I am working on a new research project involving foreclosures in the sub-prime market. I keep coming across some really intriguing data sets.

Courtesy of a RealtyTrac, below is a "Heatmap," showing the foreclosure filings on a per capita basis. The Redder the state, the more per capita filings there are.

Kinda surprising the way the concentration shakes out, ain’t it? Colorado leads the nation, followed by Nevada, with Texas and Florida not too far behind.

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Real Estate Foreclosure Filings2006_foreclosure_rate_heat_map

Courtesy of RealtyTrac

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UPDATE February 7, 2007 11:23am

I see the problems coming from two distinct groups, the low end and the speculative high end.

The Specs got extended, using cash/borrowed money to play the flipper game. Most of these players are fairly well heeled (i.e., upper middle class) and were looking to make a few quick dollars. When the music stopped, they got caught without a chair. I suspect a large percentage of this group will be able to figure a way out of their bad investments with minor (i.e, no bankruptcy) losses. Painful, but not standard-of-living threatening.

The other group are the subprime mortgagees — these are former renters that but for the very easy money, ultra low rates, and non-existent lending standards, would not have been able to buy a home. They paid up for ARM mortgages (7.75%), were over optimistic in terms of expectations for meeting their payments, and are now defaulting as their mortgages reset — earlier and in greater numbers than previously.

Category: Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

41 Responses to “Foreclosure Heatmap”

  1. VJ says:

    David Lereah was just on the ‘Today Show’ claiming the housing market has turned and is rallying.

    Anyone good at pushing on a string ?
    .

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  3. Rusty says:

    I’ve read about this before, particularly regarding Georgia, and a lot of it has to do with state-specific laws surrounding foreclosure. It’s not an apples-apples comparison across states – some require banks to jump through a lot of hoops to foreclose, some don’t.

  4. wally says:

    The patterns don’t particularly surprise me… probably could have been drawn out pretty closely just by ‘hunch’.

  5. rob says:

    interesting chart. i haven’t been able to find it on the realtytrac web site. do you have to pay to get this data?

  6. Chief Tomahawk says:

    Michael Shedlock, aka “Mish”, has an interesting post up about Freddie Mac and their delinquencies and Footnote #12:

    “Essentially Footnote # 12 says that if Freddie Mac renegotiates the terms of the loan with someone who is delinquent then “voilla” that person is no longer delinquent. It seems to me that since about June of 2006 Freddie Mac is struggling to keep this ponzi scheme afloat.”

    http://globaleconomicanalysis.blogspot.com/

    The post is titled “Delinquency Footnote # 12″

  7. In doing some research on the subject, I spoke with RealtyTrac — the emailed this map to me

  8. wcw says:

    Could you ask them to do a version weighted by foreclosure dollar volume? I know it would be harder, but it would be a lot more interesting.

    In short, who cares about the Dakotas? I want to see foreclosure rates that are going to hit bank and homebuilder bottom lines.

  9. russell120 says:

    With such a small data set, it will be difficult to conclusively show that the geographic pattern is not random. But it is certainly worth a look.

  10. GRL says:

    This gives the ranges, color coded. What are the actual numbers, in total, and per capita, in each state?

  11. Isaac says:

    I think it would be interesting to know if there were a correlation between the foreclosure rate (an indication of how much speculation got out of hand) and the percentage of state tax revenue obtained from property taxes. I think this is one possible reason why Montana, where I live, didn’t participate much in the run up, and hasn’t given much back in the last year. Compare that with states like TX and FL, that aren’t so property tax intensive. Just a hunch, would be interesting to see the data.

  12. Mike_in_FL says:

    The states with the most foreclosures fall into one of two categories, in my opinion:

    1) They never had much appreciation even during the boom due to location-specific economic weakness (Colorado never fully recovered from the tech/telecom bust, from what I’ve read) OR land abundance (Texas — builders there can keep throwing up homes as far as the eye can see). That leaves homeowners with little or no equity cushion. Even a slight decline in prices can push many of these high-LTV/weak credit/no reserves owners over the edge.

    2) They experienced far too much speculative buying during the boom. That drove home prices far out of line with incomes, forcing buyers to turn to increasingly complex/risky home loans. Florida, California, Arizona, etc. are states I’d put in this category.

    I would expect both delinquencies and foreclosures to continue to climb throughout 2007 because for-sale inventories remain extremely high relative to any time in the past four decades, investor-driven artificial demand has evaporated, ARMs are resetting at the same time lenders are (finally) starting to tighten lending standards, etc.

    http://interestrateroundup.blogspot.com/

  13. Daniel Korn says:

    This isn’t as helpful as it could be. We really need to be able to see where in the state the foreclosures are occurring. I think most of them are concentrated in the urban areas, so we really need to see a heat map by zipcode. Otherwise, more urban states will naturally look redder than rural states even if foreclosures are taken places equally among urban areas. Think you can get a heat map by zip code?

  14. Teddy says:

    In a recent newspaper article, I see that rents in NYC are up 7% in the last year and 22% in the last 3 years. This along with beef, chicken, bread, medical costs, et al doubling in price in the last 4 years have left 1.2 million New Yorkers trying to decide whether to buy food or pay the rent.

  15. Jason G. says:

    Ahh… another use of the red state/blue state color coding. Thank goodness, I was getting tired of all those politicos hogging the color spectrum!

    Excellent resource, and an excellent find.

    If you’re in a quant mood, maybe a foreclosure density (like this over at econobrowser)?

