Jessica Bruehl

1,700 realtors from around the state recently gathered in Austin for the annual "Realty Round Up" tradeshow and almost everyone had positive things to say about the current housing market. Hosted by the Austin Board of Realtors, an estimated 800 attendees filling the ballroom of the Austin Convention Center.

The event included a speech by the renowned real estate expert, Dr. Mark Dotzour, who responded to real estate predictions that housing prices will depreciate in the upcoming year. Experts forecast the median home price would decline between 5 and 10 percent, but the chief economist for the Texas A&M Real Estate Center not only rebuked the prediction, he boldly stated that now is, in fact, a great time to buy. Dotzour argued that the recession is already halfway through, and he expects it to end by summer 2009. He contends that the high proportion of individual debt compared to disposable income caused the crisis. In recent months, 14% of disposable income for individuals has been used on debt, compared to the average rate of 10%. Dotzour's outlook for 2009 shows that percentage going down. By the end of Q1, he shows a decrease in the unemployment rate and an increase in people moving into the area-projecting that 13 million people will to move into Central Texas by 2030.

Dotzour not only gave a positive outlook to the future, but he also addressed the current housing market. He disagrees with predictions of the Central Texas housing bubble, arguing that prices will not go down. He states that with the current low rates and the added benefits provided by home builders and sellers in Austin, now is a best time to buy in the area.

Austin has been insulated from the drastic downturn in the home market, thanks to all the new jobs available. Forbes has ranked Austin third among the best cities for jobs in 2008, ranked number one for income growth, and number two for employment growth. Home values won't be depreciating in this area, Dotzour argues. In fact the market is currently experiencing a three-and-a-half percent rate of appreciation. Additionally, the Austin real estate market currently holds about six-and-a-half months worth of housing inventory, and many builders are sacrificing their margins and providing extra incentives to drive sales.

Here's the link to his presentation: http://www.buffingtonsignaturehomes.com/pdfs/10-22-08-Austin-Realty-Roundup.pdf

More great news for Austin owners! PMI's quarterly analysis of the nation's top 50 largest MSAs, ranks which markets have the highest likelihood that home prices will be lower in two years. While a number of large real estate markets have a 90% or greater chance of price declines, Austin was ranked the 9^th best in the US with less than a 1% risk of a price decline. Austin was also highly ranked for its affordability compared to other markets.

PMI Fall 2008 Risk Index Indicates Rising Foreclosures and Unemployment Intensifying Risk of Future Home Price Declines

Housing Affordability Continues to Improve

WALNUT CREEK, Calif., Oct. 1 /PRNewswire/ -- PMI Mortgage Insurance Co., the primary U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Fall 2008 U.S. Market Risk Index(SM), which shows increases in foreclosures and unemployment have significantly heightened the risk of future home price declines. PMI's U.S. Market Risk Index(SM) ranks the nation's 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years.

Risk scores translate directly into an estimated percentage risk that home prices will be lower in two years. The Fall 2008 Risk Index is based on second-quarter Office of Federal Housing Enterprise Oversight (OFHEO) data. A complete copy of the Fall 2008 PMI Economic and Real Estate TrendsSM (ERET) report and an appendix that provides data for all 381 U.S. MSAs is available at: http://www.pmi-us.com/eret.

The risk of future price declines rose by more than 10 percent in 16 of the nation's top 50 MSAs, primarily in areas of the country that experienced major increases in house prices during the housing boom. Only two MSAs -- Cambridge-Newton-Framingham, MA and Boston-Quincy, MA -- saw their risk decrease by more than one percent. Among the top 50 MSAs, 17 ranked in the highest risk category and 16 of those were in California, Florida, Nevada, and Arizona.

"The risk of future home price declines increased in 94 percent of all 381 MSAs in the country this quarter," said David Berson, PMI's Chief Economist and Strategist. "The majority of these increases aren't statistically significant, in many cases risk increased by less than ten percent, but risk did increase by a significant amount -- as much as 30 percent or more -- in some states and MSAs where foreclosures and unemployment increased significantly."

