Neil Blumberg, Metro1Realty.com 502-439-2826

Expansion Management names Louisville amongst the top 50 relocation cities in US.  The article below was copied from Louisville's Business First, at http://www.bizjournals.com/louisville/stories/2006/01/30/daily22.html?f=et66&hbx=e_du

____________________________________________________________________

Louisville among hottest U.S. cities for relocation, expansion

The Louisville area is one of the country's 50 hottest regions for corporate relocation or expansion, according to a survey released Wednesday.

Louisville ranks 31st on Expansion Management magazine's list of "America's 50 Hottest Cities."

For the second year in a row, the Nashville, Tenn., area tops the list, followed by Phoenix, Atlanta, Dallas and San Antonio. Rounding out the top 10 are Charlotte, N.C.; Memphis, Tenn.; Jacksonville, Fla.; Knoxville, Tenn.; and Birmingham, Ala.

Expansion Management surveyed more than 80 prominent site consultants to find out which cities their clients find most attractive for relocation or expansion. Factors they considered include business climate, work-force quality, operating costs, incentive programs and the ease of working with local political and economic development officials. 

Neil Blumberg, broker, www.Metro1Realty.com 502-439-2826

The years 2001 to 2005 saw an unprecedented 5 year run of record increases in home prices. However, the national median existing-home price for all housing types, which jumped 12.9 percent in 2005, is forecast to rise less than half that rate in 2006, by a modest 5.1 percent, making the median price of a home $219,700 this year.  And that 5.1% still represents a 2.1% margin over the CPI, which is projected to increase by only 3% this year. 

The good news for first time home buyers is that they need not feel pressured to buy immediatey becuause prices will be relatively stable.  And a 5.1% increase still represents a respectable investment gain for sellers.

For more details, see the Rismedia article below.

__________________________________________________________________

RISMEDIA, Jan. 11 — The key word for the housing market in 2006 is balance, with a return to a more normal rate of price growth, according to the National Association of Realtors®.

David Lereah, NAR's chief economist, said current trends in the housing sector are healthy.

"We don't need to break a record every year for the housing market to be good – in fact, cooling sales are necessary for the long-term health of this vital sector," Lereah said. "A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong."

After setting a fifth consecutive annual record, projected to 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006 – that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units – the highest since setting a record 1972 – with a 6.6 percent slowing to 1.94 million this year.

"A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling. Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year," Lereah said. The 30-year fixed-rate mortgage is likely to trend up gradually to 6.7 percent during the second half of the year. "This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace."

NAR President Thomas M. Stevens from Vienna, Va., said price appreciation should be at more normal levels across most of the country. "Buyers are no longer competing for a tight supply," said Stevens, senior vice president of NRT Inc. "That means home prices generally will rise much closer to long-term norms, which is the overall rate of inflation plus one or two percentage points. Lower price appreciation will keep the door open to first-time buyers while preserving the investment advantages of homeownership for sellers.

The national median existing-home price for all housing types, projected to jump 12.9 percent to $209,100 for 2005, is forecast to rise 5.1 percent to $219,700 this year. The median new-home price, which should be up 4.6 percent to $231,300 for 2005, is expected to increase 6.0 percent this year to $245,200.

Inflation as measured by the Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. Inflation-adjusted disposable personal income is forecast to increase 1.3 percent for 2005 and 4.6 percent this year.

Growth in the U.S. gross domestic product is likely to be 3.6 percent for 2005, with GDP seen at 4.0 percent this year. The unemployment rate is expected to drop to 4.8 percent by the end of the year.

Neil Blumberg, Broker, www.Metro1Realty.com 502-439-2826

As has been published so often recently, the residential real estate market is in flux. Speculation as to bubbles bursting (within certain defined markets) are daily grist for the news mill, and those who ignore the markets direction, or do not understand the subtle differences within the market or submarket within which they work, do so at their peril.  However, as to the commercial real estate market, the news seems to be mostly favorable. One of the most reliable sources of information for real estate professionals is PricewaterhouseCooper. The good news is that key indicators demonstrate commercial real estate fundamentals are solid. Below you will find an exerpt of PricewaterhouseCoopers Fourth Quarter 2005 Korpacz Real Estate Investor Survey(R).  It foresees favorable trends and few setbacks.

