The first detailed study of the housing market in Pennsylvania and its major economic regions is being released today by the Keystone Research Center (KRC) in Harrisburg.
The study, A Building Storm: The Housing Market and the Pennsylvania Economy, shows that while the Commonwealth has escaped some of the huge housing-related troubles that have struck neighboring states, Pennsylvania residents should not be lured into a false sense of security.
The bottom line, said KRC economist Mark Price, co-author of the new report, is that “the volatile cocktail created by a bursting housing price bubble, rising foreclosures in the subprime mortgage market, and a credit squeeze in financial markets could yet translate into hard times for many more Pennsylvanians.
Given that reality, Price said, “policymakers in Harrisburg as well as Washington, DC, need to be prepared with creative responses that help keep Pennsylvania, and Pennsylvanians, above water.
The full report, including specific housing data for the state’s 14 metropolitan areas, is available at http://www.keystoneresearch.org/housingmarket. Those metro areas include Philadelphia, Allentown-Bethlehem-Easton, York-Hanover, Reading, Lancaster, Harrisburg-Carlisle, State College, Lebanon, Scranton/Wilkes-Barre, Williamsport, Johnstown, Pittsburgh, Altoona, and Erie…
… A Building Storm also reports that:
- the foreclosure rate on subprime loans issued in 2006 in Pennsylvania is projected to be 53 percent above the rate on subprime loans issued here from 1998 to 2001.
- an estimated 45,500 subprime mortgage foreclosures are projected in Pennsylvania between the third quarter of 2007 and the end of 2009. That, say the authors, represents a loss of $2.4 billion in property values.
Price pointed out that one way to gauge vulnerability to foreclosure in a particular neighborhood is to examine the number of subprime mortgages as a share of all mortgages. In Pennsylvania, according to data on new home mortgages originated in 2006, the counties with the greatest share of subprime home loans are Forest, Cameron, Venango, and Fayette. Maps showing the share of 2006 mortgages that are subprime, in each census tract within each county, are also available at http://www.keystoneresearch.org/housingmarket.
Herzenberg said the most important piece of the KRC housing report is the section that proposes practical solutions. “Much of the responsibility for stimulating the economy rests with the federal government,” acknowledged Herzenberg. “But creative state action can also help Pennsylvania remain in better shape than other states and position it for robust prosperity once any recession ends.”
