The Subprime Mess: State by State

Take a look at this map I found on It’s a state-by-state look at subprime mortgages. The redder the area, the greater number of subprime loans. Take a look at California:


The reason this is big news is that when real estate prices were hot, people who took out subprime loans could just refinance if their payments got too high. However, now housing prices are starting to fall and lenders are getting a lot more choosy on who they lend to. This is only going to make things worse before they get better.

8 thoughts on “The Subprime Mess: State by State”

  1. This is confusing. Look at CA (25%) and TN (27%). CA’s largest population centers are all in the red . . . none of TN’s are. How is TN’s overall proportion higher? Something seems amiss about that graph or the associated numbers . . . either that or the graph is just really misleading.

  2. Brad,

    I think there’s two sets of numbers. The one that is highlighted when you highlight a particular state is the percentage of subprime loans for the ENTIRE state. The red areas inside the state is the concentration of those subprime loans.

    They should have done a better job explaining their map.

  3. I don’t think so, JLP. From their explanation it seems like they are comparing subprime to total mortgages in each MSA, not share of subprime mortgages for the state. There is too much red in CA for it to be concentration within the state . . . it would add up to more than 100% even if all MSAs were at the bottom of the red range (20%).

    After another look it seems like the problem may lie in the difference between MSAs and rural areas. In TN the rural population is generally poorer, so the subprime loan % may be higher there than in any of the MSAs, bringing the total % up above. In CA, perhaps the area outside the MSAs has a very low proportion of subprime mortgages, bringing the state proportion down. I don’t know.

    Regardless, it’s a confusing map– they should have left off the state totals if they weren’t going to explain why they are so different than the appearance of the map.

    Your point stands though . . . the areas where the market was blazing hot are in far worse shape. The market priced people out of conventional mortgages but people bought anyway, getting what loans they could. Seattle and parts of FL and the Northeast look pretty lousy too. In TN this hasn’t been much of a problem . . . the subprime mortgages here may not be much higher than they’ve ever been. I’d like to see data on that though.

  4. FWIW, in Los Angeles County (my local area), the effect appears to be very localized. That is, some areas even within the county are hit hard, and others are doing okay. For example, in our particular city within LA County, we certainly have higher inventories, but our city’s default rate isn’t that high, and the subprime percentage was never as high as San Bernardino, e.g.

    It appears that (for our little local region), the “entry level” homes/condos were always both too expensive and too small for those typically getting subprime loans. Employment levels are doing quite well in our little region, so I don’t think we have too much to worry about. However, I’ve heard anecdotally that 2 cities to the south of us are hit hard. Also, the farther east you go (away from jobs, more affordable) is also hit hard.

    Just a point of view that even these maps county-wide aren’t local enough to fully understand what’s happening at ground level.

  5. It’s weird where I live (mountains of NC) you could never really guess there was a housing problem unless you watched the news. But then again there is some serious drawbacks to living in the next Florida. Considering Tiger Woods is getting ready to build his first US golf course right down the road, it’s quite difficult for locals to find affordable places to buy. I’m just glad my family is in an industry that profits from all the development, that way I can just try and ride it, save up a bunch, and move somewhere cheaper.

  6. I think this thing is a simple density map, so all it shows is CA has the highest population. One question: if jumbo mortgages are considered “subprime”, this would explain the red in California. TX and several other states have higher “percentages” than CA, whatever that means.

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