Subprime Mortgage Collapse

In the News

I’m sure everyone out there has heard speculation about the housing market bubble bursting. The US housing market has been going strong for years and has shown signs that it is slowing, and possibly even collapsing. Mortgage companies have been offering adjustable rate mortgages (ARM’s) at super low rates, which spurred on the housing boom. However these ARM’s don’t stay at the low rate for the entire mortgage, after a few years the rates jump up causing a mortgage that was costing around $995 a month to cost around $1,330.

The collapse of this housing bubble could lead to wider economic issues for the US. Home Depot and Lowe’s are cutting their earnings estimates because they are so closely tied in with the housing market. But these companies aren’t the only ones that will feel the effects of the housing market, many of these mortgages have been taken over by third parties, such as Wells Fargo, Countrywide Financial, Morgan Stanley, Bear Stearns, and the two largest mortgage holders in the country Fannie Mae and Freddie Mac.

What the Data Says

I went to GeoCommons and Found a dataset showing the 500 zip codes with the most foreclosure filings. It looks like they most of the foreclosures are in the Michigan, Ohio, Florida and California. There are other localized hot spots throughout the country, but the Northeast and Northwest seem to be doing pretty well.

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I’m very curious to see how the foreclosures are going to spread, as more and more people start to get hit by their ARM’s. There will obviously be more foreclosures where there are more houses, but New York so far seems relatively unaffected by the housing slow down, especially when compared to Detroit. I’m sure there will be future updates on this topic, so stay tuned. To visit the original map go here