The highest risk of future price declines remains in Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (99.5 percent), Riverside-San Bernardino-Ontario, CA (99.5 percent), Orlando-Kissimmee, FL (99.4 percent), Miami-Miami Beach-Kendall, FL (99.3 percent), Tampa-St. Petersberg-Clearwater, FL (99 percent). The areas with the lowest risk of price declines -- less than one percent -- are in Fort Worth-Arlington, TX, Dallas-Plano-Irving, TX, Houston-Sugar Land-Baytown, TX and Pittsburgh, PA.

Housing affordability also failed to improve this quarter, according to PMI's proprietary Affordability Index(SM), which measures how affordable homes are today in a given MSA relative to a baseline of 1995. An Affordability Index score exceeding 100 indicates that homes have become more affordable while a score below 100 means they are less affordable.

Across the nation, 40 percent of the nation's 381 MSAs showed increased affordability; while 60 percent of all MSAs experienced declines in affordability. Affordability remains challenged in 14 of the 17 MSAs with risk scores in the highest risk ranks. Home prices in these areas will need to fall further in order to move back in line with incomes before there will be meaningful reductions in risk scores.

In addition to the PMI U.S. Market Risk Index showing the risk of price declines, PMI's Fall 2008 ERET examines major changes in the mortgage origination trends as well as the impact foreclosures and unemployment are having on home prices in the second quarter of 2008.

PMI Fall 2008 PMI U.S. Market Risk Index
            

    Rank   MSA                                                                         Score
            

