Things have been a little hectic over the last few days so I didn’t have time to get to a couple of articles I had bookmarked.
One of the things that seems to be getting lost in all the hysteria about the Mortgage crisis is that bluk of the problem are concentrated in 4 or 5 states… California, Nevada, Arizona, Florida and Michigan.
Here are two must read pieces from the last week… The first is a University of Virginia study on the decline in housing value:
National housing price declines and foreclosures have not been as severe as some analyses have indicated, and they are not as important as financial manipulations in bringing on the global recession, according to a new analysis of foreclosures in 50 states, 35 metropolitan areas and 236 counties by University of Virginia professor William Lucy and graduate student Jeff Herlitz.
Their analysis shows that most foreclosures have been concentrated in California, Florida, Nevada, Arizona and a modest number of metropolitan counties in other states. In fact, they claim that “66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines.”
“California had only 10 percent of the nation’s housing units, but it had 34 percent of foreclosures in 2008,” Lucy and Herlitz reported.
H/T: Reason Online.
The second is a New York Post op ed by Alan Reynolds:
The Foreclosure Five
A National Crisis? Hardly. The Rest of Us Are Paying For The Irresponsibility of A Few States.
By Alan Reynolds, New York Post, February 21, 2009
When President Obama discusses his $275 billion mortgage bailout, he talks as if it was a national problem, caused by a national decline in home prices. “We must stem the spread of foreclosures and falling home values for all Americans,” he says. But there is no national market for homes and no national price for homes. Instead, most of the United States will pay for the folly of few.
The beneficiaries of taxpayer charity will be highly concentrated in just five states – California, Nevada, Arizona, Florida and Michigan. That is not because the subsidized homeowners are poor (Californians with $700,000 mortgages are not poor), but because they took on too much debt, often by refinancing in risky ways to “cash out” thousands more than the original loan. Nearly all subprime loans were for refinancing, not buying a home.
Reynolds goes on to point the foreclosure rates in California (1 in 173), Nevada (1 in 76), Arizona (1 in 182), Florida (1 in 214) and Michigan (1 in 397) versus the national median of 1 home in every 949.