____________________________________________________________________________

Vacancy rates declining, capital investment increasing, survey finds.

    NEW YORK, Jan. 10 /PRNewswire/ -- Steady declines in vacancy rates in downtown and suburban office markets across the country, a leveling-off of overall capitalization rates, and a continued deluge of equity and debt capital into real estate are combining to keep investors' hopes soaring into the new year, according to the newly released PricewaterhouseCoopers fourth quarter 2005 Korpacz Real Estate Investor Survey(R).

    "Last year, 75 percent of central business district (CBD) markets posted year-over-year declines in overall vacancy, compared to only 25 percent recording such declines between 2002 and 2003," said Peter Korpacz, director, PricewaterhouseCoopers' Global Strategic Real Estate Research Practice. "At the same time, in suburban office markets, 80 percent of CBD markets saw year-over-year declines last year, as compared with only 29 percent between 2002 and 2003."

    "As vacancy rates continue to edge down in each sector of the industry and with alternative investment options still being viewed dubiously by investors, capital continues to flow into each sector of the real estate industry from a range of sources -- private, public, institutional, and especially foreign
investors," Korpacz said.

    The quarterly survey of professionals involved with the real estate industry, including institutional investors, REITs, pension funds, mortgage bankers, developers and insurance companies, identifies trends across key real estate industry sectors. Other notable findings include:

    -- In spite of higher energy prices, consumer spending in the retail sector has continued strong in recent months, with many regional mall tenants experiencing impressive year-over-year gains in retail sales.

    -- High home prices, soaring construction costs and rising mortgage rates   have combined to spur increasing demand for apartments in recent months.

    -- As the U.S. economy continues to expand, and industry fundamentals remain on a positive track, many developers are looking closely at opportunities for new land development in each of the commercial property sectors.

    Additional findings, by sector, include the following:

    Domestic Self-Storage
    One key beneficiary of the continued improvement in real estate fundamentals has been the self-storage industry, according to Charles Ray Wilson, CRE, MAI, and chief economist at Self Storage Data Services, Inc., whose commentary on the sector is featured in the new edition of the Korpacz
Real Estate Investor Survey(R).  But while capital has continued to flow into this segment, some potential problems have begun to arise.  Chief among these is the concern that pricing is ahead of, and not supported by current underlying fundamentals.  As a result, overall capitalization rates may have reached a plateau, as more and more self-storage investors are beginning to realize the magnitude by which net incomes must increase in order to achieve anticipated yields, Wilson writes.

    In addition to pricing concerns, many self-storage investors need to pay more attention to what drives demand instead of simply looking for new deals to do, Wilson notes.  Also, investors who continue to purchase new assets need to better recognize and quantify the differences in the location and quality of a self-storage asset as they relate to the risk and value of the investment.  In addition, investors need to be aware of a growing trend among
taxing authorities nationwide to focus on reassessing self-storage properties upon the transfer of ownership.  Sudden, unforeseen tax increases can have a
devastating impact on yields, Wilson writes.

    Retail
    In spite of higher energy prices, consumer spending in the retail sector has continued strong in recent months.  Even so, some survey participants expressed concern that rising heating costs could dampen their overall performance results.  As many regional malls continue to perform well, investment demand has remained strong, and has helped bring a slight decrease in the average overall capitalization rate (OAR) for many mall
classifications.

    The national power center market continues to attract active interest from
investors, thanks in part to impressive year-over-year retail sales performances by a number of big-box retailers and discount merchants.  Still, investors need to exercise caution in which power center assets they choose to pursue, as a number of major retailers posted strong gains in September 2005, including Costco, Wal-mart and Target, while a number of other large discount retailers announced plans to close significant numbers of stores.

    Tough competition and aggressive pricing in the national strip shopping center market has led to a tail-off in transaction growth, although many investors still express significant interest in grocery-anchored strip centers.  At the same time, a lack of quality offerings and a growing desire to build new centers -- rather than buying existing ones -- is encouraging new development.  In fact, neighborhood/community shopping centers placed first in terms of development potential, scoring a 6.22 on a scale of 0 (abysmal) to 10 (outstanding) in the recently released Emerging Trends in Real Estate(R) 2006 survey published by PricewaterhouseCoopers LLP and the Urban Land Institute (ULI).