    1      Fort Lauderdale-Pompano Beach-Deerfield Beach; FL A          99.5
            

    1      Riverside-San Bernardino-Ontario; CA                         99.5
            

    1      Orlando-Kissimmee; FL                                        99.4
            

    1      Miami-Miami Beach-Kendall; FL                                99.3
            

    1      Tampa-St. Petersburg-Clearwater; FL                          99.0
            

    1      Las Vegas-Paradise; NV                                       98.5
            

    1      Los Angeles-Long Beach-Glendale; CA                          98.5
            

    1      Santa Ana-Anaheim-Irvine; CA                                 97.7
            

    1      Jacksonville; FL                                             97.5
            

    1      Phoenix-Mesa-Scottsdale; AZ                                  96.3
            

    1      Sacramento-Arden-Arcade-Roseville; CA                        96.3
            

    1      San Diego-Carlsbad-San Marcos; CA                            95.9
            

    1      Oakland-Fremont-Hayward; CA                                  94.4
            

    1      San Jose-Sunnyvale-Santa Clara; CA                           87.1
            

    1      Providence-New Bedford-Fall River; RI-MA                     72.4
            

    1      San Francisco-San Mateo-Redwood City; CA                     71.6
            

    3      Edison-New Brunswick; NJ                                     35.1
            

    3      Nassau-Suffolk; NY                                           29.4
            

    3      Washington-Arlington-Alexandria; DC-VA-MD-WV                 26.0
            

    3      Virginia Beach-Norfolk-Newport News; VA-NC                   25.4
            

    4      Detroit-Livonia-Dearborn; MI                                 17.8
            

    4      Minneapolis-St. Paul-Bloomington; MN-WI                      14.8
            

    4      Newark-Union; NJ-PA                                          14.4
            

    4      Baltimore-Towson; MD                                         10.1
            

    5      New York-White Plains-Wayne; NY-NJ                            9.8
            

    5      Boston-Quincy; MA                                             7.7
            

    5      Warren-Troy-Farmington Hills; MI                              7.3
            

    5      Portland-Vancouver-Beaverton; OR-WA                           6.4
            

    5      Chicago-Naperville-Joliet; IL                                 6.3
            

    5      Atlanta-Sandy Springs-Marietta; GA                            3.5
            

    5      Seattle-Bellevue-Everett; WA                                  2.3
            

    5      Philadelphia; PA                                              2.1
            

    5      Cambridge-Newton-Framingham; MA                               1.6
            

    5      Nashville-Davidson-Murfreesboro-Franklin; TN                  1.6
            

    5      Cleveland-Elyria-Mentor; OH                                   1.1
            

    5      St. Louis, MO-IL                                               <1
            

    5      Milwaukee-Waukesha-West Allis; WI                              <1
            

    5      Charlotte-Gastonia-Concord; NC-SC                              <1
            

    5      Cincinnati-Middletown; OH-KY-IN                                <1
            

    5      Denver-Aurora; CO                                              <1
            

    5      Columbus; OH                                                   <1
            

      5          Austin-Round Rock; TX                                                             <1
            

    5      Kansas City; MO-KS                                             <1
            

    5      Indianapolis-Carmel; IN                                        <1
            

    5      Memphis, TN-MS-AR                                              <1
            

    5      San Antonio; TX                                                <1
            

           Pittsburgh; PA                                                 <1
            

    5      Houston-Sugar Land-Baytown; TX                                 <1
            

    5      Dallas-Plano-Irving; TX                                        <1
            

    5      Fort Worth-Arlington; TX                                       <1
            

About PMI's Economic & Real Estate Trends(SM) (ERET) and U.S. Market Risk Index(SM)

The PMI Economic and Real Estate Trends (ERET) containing the U.S. Market Risk Index is published quarterly by PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE: PMI). The Risk Index is a proprietary statistical model that measures geographic house price risk by predicting the probability that home prices in the nation's 381 largest metropolitan statistical areas (MSAs) and metropolitan statistical area divisions (MSADs) (as measured by the House Price Index from the Office of Federal Housing Enterprise Oversight (OFHEO)) will be lower in two years. The PMI U.S. Market Risk Index is based on data including the OFHEO House Price Index, labor market statistics from the Bureau of Labor Statistics, and the PMI Affordability Index, which uses local per capita household income, home price appreciation, and a blended mortgage rate to calculate the local share of mortgage payment to income relative to its baseline year of 1995. The PMI U.S. Market Risk Index scale ranges from one to 100 and translates to a percentage. For example, a score of 50 indicates a 50 percent chance that home prices will be lower in two years.

About PMI Mortgage Insurance Co.

PMI Mortgage Insurance Co. (PMI US), a subsidiary of The PMI Group, Inc. (NYSE: PMI), provides residential mortgage insurance to mortgage lenders, capital market participants, and investors throughout the United States. PMI US is incorporated in Arizona, headquartered in Walnut Creek, CA, and licensed in all 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. By mitigating default risk, residential mortgage insurance expands home ownership opportunities and assists financial institutions in reducing the capital they are required to hold against low down payment mortgages. PMI US is rated A+ by Standard and Poor's, Aa2 by Moody's, and A+ by Fitch. For more information: http://www.pmi-us.com.

Cautionary Statement: Statements in this press release that are not historical facts or that relate to future plans, events or performance are 'forward-looking' statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, PMI's U.S. Market Risk Index, Affordability Index, and any related discussion, and statements relating to future economic and housing market conditions. Forward-looking statements are subject to a number of risks and uncertainties including, but not limited to, the following factors: changes in economic conditions, economic recession or slowdowns, adverse changes in consumer confidence, declining housing values, higher unemployment, deteriorating borrower credit, changes in interest rates, or a combination of these factors. Readers are cautioned that any statements with respect to future economic and housing market conditions are based upon current economic conditions and, therefore, are inherently uncertain and highly subject to the changes in the factors enumerated above. Other risk and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including our reports on Form 10-K for the year ended December 31, 2007 and Form 10-Q's for the quarters ended March 31, 2008 and June 30, 2008.

SOURCE PMI Mortgage Insurance Co.

Once again, Austin and our close neighbor to the south, San Antonio, are leading lists for the best cities to live in and buy real estate. Named by Forbes.com as the leading cities to get the "most bang for your buck," you can read the entire article here: http://realestate.yahoo.com/promo/best-and-worst-bang-for-the-buck-cities.html

Let's face it...everyone is looking to save a little money these days and we have something to help! Below is a link to the Kids Eat Free Guide for restaurants in and around Austin. Be sure to give the restaurant a call before you go!

http://www.gracytitle.com/e-flyer/8x8/Kids%20Eat%20Free/Kids%20Eat%20Free%20inside.pdf

With the government taking over Fannie Mae and Freddie Mac, rates are finally nicely under 6% for many homeowners and it's been some time since we've seen that. No one can fully predict how long it will last either and many companies offer a free float-down option so there's no excuse for homeowners not to lock in now and protect what's happening in the industry to their benefit.

Also, most homeowners who haven't owned a home in 3 years will qualify for a tax credit of $7,500 so remember even if a seller won't go down to as low of an offer as you had hoped, you may still qualify for a nice bonus soon to make up for it at tax time!