Just who are these subprime borrowers?

In the comments to a post in Calculated Risk, I found a link to this chart at OC Register. It purports to show the subprime’s regional share of home-buying mortgages. I say purports because it is drawn from a database that only holds 50 percent of all subprime loans and 80 percent of traditional mortgages so it can’t be taken as the gospel truth. Still, it seems like it is a big enough sample that it ought to be roughly accurate.

This is what the chart says about Binghamton NY……

Binghamton, NY $76,300 15%

Based on what I know about the Binghamton Market, that seems roughly right to me. $70 to $90 thousand is what it will take to get a poor family a livable house in the Binghamton area.

Now let’s look at he figures for the Richmond-Petersburg, VA area……

Richmond-Petersburg, VA $116,600 41%

Let me ask you a question; do you think upstate New York or Virginia has been doing better economically? I don’t think there is much doubt about the answer to that question. It seems clear Virginia has had a lot better economic performance in recent years than upstate New York. So how come sub prime in Richmond-Petersburg area is more than twice the share of Binghamton? Are there really more poor people in the Richmond-Petersburg area?

I doubt it. I think the answer can only be that the speculative excess in Virginia was worse than it was in upstate New York, thus causing more people to overtax themselves to get a home.

But this raises an interesting question. Many people have been dismissing the problems with subprime as something that will not affect the majority of Americans. The current conventional wisdom seems to be that only poor people will suffer.

But if you look OC Register’s chart you will see that most of the areas that have the biggest percentage in subprime loans are also the areas that have had the strongest economic growth in recent years. If most of the subprime pain is going to be found in places that have done the most to contribute to this country’s economic growth in recent years, what does it say about the chances of the country as a whole weathering this problem without going into recession?

One Response to “Just who are these subprime borrowers?”

  1. […] _uacct = “UA-1202685-1”; urchinTracker(); Map of the Ethereal Land The Ethereal Voice Front Page – Politics – Money – Knowledge – Art – Food – Fun Masthead About Just who are these subprime borrowers? By Ape Man | March 12, 2007 – 4:29 pm Posted in Category: Front Page, Money In the comments to a post in Calculated Risk, I found a link to this chart at OC Register. It purports to show the subprime’s regional share of home-buying mortgages. I say purports because it is drawn from a database that only holds 50 percent of all subprime loans and 80 percent of traditional mortgages Click Here to continue reading. […]

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