Burnt Orange Report

We're number one!

Actually, this fits into the long-term downward social-economic spiral that the state demographer is worrying about. See Kuff's post here (http://www.offthekuff.com/mt/archives/004898.html#004898).

Our low-tax, no-service mentality is about to rise up and bite us in the ass.

I'm no statistician, nor an economist. But without adjusting these statistics for relative populations and in particular, homeowning populations, these stats are pretty meaningless and perhaps downright misleading. I'd wager, for example, that Texas is among the top two or three states in total number of homeowners period. Based on that, would you expect it to be in the bottom half on the gross number of foreclosures?

Well, the only data I could find for you Beldar (in my super quick referencing so there is probably something better) is the US Census data on home ownership.

The percentage is the proportion of homeowners to the total number of occupied households, which I think is very good for comparing states to each other. Texas is ranked 45th.

As the interest rate rises, variable rate home mortgages are going to be more expensive and thus, forclosures are going to go up. A variety of things cause the interest rates to rise, among them, excessive borrowing by the federal government. Forclosures are a good indicator of how much we are overborrowing and spending.

I think the national problem of consumer debt is our number one problem. Our economy is growing at a good pace, but the consumer debt we're piling on is a disease that will wreck our future. Any smart economic plan would take this into consideration. I hope one or both parties start recognizing this and put some plan in action.

Nate, the numbers you quote are based on total households (which include apartments for example) and of those, how many of them are owned (versus rented). The reason Texas ranks fairly low is that we've turned into a comparatively young, urban, and mobile state: We have far more young, mobile, apartment-dwellers than, say, Minnesota and South Carolina (tied for first). New York predictably ranked 50th and California 48th -- both home to famously rich apartment-dwelling yuppies/Gen-Xers -- in the stats you found (i.e., they have the lowest and third-from-lowest proportion of homeowners out of all households), with private-property-starved Hawaii nestled in between them at 49th.

But these numbers tell you nothing about the absolute number of homeowners in any given state, and more about the urban/suburban/age mix than about how well any of the states are doing economically.

Hypothetically, assume that Texas has 20 million homeowners and that South Dakota has 1 million. And assume there are 200,000 foreclosures in a year in Texas, but only 50,000 in South Dakota.

Would that mean the Texas economy is in the tank while everything's rosy in South Dakota? No -- in fact, adjusted for the states' respective homeowning populations, that would mean that your odds of losing your home were five times higher in South Dakota (50,000=5% of 1,000,000) than in Texas (200,000=1% of 20,000,000). Yes, there would be 150,000 more total foreclosures in Texas than in South Dakota. But that's a meaningless figure unless you also look at, and adjust for, the relative number of total homeowners in each state.

You know the old saying: "There's lies, damned lies, and worst of all, statistics." I know you guys are eager to find bad economic news because it's another reason to dump on Dubya or Gov. Goodhair. But you're mixing up your apples and oranges to come up with predictions that it's about to rain grapefruits. Fuzzy math!

Oh -- one more thing, about variable rate mortgages. Only an idiot would choose a variable rate mortgage when fixed rate mortgages are at or near all-time lows.

The first house I bought was in 1984 or so, and my variable rate mortgage was at 18%. (Fixed rate mortgages then were going at 21 or 22% if I recall correctly.) As a result of the Reagan Revolution, interest rates fell from their historic highs during the Carter years, and within a couple or three years, my variable rate mortgage had dropped about eight percentage points, with a big corresponding reduction in my monthly payment. I was gambling that rates would go down, and they did. But these days, almost all the new mortgages and refinancings being done are fixed-rate deals to lock in the current low rates -- which will mean that if you're right and interest rates do go up, fewer existing mortgage holders will be affected. (The pinch will be on those foolish enough to have bought adjustable rate packages and those buying for the first time.)

The poor will always be with us, unfortunately. But instead of focusing solely on the margin, look at the big picture. The percentage of home ownership -- including in ethnic and geographic communities that have historically not been strong homeowners -- have hit all-time highs during Dubya's administration. Yes, I know, that's little comfort if you're the guy on the margin, your dot-com has gone bust, and you're having to return to apartment-dwelling or worse. But it's a mistake to extrapolate from that to say that the big picture is bleak.