Ben Bernanke, Chairman of the Federal Reserve, made a speech on May 5 at Columbia Business School where he laid out some of the repercussions of the mortgage crisis affecting the US economy. A large portion of his speech focused on the geographic distribution of foreclosures and other components of the crisis, including housing prices. To quote Bernanke:
On the principle that a picture is worth a thousand words, Federal Reserve staff, using detailed, county-by-county information on mortgage performance, have developed a series of “heat maps,” which summarize the incidence of serious mortgage delinquencies across the nation as well as some of the key drivers of loan performance. As the examples will make clear, the figures (with the exception of one map depicting house price changes) use warmer colors–orange and red–to show counties for which the factor being considered has a higher value or change. Lower values or changes (again, with the exception of that one map) are indicated by shades of green. Yellow indicates areas where the factor under consideration has a moderate value or change.
Bernanke included seven maps with his presentation: Mortgage Delinquency Levels by County for 4th Quarter 2004; Mortgage Delinquency Levels by County for 4thQuarter 2007; Change in Mortgage Delinquency by County Q4 2004-Q4 2007; Unemployment Rate Change by County (2004-2007); Change in House Price Index by County 2004-2007; Non-Owner Occupied Home Purchases by County 2005-2006; and Percentage of Home Loans with Piggybacks by County 2005-2006. As Bernanke mentioned, each map uses colors to demonstrate the lowest through highest quintiles of the data.
Even a brief glance at the maps indicates what anecdotal evidence has already confirmed–the impact of the mortgage crisis is being felt differently in different parts of the country. The Southwest has suffered severe increases in foreclosure rates and decreases in housing prices. Every county in both Nevada and California has seen its average home prices drop to 2006 levels or below. Similarly, the Midwest–particularly Michigan–has also suffered, as has Florida, and parts of New England.
Other states have different problems. The 2004 foreclosure rate map indicates that Southern states like Mississippi and South Carolina were were already suffering from disproportionately high foreclosure rates, and that those rates have not diminished (though they have also not increased). Some counties in Indiana that already suffered high foreclosure rates, however, have seen their rates increase dramatically.
In the Thursday edition of the Economist, this article also referenced Bernanke’s mortgage maps, point out a significant limitation in the data:
Mr Bernanke’s maps use figures from the Office of Federal Housing Enterprise Oversight (OFHEO)…OFHEO’s figures include only houses financed by mortgages backed by the government-sponsored giants, Fannie Mae and Freddie Mac. They leave out the top and bottom of the market—where prices rose fastest during the bubble and where the mortgage mess was most severe. Thus OFHEO’s figures probably understate the scale of the housing mess.
The Economist helpfully provides this additional chart of housing prices, comparing the OFHEO numbers against more “representative” figures that are indeed worse. The article above also recreates one of Bernanke’s maps in a design and color scheme that is easier to read.
All seven of Bernanke’s Federal Reserve maps are presented in a slideshow at the bottom of this page. Additionally, the Fed has provided a breakdown of all the counties by quintile here.
I found the Fed data for this post via Calculated Risk. And thanks again to Alex for another recommendation!
I find it odd that NoVa has been hit so hard by mortgage delinquincy since housing prices (at least in the immediate) metro area have not yet adjusted downward. Unless it’s just really bad outside the beltway, I wonder what other factors are contributing to people not paying their mortgage payments.