PMI sees California and Florida weakening while most of nation's housing markets recover

In 35 of the 50 largest metropolitan areas in the U.S., PMI reports, the risk of future price declines decreased in the first quarter; however, in California, the risk of price declines increased.

The main shadow over the state's real estate markets, according to PMI, is foreclosures, which tend to drive down prices. PMI did find one sign indicating that California's market might be normalizing: Excess housing supply is declining in many markets -- the supply of unsold inventory in Orange County, for example, dropped from 29.0 months' worth in late 2007 to 20.3 months in early 2008.

To calculate a "risk index," PMI uses such factors as home-price appreciation, employment, affordability, inventory, and foreclosures.

Here's PMI's list of cities with the highest "risk factors" in the first quarter of 2008. (A risk factor of 85% means PMI believes there's an 85% chance of declining values in the next 24 months.)

1) Riverside-San Bernardino-Ontario: 95.5%

2) Fort Lauderdale-Pomano Beach: 92.2%

3) W. Palm Beach-Boca Raton: 91.9%

4) Orlando-Kissimmee: 91.1%

5) Las Vegas: 88.1%

6) Tampa-St. Petersburg: 86.6%

7) Santa Ana-Anaheim-Irvine: 85.8%

8) Los Angeles-Long Beach-Glendale: 85.7%

9) Miami-Miami Beach: 84.8%

10) Sacramento: 82.2%

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Peter Viles

Most likely to sell at large discount

The folks at online brokerage Redfin looked at more than 2,900 house sales in Los Angeles County from April through June and identified traits of homes that sold at the largest discount from the final asking price. Prices came down most when homes were:

1) listed for more than 90 days

2) fixer-uppers

3) owned by the sellers for 20 years or more

4) owned for less than five years.

Redfin also found that sellers who have already cut their list prices often agree to more reductions to get a sale.

Most of the above are fairly obvious. Sellers who've owned a home for more than 20 years probably will make a solid profit even if they come a long way down from the original list price. Those who've had the home less than five years may be in mortgage trouble.