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This is an update to a map I did previously and attempts to compensate for Hawaii and California skewing the national picture so much.
This map is based on the average of the subprime home prices and the standard deviation from that average. (Note that this average is not the true national subprime average though, since 1/8th of the population lives in California, which has very expensive homes. California would therefore pull up the national average if I did a weighted average.)
The average subprime home value of the states: $213,377.
The standard deviation of the average: $91,615
Pure red represents two standard deviations above the average. Pure yellow represents the average. Pure green represents two standard deviations below the average.
Hawaii is off the chart coming in at 3.45 standard deviations above the average. California is too, coming in at 2.55 standard deviations above the average. (I'd need an even brighter red to do them justice.) New York is next, coming in at 1.59 standard deviations above the average.
Oklahoma is the least expensive, coming in at 1.13 standard deviations below the mean. (There is no pure green on the chart.)
See Also:
Calculated Risk: JEC On Subprime Crisis
Subprime Home Value Map
Source Data:
JEC: The Subprime Lending Crisis
average home value calculated using the 2006 Home Mortgage Disclousure Act (HMDA) data for subprime first-lien loans and loan-to-value ratios courtesy of the Center for Responsible Lending
5 comments:
I am guessing that New York is also skewed by large areas of upstate where not much happened in the way of price appreciation. At times it seems as if the entire employable portion of the upstate economy has moved to the Carolinas.
On a broader view, your map loosely seems to follow pay scales and cost of living numbers. That is not really that surprising. However, there was a (Brookings Institute I think) study that showed (counter intuitively) that defaults are higher in low cost of living areas then in high ones. The speculated reason for this was that it is easier for people in low cost of living areas to get the loans that will eventually get them in trouble.
I suspect you are right on all of that.
Take Michigan for example. Homes are inexpensive relative to the rest of the county. However, if you go back and look at the previous maps it sure doesn't look good for that state.
It is red on the unemployoment trend map.
It is red on the subprime crisis map.
However, California also matches those two conditions AND has expensive homes. Ouch.
California is the epicenter to me, although a case could be made that our industrial heartland's problems were here first and don't appear to be going away any time soon (even with a falling dollar).
In other words, problems are not being "contained."
Expensive homes in California? I got one. Difference is I got mine in 1995. You have to be careful pricing an entire market on the margins. Proposition 13 has created a market of slower turnover in many places. You have to understand that a whole lot of people who didn't participate in the market run up aren't going to be too baldly hurt in the collapse.
You have to understand that a whole lot of people who didn't participate in the market run up aren't going to be too baldly hurt in the collapse.
The same thing applies to me here in Washington State. I've lived in my house for 10 years (and intend on living here many more). While my neighbors seem giddy over the appreciation, I wouldn't mind a leveling off if only so my property taxes didn't go up.
The people hurt the most are (and/or will be) those that felt pressured (understandably perhaps) to buy recently as prices rose.
I should point out that my last comment was an opinion of course based on the assumption that property prices fall.
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