    Office
    The national central business district (CBD) office market continues to improve, with this sector's overall vacancy rate falling from 13.7% to 13.1% between the second and third quarters of 2005.  By way of comparison, this sector's overall vacancy rate was 14.8% in the third quarter of 2004 and 15.5% in the third quarter of 2003.  According to the report, the three top-performing CBD office markets over the past year are all located in California: San Francisco, Oakland, and Orange County, where overall vacancy rates fell an average of 360 basis points between the third quarters of 2004 and 2005.  Another CBD market that continues to perform well is Phoenix, which posted an overall vacancy rate of 15.4% in the third quarter of 2005, a decline of 230 basis points from the third quarter of 2004.  In the Emerging Trends in Real Estate(R) 2006 survey, Phoenix scored a 6.27 on a scale of 0 (abysmal) to 10 (outstanding) in terms of investment potential, the same as New York City.  For development potential, Phoenix scored a 6.28 among Emerging Trends respondents.

    In the national suburban office market, declining speculative new construction -- due in part to high construction costs -- and an improving job
market are helping to fuel a continuing recovery.  A total of 5.27 million square feet of speculative office space was under construction in 40 suburban office markets during the first nine months of 2005.  By way of comparison, for the first nine months of 2003, this total was 8.44 million, and for the first nine months of 2004, the total was 6.41 million.  But even though overall vacancy rates continue to fall, few investors express confidence that now is the best time to buy suburban office assets.  In fact, the Emerging Trends in Real Estate(R) 2006 survey) found that 20.4% of respondents believe that 2006 will be the best time to buy suburban office assets.  At the same time, 35.6% of respondents said that 2006 will present the best time to "hold" suburban office properties, while the remainder (43.9%) said that 2006 will be the best time to "sell" suburban office assets.

    Flex/R&D
    Overall, most investors tend to view flex/R&D acquisitions as "opportunistic" and involving greater risk, particularly compared to traditional warehouse investments.  Even so, steadily improving fundamentals and the anticipation of higher returns are drawing some investors to this category.  In fact, R&D industrial assets are likely to give investors one of the highest unleveraged returns in 2006, according to Emerging Trends in Real Estate(R).  One market singled out in the Korpacz survey was Philadelphia, where the vacancy rate in flex/R&D fell to 12.8% in the third quarter of 2005, marking a decline of 170 basis points from the prior quarter.  Another flex/R&D market singled out is Portland, where the vacancy rate fell to 10.4% in the third quarter of 2005.   Other cities where buyers of flex properties have been especially active during 2005 include San Jose, San Diego and Los Angeles.

    Warehouse
    Steady returns and strengthening fundamentals are also leading many investors to seek opportunities in the national warehouse market.  Sales activity has been described as extremely brisk in the western region of the U.S, where a total of 349 warehouse assets were reported sold during the first 10 months of 2005. Approximately 30% (105) of these warehouse properties were located in Los Angeles.  Seattle, with a total of 44 assets sold, had the second highest number of warehouse transactions on the West Coast.  Other regional warehouse markets identified as performing well include Chicago, where a total of 102 warehouse properties sold during the first 10 months of 2005, and Northern New Jersey, where industrial vacancies amounted to a low
7.7% in the third quarter of 2005...

    Apartments
    The market for apartments has seen increased demand in recent months.  The overall vacancy rate in the third quarter of 2005 amounted to 5.8% -- down from 6.4% in the prior quarter and 6.6% a year earlier. Part of the reason for the decline can be traced to an increase in renter demand, as well as a steady increase in the rate of condo-conversions.  In the third quarter of 2005
alone, approximately 33,600 apartments were converted to condominiums, with a total of 84,000 condo-conversions occurring at the time the Korpacz survey was completed.  By comparison, 2004 saw a total of approximately 66,000 conversions.  The high level of competition among "condo converters" has caused prices to remain elevated and led to further declines in overall capitalization rates in many areas.  Key markets where condo-conversions have been especially hot include Orlando, Tampa, Broward County and Phoenix.
Overall, condo-conversions made up 43.0% of the total apartment sales in the
third quarter of 2005, the survey found.

