Saturday, September 27, 2008

Want to see non-prime mortgage conditions in your area?

Federal Reserve Bank of New York hosts a super-cool dynamic map of non-prime mortgage conditions across the U.S. You can specify type of mortgage, sub-prim or Alt-A, and see the latest statistics (most current is August 2008) on:
  • number of foreclosures
  • share of loans per 1000 households
  • share ARMs
  • share of delinquencies
  • share in foreclosures
  • and a slew of other statistics, including share of high LTV loans (loan amount to value of home).

This is what I find for sub-prime market in my area, Boston, MA:

  • 19.5 loans per 1000 housing units
  • 1.9 foreclosures per 1000 housing units
  • 67.9% of the loans are ARMs (adjustable rate mortgages)
  • 15.1% of the loans are 90 days delinquent
  • 28.4% of the loans are resetting in 12 mo.

Now, let's compare that with the sub-prime market in Stockton, CA:

  • 34.3 loans per 1000 housing units
  • 4.6 foreclosures per 1000 housing units
  • 71.6% of the loans are ARMs (adjustable rate mortgages)
  • 9.9% of the loans are 90 days delinquent
  • 32.7% of the loans are resetting in 12 mo.

I expected that Stockton would be much worse than Boston, and it is with over two times as many foreclosures, but the sub-prime market sucks everywhere. There is an ongoing problem in these two markets: sub-prime and Alt-A.

The self-propelling downward spiral is amazing: sub-prime borrowers earn less income and pay a higher mortgage rate (the merits of sub-prime lending are not being challenged here); home values decline and defaults rise; escalating risk of default in the sub-prime market causes rates to surge relative to prime rates; rates reset, jobs are lost, sub-prime really can't pay now; foreclosures rise; the housing market deteriorates further; etc., etc.,..... and the cycle goes on until real price-discovery (a floor in the housing market) clears the foreclosure market at rock-bottom prices. Unfortunately, that hasn't happened yet.

Rebecca Wilder


  1. That was a really interesting article. It is amazing the difference in the areas of the country

  2. Odd you should look at Stockton - not exactly on a par with Boston. I go thru there as fast as possible. I do tend to disagree with you on when the housing market should bottom - I think way into next year, like May or June. As people start to lose jobs as foallout from this financial "crisis", more will lose their homes. When people in Darien, CN and Summit, NJ lose in droves, things are serious all over.

  3. I only think that sales will bottom this year. Prices not until mid 2009. May or June fore sales? Or for prices?

    I agree, Stockton is not on par with Boston, but the statistics from a glance do not appear to different. Further, the trend for each may be completely different - this data is just for one month, August 2008, out of the whole 1-year debacle.



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