to the complete article on Houston Business Journal. 

https://www.bizjournals.com/houston/morning_call/2015/04/houston-among-top-5-riskiest-cities-for-declining.html

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