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John Lounsbury
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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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  • Unemployment as a Mortgage Delinquency Driver 5 comments
    May 22, 2010 11:53 PM | about stocks: XHB
    Calculated Risk has a graph that shows a relationship between unemployment and mortgage delinquencies, including foreclosures.  One inference from the graph is that a significant part of the mortgage problem is related to unemployment.

    For large image, click here.

    The two most dramatic outliers are Nevada and Florida, generally considered the two most over built states.

    Disclosure: No positions.
    Stocks: XHB
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  • Old Trader
    , contributor
    Comments (5732) | Send Message


    With all due respect, doesn't this rank up there with the news that water is wet?
    23 May 2010, 09:59 PM Reply Like
  • John Lounsbury
    , contributor
    Comments (4050) | Send Message
    Author’s reply » Old Trader - - -


    I wanted to expand this to also look at how the size of the housing bubbles in each state correlate with mortgage delinquency rates. I haven't been able to locate the MBA data table so I haven't done that yet. I know I could pay a big fee to the MBA to get the data, but I am not about to pay MBA and then provide them with free publicity.


    I think a nice multivariant analysis may be lurking here, but I have to get the data to explore.


    Sorry if my posting of the first thought in this process disappointed you. I often do this sort of thing in Instablogs. Some of them grow into articles and others develop no further and end up being isolated factoids as interesting as a disclosure that water is wet.
    24 May 2010, 11:36 AM Reply Like
  • Old Trader
    , contributor
    Comments (5732) | Send Message
    LOL...John, I understand completely...these instablogs can be the equivalent of "scratch paper".
    24 May 2010, 12:22 PM Reply Like
  • billddrummer
    , contributor
    Comments (1761) | Send Message


    Further development of the 'scratch paper' premise:


    One could argue that overbuilding artificially created a large number of construction jobs. People with those jobs bid up the supply of homes.


    With overbuilding exposed, construction employment plummeted, creating higher construction related unemployment--what I like to call 'primary' unemployment.


    As a corollary, real estate related employment rose right along with the expanded supply. This would cover mortgage bankers, title officers and their assistants, real estate agents, county recorder staff members, and the like.


    With overbuilding exposed, those jobs disappeared as well--'secondary unemployment.'


    And then there are the things that go with new home purchases--draperies, appliances, carpeting, furniture, lawnmowers and tools, and all the people involved in manufacturing, transporting, and selling them.


    With overbuilding exposed, those jobs vanished too--'tertiary unemployment.'


    And without a job, you can't pay your mortgage on time.


    Now, it seems to me that the entire country was affected to a degree--the primary reason for the recession. But the states most vulnerable to the popping real estate bubble suffered the worst--AZ, NV and FL.


    And as the chart shows, those states have yet to recover.
    24 May 2010, 03:58 PM Reply Like
  • ebworthen
    , contributor
    Comments (2799) | Send Message


    Of course, if you ask the FED and Congress and the Administration they will say that foreclosures are caused by the predatory lenders (that they are giving trillions at 0.25% to lend out for more mortgages underwritten by taxpayers and lending out at loan shark rates on credit cards of 29%). Barney Frank NEVER supported easy money for mortgage loans (*sneeze*). Hmmm...we must need some legislation.


    Those evil bankers! (left hand taking big $$$ bribe). "Now go and vote for me!"


    Oh, and it's all because of those silly Greeks too!


    We would never stoop to such levels (*cough*).
    23 May 2010, 11:29 PM Reply Like
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