PMI, the private mortgage insurance company, comes out with a study every quarter that ranks the top 50 metropolitan statistical areas (MSA) in the United States based on their assessment of the probability of a house price decline within 2 years.
The PMI Market Risk Index score for Phoenix-Mesa-Scottsdale increased significantly in the 3rd quarter as our appreciation rate declined from 31% (3rd Qtr 2005 over 2004) to 16% (3rd Qtr 2006 over 2005). Overall, however, metro Phoenix is still in the middle of the pack.
Income growth was strong in the 3rd quarter so that many markets saw slight improvements in home affordability as incomes grew faster than home prices. Home affordability is still a big problem and probably will be for a long time until incomes catch up with home prices.
Phoenix had the 3rd highest employment growth at 4.97%, however, appreciation was still strong from 3rd quater 2005 to 3rd quarter 2006 at 16%, so metro Phoenix affordability declined.