MORTGAGE INSURERS RAISE YELLOW FLAG ABOUT DC MARKET

The risk of a price decline in the DC-NOVA-Maryland market rose during the three-month period ending April 1, according to the PMI Group, which is the nation's largest private mortgage insurer. As of April 1, there was a 40.1 percent chance there would be a drop in the market within two years. Three months earlier, as of Jan. 1, there was a 34.5 percent chance the market would drop within the next two years. Not good.


Though risk is rising, the numbers still could have been higher, notes the Spring 2006 Economic & Real Estate Price Trends report. The region's "robust economies have kept their Risk Index scores from further advancing in this quarter."

Despite concerns that in the Washington-area market that "employment growth may be tied too closely to the real estate sector and a significant decline in housing affordability, the [area has] posted more than 20% price appreciation over the last 12 months and employment situations remain strong. While "slowing may be on the horizon" with further weakening in affordability, the region's "robust" economy has kept its Risk Index scores "from further advancing in this quarter."

In other words, a blip on the job market could turn into a major drop in the housing market.