  16. Tom B says:

    The other thing that could be better would be to have per HOUSEHOLD instead of per capita numbers…..

  17. Mike says:

    I don’t know. I think it kind of makes sense. The southern areas would have a lot of foreclosures because of a) speculators getting burned and b) a ton of nonsense interest-only loans to people who had no business getting them (and many of these are probably the illegal Mexican population in those regions).

    The other area would be the rust belt. While I suspect there was never much of a “froth” in that region, we continue to lose manufacturing jobs from there, so I would think that would be a factor.

  18. Rusty says:

    Kind of on queue, here’s an article about how the exurbs have been hardest hit by the real estate slowdown, which confirms some of the hypotheses above.

    http://money.cnn.com/2007/02/06/real_estate/exurbs_housing.reut/index.htm?cnn=yes

  19. costa says:

    “In a recent newspaper article, I see that rents in NYC are up 7% in the last year and 22% in the last 3 years. This along with beef, chicken, bread, medical costs, et al doubling in price in the last 4 years have left 1.2 million New Yorkers trying to decide whether to buy food or pay the rent. ”

    Pretty much, its so expensive to live here. Not to mention the price to commute into the city, keeps going up. Put people still keep renting 750sq ft for 1500 a month

  20. Teddy says:

    Costa, and more people renting per unit sq ft!

  21. Sri says:

    Now, let us turn to the economic impact of this housing slowdown/bust. This slowdown for what ever reason hasn’t turned into national economic slowdown as many predicted. Do we know why that is? Is it “this time it is different”?

  22. Unknown says:

    The DC/MD/VA area was one of the areas with the highest levels of I/O and ARM loans, yet it is showing one of the lowest foreclosure areas of the country. What I read recently said that RE agents are going to bankruptcy courts and buying the homes at cut-rate prices before people foreclose on them, then the RE agents are reselling them. It seems somewhat unethical and a way to keep the RE market falsely propped up in that area of the country.

  23. Foreclosures By State

    Heres some interesting information from The Big Picture regarding foreclosure filings by state.
    Colorado leads the nation, followed by Nevada, with Texas and Florida not too far behind.

    Kentucky is near to the middle, which is better but with …

  24. Bob A says:

    “Faith based lending (and borrowing)” runs into reality. Just keep thinkin’ those positive thoughts folks. It’ll all work out.

  25. Al says:

    The entire west coast and Florida are fairing the worst. This is where speculators pushed home prices up way beyond what local workers could afford to own.

  26. OkieLawyer says:

    Is there any way to get the raw numbers per capita?

  27. S says:

    Herb Greenberg has been sounding the alarm for years that the sub-prime mortgage writers were not adequately reserving for loan losses. He often wrote about NFI, but NEW just vindicated him.

    http://biz.yahoo.com/prnews/070207/law100.html?.v=62

  28. Rick Sharga says:

    Since you’ve asked, here’s a link to the RealtyTrac year-end report. It lists the number of foreclosure filings by state, along with the per household rates. It also ranks the top 100 metro areas in the US based on their foreclosure filing rates.

    http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=1855&accnt=64847

    We also have a blog with a lot of foreclosure investing information and statistical data (www.foreclosurepulse.com).

    If anyone is interested in state info broken out by county and/or zip code, that is available as a monthly report. We can do heat maps at the zip code level, but on a national basis, the image would have to be pretty large to be legible.

  29. BamBam says:

    It would be interesting to know what percentage of “market price” these foreclosures are being sold for at auction. Does that percentage vary greatly by area?

  30. Idaho_Spud says:

    Neither of the two groups you mentioned in foreclosure will be buying a home anytime soon. Who is supposed to be buying in Mr. Lereah’s recovery?

  31. BeachBum says:

    And if you needed further confirmation of the subprime lending problem, here it is -

    http://online.wsj.com/article/SB117088245754201362.html?mod=home_whats_news_us

  32. weezielovesmoonpies says:

    “Ahh… another use of the red state/blue state color coding. Thank goodness, I was getting tired of all those politicos hogging the color spectrum!”

    Jason G.,

    Actually, it looks a lot (though not exactly) like the political use of the color spectrum.

  33. weezielovesmoonpies says:

    Sorry–I should have said the reverse of the politcal use of the color spectrum.

  34. I’d like to see a heat map by zip code, as well. In addition, a map or list of where federal, state, and local government money is being spent in the “hot spots” would be interesting. That would put the defaults into a broader context even within zip codes and localities.

  35. The rate of foreclosure, if not just as bad probably worst, with a plethora of over zealous amatures across the country saturating the local market.

  36. The rate of foreclosure in Chicago, is just as bad if not worst, with a plethora of over zealous amatures across the country saturating the local market.

  37. Do you think that due to media-hyping foreclosures banks are tougher to negotiate with?

  38. Do you think that due to media-hyping foreclosures banks are tougher to negotiate with?

  39. Wow. This came up in the top 10 results on Google for Florida Heat Map

  40. Johnny says:

    It depends on whose negotiating with the banks. They are not going give anything up unless you show them why they should. The might give you little quirks here and there but nothing major. We specialize in negotiating with the lenders and banks for you. We have the experts needed to take your situation and negotiate a new program. We’ve stopped foreclosures, dropped interest rates, wiped out past dues and more for our clients. We’ll save your house.

  41. anon says:

    Is this data being updated month to month? Would be good to see the absolute numbers per state. Also, as another poster suggested, it would be good to have a zip code heat map.