The charts show where markets are most volatile, according to the latest PMI's Group Economic and Real Estate Trends.
Via Inman News, fourty-eight of the 50 states in the nation faces declining housing price this quarter.
Forty-eight of the nation's 50 largest metropolitan statistical areas face a greater risk of declining home prices this quarter, but the continued strength of national and local economies suggests that in the absence of an economic shock, the once red-hot housing market will cool gradually, an industry report found today.
House-price appreciation has slowed in nearly half of the metropolitan statistical areas compared with last quarter, according to PMI Mortgage Insurance Co.'s latest risk index.
Affordability remains a problem with eight metro areas registering affordability levels considered low by historical standards, due to appreciation and higher interest rates.
The study also shows that long term holding matters. In a 20 year period performance (1986-2005) that compares the returns in volatile markets vs. stable markets, it showed positive results. The volatile markets include San Fransisco, CA, Los Angeles, CA, and Dallas, TX. Stable markets on the other hand, included Atlanta, GA, Nashville, TN and Cleveland, OH. For example, in San Fransisco and Los Angeles markets, in a short 5-year holding, the results can go from -40% in LA to -10% in SF. The upside returns can go from +50% to +25% for both areas. Risky? You bet.
However, in a 20 year period, it is a different story. It shows that the risks diminish to almost nil! In stable markets - in a 5-year holding, Atlanta's market showed positive return from 8-25%. What's interesting though, in a full 20-year cycle, the returns was much narrower between 11 and 15%.
You get the picture...the rule of stocks investing applies to housing market as well. If you owned your home longer you will be rewarded handsomely. Think about this, unlike stock market when a company you invested in go down the tube, you'll lose your shirt. In home ownership even in a really depressing market, the value of your home will not go down to zero!
* Economic Real Estate Trends [PMI Group pdf]
Graphics: PMI Group.
