5 States With the Fewest Home Foreclosures in July

There are few statistics that better illustrate our economic travails over the last few years than the number of homes that continue to be foreclosed upon on a monthly basis.

The good news is that the number is shrinking. According to a new report from CoreLogic, there were a total of 49,000 completed foreclosures in July. This was 8.6% less than June and 25% below the same month last year. To see the figures for the previous month, click here.

The bad news is that we still have a long way to go before things normalize. Between 2000 and 2006, CoreLogic estimates there was an average of only 21,000 completed foreclosures each month. The current rate will need to fall by 57% to get back to that level.

That being said, the state of the foreclosure market is not uniform across the country. What follows, in turn, are the five states with the fewest foreclosures over the past 12 months. To see a list of the five states with the most foreclosures, click here.

State

Completed Foreclosures Over the Past 12 Months

Foreclosure Inventory as a Percent of Mortgaged Homes

District of Columbia

141

2.1%

North Dakota

484

0.9%

West Virginia

505

0.7%

Hawaii

512

3.7%

Maine

754

3.9%

Source: CoreLogic.

As I noted last month, it probably goes without saying that the number of completed foreclosures here has a lot to do with the population of the state in question. Take North Dakota and Maine as examples. These are two of the least populated states in the country. It makes sense, in other words, that they would have among the fewest foreclosures.

More telling, in turn, is the foreclosure inventory as a percent of mortgaged homes. The tides are reversed in this regard for at least Maine and Hawaii, which sport among the highest percentages of any state. The national average is 2.4%.

Percentages aside, the benefit of the relative health of these housing markets can be seen in the performance of smaller, regional banks like Bank of Hawaii (NYSE: BOH  ) , BB&T (NYSE: BBT  ) , and TD Bank (NYSE: TD  ) which have large presences in Hawaii, West Virginia, and Maine, respectively.

As you can see in the chart below, while the KBW Bank Index (DJINDICES: ^BKX  ) is still below its pre-crisis level, shares of all three of these banks have more than recovered since the beginning of 2008 as a testament to this.

BOH Total Return Price Chart

In addition, each of these lenders trades at a comparatively dear multiple. Bank of Hawaii is valued at 2.5 time tangible book value, BB&T at 2.1 times, and TB Bank at 2.6 times tangible book. Meanwhile, the average multiple on the KBW Bank index is 1.8.

These facts go a long way toward explaining why investors like Warren Buffett are so interested in smaller, high-quality lenders that have proven to be bastions of safety and profit.

The cream of the crop in this regard is the bank discussed in our free report on the stock that Buffett wishes he could own but can't because of its size. Since this bank's inception, it's returned more than 5,000% to shareholders in both dividends and share-price appreciation. It's no wonder, in turn, that it's regularly selected as among the top banks in the country time and time again. You can learn the identity of this bank instantly and for free simply by clicking here now.


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