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Metro areas most vulnerable to price cuts, report says

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Home prices in metropolitan areas across the country are at a higher risk of falling in 2011,  according to a new report from mortgage insurer PMI Group. David Berson, current chief economist at PMI and former chief economist at Fannie Mae, told CNBC that although the economy is showing signs of recovery, as long as unemployment rates keep rising, home prices will continue to fall, preventing a complete recovery in metropolitan areas that have been hardest hit by the housing crisis. While investors and first time homebuyers are spurring sales in troubled states such as California and Arizona, the large numbers of homes for sale are keeping prices low. “Those are the markets where risks for additional price declines still remain the biggest,” Berson said. He also predicted that national home prices will flatten out next year.

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