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 52,000 completed foreclosures in May. While this was 3.5% higher than the previous month, it was nevertheless 27% below the same month last year.
The bad news is that we still have a long way to go before things normalize. Between 2000 and 2006, CoreLogic estimates that there was an average of only 21,000 completed foreclosures each month. The current rate will need to fall by 60% 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 most foreclosures over the past 12 months.
|
State |
Completed Foreclosures Over the Past 12 Months |
Foreclosure Inventory as a Percent of Mortgaged Homes |
|---|---|---|
|
Florida |
103,000 |
8.8% |
|
California |
76,000 |
1.2% |
|
Michigan |
64,000 |
1.1% |
|
Texas |
51,000 |
1.1% |
|
Georgia |
47,000 |
1.7% |
Source: CoreLogic.
The fact that Florida and California are at the top of the list should come as little surprise. This is because, as you can see in the chart below, these states experienced some of the most dramatic volatility in home prices before, during, and after the housing bubble.
So why does this matter? At least in the banking space, regional economic figures like these can make a big difference for the success or failure of lenders. It goes a long way, for instance, in explaining the problems at SunTrust Banks (STI +0.00%), which is based in Georgia, Wells Fargo (WFC 2.28%), which assumed Wachovia's heavy Florida presence, and Bank of America (BAC 2.63%), which has a significant footprint in California that was added to via its purchase of Countrywide Financial.
It also goes a long way toward explaining why investors like Warren Buffett are so interested in smaller, high-quality lenders that have proven themselves to be bastions of safety and profit.