    Net Lease
    In the national net a reduction in the number of properties being offered for sale has led to bidding wars on the best quality assets being offered. And while sales activity has continued to occur in each segment of the net lease market -- sale-leaseback, 1031 exchange, and triple-net-leased properties -- high real estate prices and the ability to access equity have helped spur a growing number of sale-leaseback transactions.  Overall, the number of net lease offerings nationwide declined in the third quarter of 2005, when 6,898 worth a combined value in excess of $23.1 billion were up for sale.  This compares to a total of 9,324 available properties, with a combined value of over $27.9 million only one quarter earlier.  This represents a 27.0% drop in the number of available properties and a 17.2% decrease in their cumulative value in only three months time.  Top-rated states for net lease property investments have remained fairly consistent over the past quarter, with states offering the greatest number of properties for sale as compared to state population.  These states include Texas, Florida, California, Arkansas and Georgia, which altogether totaled 45.3% of the total net leased property offerings in the third quarter of 2005.

    National Development Land
    Positive economic factors are prompting developers to look closely at opportunities for new land development in each of the commercial property sectors.  According to the survey, some of the most attractive opportunities over the near term include infill housing and mixed-use projects, age-restricted communities, and resort/second-home building.   The survey goes on to list the top ten markets offering the best prospects for commercial/multifamily development for the coming year.  Listed one to ten, they are:  Washington, DC, San Diego, Northern Virginia, Orange County, Los Angeles County, Riverside/San Bernardino, New York City, Maryland suburbs, Phoenix, and Fort Lauderdale/West Palm Beach.  While development land opportunities are opening up across all segments in the real estate industry, caution is still an important watchword, the survey warns:  "Even in niche real estate markets, such as self-storage, medical and student housing, fundamentals can be easily imbalanced if too much product gets built too quickly."

    The fourth quarter 2005 Korpacz Real Estate Investor Survey(R) provides detailed overviews of national retail markets, including regional mall, power center and strip shopping center overviews; overviews of 14 major office markets; and national overviews of the Flex/R&D, Warehouse, Apartment, Net Lease, and Development Land markets.  The report also features up-to-date commentaries concerning Valuation Issues, Technology News and Trends, Economic News, and the Real Estate Capital Markets, as well as a special report on the Domestic Self-Storage Market.

    One year online or electronic (PDF) subscriptions to the survey can be
purchased for $350 at http://www.pwcreval.com/.

    PricewaterhouseCoopers (http://www.pwc.com/) provides industry-focused
assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders.  More than 130,000 people in 148 countries work collaboratively using Connected Thinking to develop fresh perspectives and practical advice.

    "PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and
independent legal entity.

    The PricewaterhouseCoopers real estate group is part of the firm's financial services group, one of the leading providers of integrated professional services to major financial services organizations.  Our integrated approach to problem-solving involves an international network of real estate accounting, tax and business advisory professionals who can quickly mobilize to form highly qualified teams to respond to a client's opportunity or challenge.

    Our global real estate professionals offer in-depth experience in a wide range of financial accounting and reporting issues, global tax solutions, investment fund structuring, capital market transactions, securitization issues, technological applications, systems and operations; due diligence and transaction support, and valuation management.

Neil Blumberg, broker, 502-439-2826 neil@neil4realty.com

__________________________________________________________________

As you probably know, the market has turned in some parts of the US from a strong sellers market to a buyers market.  Homes are staying unsold for longer periods. A proactive method of moving your home quickly is available through Value Range Marketing (VRM).  Not everyone has embraced this idea, but I believe that, given the right circunmstances, it will prove itself to be an invaluable tool, especially as the market tightens and sales slow futher. 

But beware! Using it incorrectly could easily result in a missed sale or lower price being obtained for your home.  One of the critical issues, especially in markets such as Louisville, where this type of marketing is virtually unknown, is the range chosen, and this will be driven in part by whether the anticipated sale price falls at one of the typical "end" search parametrs of typical searches.

For two very interesting articles on this VRM, check out the article I've cut and pasted below from the January 1, 2006 "Realtor" Magazine, the official magazine of The National Association of Realtors.  Take a look also at a very recent article which appeared in the Money section of USA Today at

http://www.usatoday.com/money/economy/housing/2005-11-28-range-pricing-usat_x.htm

Good Luck and Good Selling!

---------------------------------------------------------------------------------------------------------

Value-Range Marketing Takes Hold

Believers in a decade-old marketing strategy that prices a home in a range say they get faster sales at higher prices.

