MBA Chart of the Week: Share of Loans in Foreclosure, Real House Prices by State
According the 2nd Quarter Mortgage Bankers Association’s National Delinquency Survey (http://mba.informz.net/informzdataservice/onlineversion/ind/bWFpbGluZ2luc3RhbmNlaWQ9NTQ3NjMzMSZzdWJzY3JpYmVyaWQ9ODM2NTM1ODEx), the percentage of U.S. loans in the foreclosure process at the end of the second quarter was 1.64 percent, 45 basis points lower than one year ago. Both the foreclosure experience and the recovery in house prices has varied around the country, however.
For example, Texas experienced only a modest run-up in real prices prior to 2007 and, buoyed by a then-strong market for oil, house prices did not fall very much in the years following, capping the rise in foreclosures. Ohio did not have a large run up in house prices either, but it struggled due to more specific economic factors through the recession and thus experienced an increase in the percentage of mortgages in foreclosure.
In California, the cyclic rise in house prices was far more pronounced, as was the rise in foreclosures. In Florida, there was a similar boom in prices, but legal constraints on the foreclosure process impeded the rate at which foreclosures were completed, which caused a much more pronounced accumulation of housing stock in foreclosure.
Texas is the only one of these four states to have had a complete recovery in real house prices relative to its peak. Florida and California prices have returned levels on par with 2003, but Ohio prices remain low in real terms. Of these four states, only Texas has seen new housing permits for 1-4 family homes return to near pre-recession levels.
While lagging permitting rates in Ohio and Florida may be warranted by market conditions, regulatory constraints among other factor have likely contributed to the slow rate of building in California.
To view the Chart of the Week, click https://www.mba.org/news-research-and-resources/forecasts-data-and-reports/forecasts-and-commentary/chart-of-the-week.
(Lynn Fisher is vice president of research and economics with the Mortgage Bankers Association; she can be reached at lfisher@mba.org. Joel Kan associate vice president of economic forecasting with MBA; he can be reached at jkan@mortgagebankers.org.)
