Statistical Snapshots of Virginia’s Foreclosure Crisis

I could find material for a dozen blog posts in the 2011-2012 Virginia Economic Forecast prepared by Chmura Economics & Analytics and just published by the Thomas Jefferson Institute for Public Policy. But there are so many other pressing matters to write about that I will confine myself to the fascinating data presented regarding the foreclosure crisis in Virginia.

First, consider the graph to the left. Once upon a time, like eight years ago, the percentage of Virginia households that could afford the median-priced home tracked that of the national average. Then the Old Dominion broke free from the pack. By 2006, we had a full-fledged affordability crisis. The gap between Virginia and the national average has narrowed since then as prices have dropped, but it persists. Affordability remains an issue. That’s the bad news.

Fortunately, there is some good news. The rate of foreclosures in Virginia is half the national average — hardly an outcome I would have expected given the persistence of the affordability gap. The graph to the right shows that the foreclosure rate in Virginia is a small fraction of that in former go-go states like Florida and Nevada. To what do we owe our good fortune? Stronger employment and incomes? More responsible lending on the part of Virginia banking operations? Frankly, I don’t know.

The third graph shows the details. The surge in housing prices was strongest in Northern Virginia, Hampton Roads, Winchester and Charlottesville. The subsequent drop in housing prices was worst in Winchester and Northern Virginia, followed by Richmond, Hampton Roads and Charlottesville. The smaller metro areas missed much of the run-up… and nearly all of the bust.

Which brings us to the last graphic, which shows where the foreclosures filed in March 2011 are the most numerous. Not surprisingly, foreclosures occur where the people are, in the most populous parts of the state. It would be helpful to see a breakdown of the number of foreclosures expressed as a percentage of the population or the number of homeowners. Still, we can draw some conclusions from the limited data. There are vast swaths of the state where the number of foreclosure filings were less than 12. If there were fewer than 12 filings in a month in a jurisdiction, it’s pretty safe to say that there is no foreclosure crisis there.

(Click on maps and charts for more legible images.)

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