California and Florida Top Metro Depreciation Risk Ranking.

Walnut Creek, CA-In the country's largest metropolitan areas there is a 34.6% chance "that prices will be lower in two years," with Florida

and California being higher risk, according to the Summer 2007 U.S. Market Risk Index released by PMI Mortgage Insurance Co. here, a subsidiary of The PMI Group Inc.

The average score based on population was at 346, PMI said, as suggested by the index, which ranks the nation's 50 largest metropolitan statistical areas based on the likelihood home prices in these markets will drop in the next two years.

Chief risk officer of PMI Mortgage Insurance Co., Mark F. Milner, introduced another version of the index.

"Our new model gives more weight to the recent volatility of an area's price movements and is better suited for the vastly different market we are in today. Our prior model, in contrast, was tuned to the rapidly appreciating market we were in from 2002 to 2006."

The new and enhanced or updated index on the other hand considers "an area's recent price volatility." Currently it shows "a shift in risk toward Florida and California, as well as certain areas of the Southwest."

The enhanced index introduces risk ranks, a feature that groups together areas with consistently similar characteristics. This year, at 60% or greater chance "that home prices will be lower in two years," the index shows the following areas will be affected: Riverside, Calif., Phoenix, Las Vegas and West Palm Beach, Fla.