Home prices will fall in more than half of the largest U.S. cities through 2010 as the recession slashes jobs and reduces buying power, according to PMI Mortgage Insurance Co.
PMI, the second largest U.S. mortgage insurer, said 21 of the 50 biggest U.S. metropolitan areas have more than a 75 percent chance of lower home prices in two years. Six others have more than a 50 percent chance, the Walnut Creek, California-based insurer said in a report today.
“We’ll see sales start to recover before the job market,” David Berson, chief economist at PMI, said in an interview. “Prices will lag because of the large number of homes for sale and those that are vacant but not yet on the market.”
In New Jersey, the Edison-New Brunswick area and Newark have an 89 percent and 84 percent probability, respectively, of lower prices in two years. Nassau-Suffolk in New York has a 78 percent chance; Washington has an 88 percent chance; and Baltimore has an 84 percent chance, according to PMI.
“The suburbs of New York and D.C. are high-cost areas that had substantial run-ups in prices,” Berson said. “They are the next group down from the sand states.”