Thursday, October 21, 2010

What A Difference A Decade Makes

I recently came accross a report from the Federal Reserve Bank of San Fransisco entitled "Underwater Mortgages" where the authors,  John Krainer and Stephen LeRoy, attempt to determine the point at which underwater borrowers decide to throw in the towel and walk away from their homes.

While the article has some interesting information about the 'boiling point', I found that two of the images that accompany the report are just as interesting for people working in housing in Minnesota.

The first image shows the share of underwater mortgages in the fourth quarter of 2000:

(Click To Enlarge)

According to the figure, in the fourth quarter of 2000, Minnesota was one of only a dozen states where the share of 'underwater' mortgages was less than one tenth of one percent! (between 0% and 0.1%).

However, by fourth quarter 2009, our rate of negative equity homeowners had increased to between 6% and 10%:

(Click To Enlarge)

Interestingly... NO STATE was in the 0%-0.1% category by the end of the 'aughts'.

The complete report is here.

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