Thursday, August 13, 2009

Parsing the July 2009 Foreclosure Data

Foreclosures - and the combination of adverse consequences thereof - are arguably at the heart of our financial and economic malaise. That being said, the monthly RealtyTrac foreclosure report should be reviewed regularly by anyone hoping to decipher the trends or current state of the economy.

The headline most commonly derived from the latest RealyTrac report - current as of July '09 foreclosure actions - has read something to the effect of "Foreclosures up 7% in July". This headline represents an aggregate, month-to-month rate of change for all 50 states and the District of Columbia. I feel that the year over year figure is far more instructive; in this case indicating that US foreclosure filings (default notices, scheduled auctions, and bank repossessions) were up 32.32% in July from the same period a year ago.

The chart above takes the analysis a step further, and plots the percentage change - in ascending order according to % change from a year ago - for each state + the district of Columbia. As is evident from the illustration, there is a wide range of disparity between the different states and their respective change in foreclosure filings. Relevant points from the data:
  • 13 States (includes DC) recorded a decline in foreclosure filings from a year ago
  • 22 States recorded a greater than 50% increase in filings from a year ago
  • 10 States recorded a greater than 100% increase in filings from a year ago
  • West Virginia, Hawaii, and South Dakota each recorded a greater than 250% increase in filings from a year ago.
  • Florida, California, Nevada, and Arizona accounted for more than 50% of all US foreclosure filings in July.
When assessing recent foreclosure data, it's imperative that readers be aware of the various foreclosure moratoriums that have been enacted in various states. These moratoriums have a severe distorting effect on the data for those States, and serve only to create a dangerous backlog of homes that will be drip-released back to the market for years to come. They do score short term political points with members of State Legislatures though. Sphere: Related Content

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