Click on the link below for this month's edition of cool Cyber Magic tips for the curious. If this is the first time you're seeing my cyber magic newsletter, take a look also at the back editions, all of which you can access from the current issue.

http://www.recyber.com/cybertips/neil4realty

__________________________________________________________________

1   Property Taxes and Interest Deduction: Under the current tax code, most homeowners can deduct property taxes and interest paid on their mortgages each year they own their properties. They are allowed to write off interest on both their first and second mortgages (and even equity lines and loans where their homes are used as the collatreral).

2   Borrowing Against Equity: Each month homeowners make their mortgage payments, they pay down part of their debt.  The difference between what a homeowner owes on the property and the value of the property is called equity.  After a homeowner has built up equity in his house, he can borrow against it.  Many people use the equity as a retirement savings, or to improve the property, buy a car or perhaps pay for their childrens education.  Seniors are using equity for reverse mortgages, which allows them to sell the house to the bank, remain in possession until death, and receive from the bank a monthly payment! 

3   Home Appreciation:  Another way equity is built up in a house is by passage of time, because, unlike cars and almost any other item, property tends to increase in value each year. 

4  Fixed Monthly Payment:  Whereas renters rent steadily increases over the years with inflation (or investor greed), those homeowners who have fixed rate mortgages will never have to pay any increase in their monthly mortgage payment.  Over a 30 year period this can amount to tens of thousands of dollars in savings.

5  Car Insurance:  Many insurance companies will give the homeowner a discount (up to 10%) if he insures both his car and home with them.

6  Recent Federal Government Changes: According to an article recently published in RISMedia, "during the last few years, the federal government has made owning a home even more financially favorable. Recent improvements enacted include the following: 

* In 2005, the 15 percent tax bracket for married couples will increase from $46,700 to $55,900, so that many families currently in the 27 percent (tax) bracket will drop back a level allowing for more tax savings.

* The federal government has recently relaxed rules on IRA and 401(k) retirement accounts, permitting first-time homebuyers to tap into their retirement funds for their down payment without paying penalties on early withdrawal.

* The federal government now offers exclusions of capital gains on sales of principal residences, which has resulted in $22.9 billion in tax benefits over the last several years. This category has ballooned since 1997, when Congress first sanctioned tax-free treatment of up to $250,000 (for single filers) or $500,000 (for married joint filers) on home-sale profits. The exclusions are available on homes owned for just 24 months, and can be used without limit every 24 months."

PSYCHOLOGICAL BENEFITS OF HOME OWNERSHIP

1  Stability:  Perhaps one of the most underrated and least discussed advantages of home ownership is the stability it brings to the homeowner and, if married, to the family.  Same schools, same neighbors, same shops. Homeownership fosters lifelong friendships and fond memories of "where I grew up".  Home ownership has come to be recognised as one of the main elements in achieving the American Dream.

2  Avoid Proximity Problems caused by Apartment-Dwelling: Many people who have lived in an apartment will rember the neighbors cooking smells and the noises.  Homeownership usually eliminates these problems.

3  Freedom From Restrictions: Renters can usually not paint the walls the way they want, and even if they could, would not want to spend the money on it.  If the landlord allows a pet, there will often be a surcharge.  Home ownership gives you total control of your home environment. 

Neil Blumberg, real estate broker, 502-439-2826 www.GoldenRuleMetro.com

Great news for the Louisville housing market was published on February 24, 2005 by PMI Mortgage Insurance Co.  (See http://www.pmigroup.com/lenders/eret.html for entire Report)

------------------------------------------------------------------------------------------------------------------------------------------
WALNUT CREEK, Calif.--(BUSINESS WIRE)--Feb. 24, 2005--PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE:PMI - News), has released its winter 2005 Risk Index indicating a decrease in the probability of an overall house price decline since the autumn of 2004. PMI's Risk Index represents PMI's view on geographic house-price risk and the probability of a regional home-price decline as measured over the next two years.

Based on PMI's Risk Index model, as of January 2005, the average risk value of the 50 largest Metropolitan Statistical Areas (MSAs) is 161. This implies that on average, there exists a 16.1 percent probability of an overall house price decline, as measured within the next two years and across the 50 largest housing markets.

