October 2, 2018

Arch MI’s New Housing and Mortgage Market Review Features Special Report on Millennials and Ranks the 25 Best Markets for Affordability and Job Growth

With Homebuying Costs Up Sharply, Arch MI’s Fall 2018 Report
Identifies Challenges and Opportunities for Millennials

GREENSBORO, N.C.–()–Millennials, a key driver of the housing market, are the focus of a
special edition of The Housing and Mortgage Market Review (HaMMR)
released today by Arch Mortgage Insurance Company (“Arch MI”). With
Millennial home ownership on the rise, the report ranks 25 affordable
cities with solid growth, examines how the age distribution points to
increased housing demand over the next decade and lists key facts these
homebuyers need to know.

With Homebuying Costs Up Sharply, Arch MI’s Fall 2018 HaMMR Report Identifies Challenges and Opportunities for Millennials

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The report also concludes that, because the supply of homes trails the
demand by as much as 2 million units, prices are likely to continue

“It’s important for potential buyers to understand that many markets
remain reasonably affordable by historic norms, but this may not last
much longer since the consensus forecast is for prices and interest
rates to continue increasing,” said Dr. Ralph G. DeFranco, Global Chief
Economist for Arch Capital Services Inc. “The good news is there are
many cities with vibrant job markets and homes that are more affordable
than the nation as a whole. One factor that needlessly hinders some
potential first-time buyers is the incorrect idea that you need a 20
percent down payment when, in reality, most first-time homebuyers put
down between 3 and 10 percent. Unfortunately, delaying a purchase
decision in the current market will likely mean paying more later.”

Fall 2018 HaMMR

Top Five Most Affordable Cities with Both Strong Labor and
Housing Markets

Rank     Metro Name     State    

Y/Y %


Home Price
Growth Y/Y %




Median DTI

1     Fort Worth-Arlington     TX     2.7     9.8     27%     26%
2     Jacksonville     FL     3.0     9.7     28%     27%
3     Oklahoma City     OK     2.2     4.6     19%     22%
4     Charlotte-Concord-Gastonia     NC     2.6     9.3     27%     22%
5     Grand Rapids-Wyoming     MI     2.0     8.6     24%     23%
      United States     US     1.6     6.6     31%     34%

All 25 of the cities listed in the report have better overall
affordability than the U.S. overall, which currently requires 31 percent
of the median household’s income to cover mortgage payments on a
median-priced home.

The quarterly Arch MI Risk Index, a statistical model based on nine
indicators of the health of local housing markets, suggests the
probability of home prices being lower in two years is unusually low at
6 percent, up 1 percent from the previous quarter due to worsening
affordability, particularly in Western states. Every state is expected
to have positive home price growth over the next two years, continuing
recent trends.

The states with the highest risk of having lower home prices in two
years are Alaska at 26 percent, followed by West Virginia at 19 percent.
Among larger metros, Houston, Texas (22 percent) and Denver, Colorado
(18 percent) are the riskiest because their home prices are far higher
than expected compared to the historical relationship between prices and

Alaska, West Virginia and Texas have the highest probability of home
price declines over the next two years due to the lingering effects of
weakness in the energy-extraction sector. However, risks in these areas
are trending down in tandem with higher oil prices.

Fall 2018 Arch MI Risk Index

States with the Highest Risk Index Values (Probability of Price
Decline Times 100)

State     Risk Index     Change in Quarter
Alaska     26     -1
West Virginia     19     -3
Texas     18     2
Connecticut     18     3
North Dakota     17     -3
Wyoming     15     -4
Colorado     13     5
Idaho     11     4
Mississippi     11     2
Oklahoma     11     -2

Commentary resources:

  • The Housing and Mortgage Market Review is posted at archmi.com/hammr.
    The Fall 2018 edition summarizes current U.S. housing market
    conditions and focuses on Millennials.
  • Dr. DeFranco will host a Housing Update webinar discussing market
    conditions and the details of HaMMR on Oct. 23 and 24. Registration is
    free at archmi.com/hammr.
  • Detailed and interactive regional graphs and maps showing home prices
    and estimates of over-/ undervaluation are also available at archmi.com/hammr
    by clicking on the HPI Charts link.

About Arch Mortgage Insurance Company

Arch Capital Group Ltd.’s U.S. mortgage insurance operation, Arch MI, is
a leading provider of private insurance covering mortgage credit risk.
Headquartered in Greensboro, North Carolina, Arch MI’s mission is to
protect lenders against credit risk, while extending the possibility of
responsible home ownership to qualified borrowers. Arch MI’s flagship
mortgage insurer, Arch Mortgage Insurance Company, is licensed to write
mortgage insurance in all 50 states, the District of Columbia and Puerto
Rico. For more information, please visit archmi.com.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe
harbor” for forward-looking statements. This release or any other
written or oral statements made by or on behalf of Arch Capital Group
Ltd. and its subsidiaries may include forward-looking statements, which
reflect our current views with respect to future events and financial
performance. All statements, other than statements of historical fact
included in or incorporated by reference in this release, are
forward-looking statements.

Forward-looking statements can generally be identified by the use of
forward-looking terminology such as “may,” “will,” “expect,” “intend,”
“estimate,” “anticipate,” “believe” or “continue” or their negative or
variations or similar terminology. Forward-looking statements involve
our current assessment of risks and uncertainties. Actual events and
results may differ materially from those expressed or implied in these
statements. A non-exclusive list of the important factors that could
cause actual results to differ materially from those in such
forward-looking statements includes the following: adverse general
economic and market conditions; increased competition; pricing and
policy term trends; fluctuations in the actions of rating agencies and
our ability to maintain and improve our ratings; investment performance;
the loss of key personnel; the adequacy of our loss reserves, severity
and/or frequency of losses, greater than expected loss ratios and
adverse development on claim and/or claim expense liabilities; greater
frequency or severity of unpredictable natural and man-made catastrophic
events; the impact of acts of terrorism and acts of war; changes in
regulations and/or tax laws in the United States or elsewhere; our
ability to successfully integrate, establish and maintain operating
procedures and integrate the businesses we have acquired or may acquire
into the existing operations; changes in accounting principles or
policies; material differences between actual and expected assessments
for guaranty funds and mandatory pooling arrangements; availability and
cost to us of reinsurance to manage our gross and net exposures; the
failure of others to meet their obligations to us and other factors
identified in our filings with the U.S. Securities and Exchange

The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with other cautionary
statements that are included herein or elsewhere. All subsequent written
and oral forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by these
cautionary statements. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.


© 2018 Arch Mortgage Insurance Company. All Rights Reserved. Arch MI is
a marketing term for Arch Mortgage Insurance Company and United Guaranty
Residential Insurance Company. The Housing and Mortgage Market Review and
Arch MI Risk Index are registered marks of Arch Capital Group (U.S.) or
its affiliates. HaMMR is a service mark of Arch Capital Group (U.S.) or
its affiliates.


Arch Capital Services Inc.
Greg Hare, 336-333-0416
Margaret Bonaparte, 415-891-4914