Alabama Dodges Mortgage Woes

To this point, and despite having some of the most ruthless foreclosure laws in America, Alabama has managed to dodge the mortgage foreclosure nightmares that have plagued the rest of the country.

Some might say it’s the result of sheer irrelevancy. Unlike many other states, Alabama has not seen its housing prices skyrocket since the late 1990’s. For example, here’s some examples of Housing Price Index charts (via – TheBurstingBubble) for some other states. (Click on the charts for a closer look)

HPI Chart for NY HPI Chart for DC HPI Chart for CA
HPI – New York HPI – Washington, DC HPI – California

Notice how, in each example, there is a brief plateau in the early 1990s where housing prices stayed roughly the same, followed by a huge increase in the late 90s and early 2000s. Admittedly, these are the extreme examples in the country.

However, for a regional example, have a look at Georgia:

HPI Chart - GA
HPI – Georgia

While it’s certainly less pronounced, you can make out the same pattern. Now, here’s Alabama’s chart:

HPI Chart - AL
HPI – Alabama

Two things to notice; first, and this should be obvious, housing prices never get as high in Alabama as they do in the other states. Second, we don’t see the plateau in the early 90s or the skyrocketing prices thereafter.

These skyrocketing prices are partly to blame for the foreclosure crisis in the much of the country; people looking to “move up” in home ownership were forced to buy houses that were way outside of their means. Perhaps because Alabama didn’t experience this trend, it hasn’t seen the foreclosures that the rest of the country has seen. In fact, according to the Associated Press, Alabama currently ranks 38th among all states in foreclosures. And while it’s certainly a statistic we don’t mind being at the bottom on, we should keep in mind that part of the reason is that we haven’t seen our real estate value booming like it has in the rest of the country.

Michael

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