Deep Housing Market Problems Mostly Localized

The housing bubble and collapse were felt on a national level, but some markets were a lot more affected than others. Yesterday's Mortgage Bankers Association second quarter delinquency data made clear that some states' housing markets are struggling far more than others. If you follow the sector, then you can probably guess the worst states.

First, here's a map of serious delinquency (from the MBA):

mba map delinquencies 2010-q2.png

The MBA defines "serious delinquency" as 90+ days delinquent plus foreclosure inventory. You can see that Florida and Nevada are the worst -- by far. For Florida 20.1% of mortgages were seriously delinquent. For Nevada this described 18.9% of mortgages. The other states drop off significantly from there, with Arizona, California, and Illinois the only others above 11% at 11.9%, 11.3% and 11.1%, respectively.

If you look just at 90 days or more delinquent, then the worst are still mostly the same, though Nevada is now #1 with 8.6% of mortgages, followed by California, Arizona, and Florida, all three of which are between 6% and 7%. It's interesting to note, however, that many of these states are doing relatively well in the early stage of delinquency, from 30 to 59 days. California, for example, is suddenly ranked as the 40th worst, or 11th best. Even Nevada comes in 33rd worst.

This likely partially indicates that the initial housing bubble problems, driven by subprime and adjustable-rate* mortgages are taking a backseat recently due to unemployment-driven defaults. Alternatively, other states with high early-stage delinquencies could mean that since the housing inventory in those states isn't as flooded or underwater, struggling homeowners are able to find sellers more easily instead of defaulting.

As for the lagging foreclosure indicators, however, it's those usual suspects that remain troubled. Here's foreclosure inventory (from the MBA):

mba map foreclosure inv 2010-q2.png

And foreclosure starts (from the MBA):

mba map foreclosure starts 2010-q2.png

You have to wonder how the economies of states like Nevada, Florida and Arizona will fare going forward. They were all very dependent on housing, an industry which will be very weak for a prolonged period. This contrasts with California, which already appears to be improving relative to the rest of the pack, probably because its economy is better diversified in a variety of industries like technology and media.

Note: Thanks to the Mortgage Bankers Association, which provided its consent to republish its charts here.

*Update: I should have been clearer here. As I mention in response to a comment by Jozef_2, the sorts of ARMs I'm talking about are those wacky ones that included teaser rates and were generally marketed to people who couldn't ultimately afford their resets. Plain vanilla ARMs are probably looking pretty nice right about now, since rates are at record lows.