Foreclosures Concentrated in Four States
I have posted many times (here, here, here and here) about how foreclosures are mostly concentrated in only four states: AZ, CA, FL and NV (see map above), despite the media coverage that would suggest it's a much more widespread phenomenon.
Now comes confirmation of those observations of highly concentrated foreclosures from a new study recently released by the University of Virginia (press release and full study here):
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% of potential housing value losses in 2008 and subsequent years may be in California, with another 21% in Florida, Nevada and Arizona, for a total of 87% of national declines."
"California had only 10% of the nation's housing units, but it had 34% of foreclosures in 2008," Lucy and Herlitz reported.
California was vulnerable to foreclosures because the median value of owner-occupied housing in 2007 was 8.3 times the median family income, while the 2007 national average was only 3.2 times higher than median family income (and in 2000, it was lower still at 2.4).
HT: NY Times columnist Catherine Rampell's article "Foreclosure Rates Aren’t Really That High … Unless You live in Arizona, California, Florida or Nevada."