Coastal MSAs continued to crowd the top of PMI's Risk Index. Three MSAs in the Northeast region and six California MSAs held the top nine spots on the risk index where home price declines are most likely over the next two years. Boston, San Jose-Santa Clara, San Francisco-Oakland, San Diego and Providence rounded out the five most risky on the risk index list. New England MSAs have maintained a trend of lower affordability and heightened house-price risk. On the west coast, labor conditions in Northern California MSAs have improved considerably compared to the previous quarter, but substantial growth in home prices has lowered affordability, pushing up their risk index values.

                         PMI Risk Index by MSA
                                                       Risk
MSA                                                    Index
---                                                    -----
Boston-Cambridge-Quincy, MA-NH                          533
San Jose-Sunnyvale-Santa Clara, CA                      530
San Francisco-Oakland-Fremont, CA                       479
San Diego-Carlsbad-San Marcos, CA                       433
Providence-New Bedford-Fall River, RI-MA                397
Sacramento-Arden-Arcade-Roseville, CA                   369
New York-Northern New Jersey-Long Island, NY-NJ-PA      363
Los Angeles-Long Beach-Santa Ana, CA                    359
Riverside-San Bernardino-Ontario, CA                    316
Detroit-Warren-Livonia, MI                              274
Minneapolis-St Paul-Bloomington, MN-WI                  263
Denver-Aurora, CO                                       224
Miami-Fort Lauderdale-Miami Beach, FL                   176
               Average                                  161
Jacksonville, FL                                        158
Washington-Arlington-Alexandria, DC-MD-VA-WV            151
Hartford-West Hartford-East Hartford, CT                142
Tampa-St Petersburg-Clearwater, FL                      137
Austin-Round Rock, TX                                   117
Richmond, VA                                            117
Charlotte-Gastonia-Rock Hill, NC-SC                     113
Dallas-Fort Worth-Arlington, TX                         112
Portland-Vancouver-Beaverton, OR-WA                     109
Phoenix-Mesa-Scottsdale, AZ                             105
Kansas City, MO-KS                                      105
Houston-Baytown-Sugarland, TX                           103
Orlando, FL                                             102
Atlanta-Sandy Springs-Marietta, GA                      101
Virginia Beach-Norfolk-Newport News, VA-NC              101
Las Vegas-Paradise, NV                                   97
Seattle-Tacoma-Bellevue, WA                              97
Baltimore-Towson, MD                                     96
St Louis, MO-IL                                          94
Chicago-Naperville-Joliet, IL                            90
Cleveland-Elyria-Mentor, OH                              74
Milwaukee-Waukesha-West Allis, WI                        73
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD              71
New Orleans-Metairie-Kenner, LA                          70
San Antonio, TX                                          69
Columbus, OH                                             68
Nashville-Davidson-Murfreesboro, TN                      65
Louisville, KY-IN                                        63
Cincinnati-Middletown, OH-KY-IN                          63
Birmingham-Hoover, AL                                    62
Salt Lake City, UT                                       61
Memphis, TN-MS-AR                                        60
Indianapolis, IN                                         60
Rochester, NY                                            59
Oklahoma City, OK                                        57
Buffalo-Niagara Falls, NY                                57
Pittsburgh, PA                                           57

The PMI Risk Index

The PMI Risk Index is a statistical model based on certain measures of economic activity and conditions that PMI believes are predictive of the likelihood of home price declines over the next two years. Factors used to derive the PMI Risk Index include the House Price Index from the Office of Federal Housing Enterprise Oversight, labor market statistics from the Bureau of Labor Statistics and the affordability index, which captures changes in the demand for housing as a function of local median household income and the median mortgage payment.

The PMI Risk Index scale ranges from one to 1,000, where a higher score indicates a higher likelihood of future home price declines. For example, a PMI Risk Index of 100 indicates a 10% chance of a decline in home prices over the next two years.

Because the PMI Risk Index scale is linear, if the PMI Risk Index for an MSA were to increase by 100%, say to 200 from 100, then, according to the PMI Risk Index model, the risk of home price decline has also doubled. Alternatively, if the score were to decline by 50%, for example to 50 from 100, the risk of home price decline has also declined by 50%.

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 Risk 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. Other risk and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including our report on Form 10-Q for the period ended June 30, 2004.

     PMI Mortgage Insurance Co.
     Josh Wozman, 925-658-6863 (Media)
     Matt Nichols, 925-658-6618 (Investor)