Home Foreclosure Rates, Economic Freedom, and the Election

It strikes me that it would be interesting to examine the very uneven incidence of home foreclosure rates in the states and see if there may be any lessons to be learned about those states attitudes toward economic freedom and how they voted in the presidential election. So, which states had the highest 2007 foreclosure rates in number per 1000 mortgages? I have indicated which way the state voted in the presidential election using red for McCain and blue for Obama. The second number is the ranking for economic freedom from my post of 8 November 2008. I have looked for more recent mortgage foreclosure rates, but have not been able to find a complete set for all the states, so the 2007 rates will have to do for now.

Nevada 33.8, 6
Florida 20.0, 28
Michigan 19.5, 43
California 19.2, 47
Colorado 19.2, 3
Ohio 18.0, 44
Georgia 15.7, 11
Arizona 15.2, 21
Illinois 12.5, 27
Indiana 10.3, 23

All other states had 2007 foreclosure rates per 1000 mortgages below 10. South Dakota and Vermont had rates as low as 0.1. Maine's rate was 0.4 and West Virginia's was 0.5. The foreclosure rates are very unevenly spread across the country. Attempts to help people avoid foreclosure on the part of the federal government will involve huge transfers of money from some states with no problem to a few states with a really bad problem.

We will note that the average economic freedom index ranking of these states is 25.3, so the degree of economic freedom does not correlate well with the mortgage foreclosure rates. But, the Republican presidential candidate usually wins the vote in the states of Nevada, Florida, Colorado, Ohio, Georgia, Arizona, and Indiana of this set of states, if he is to be victorious. Yet of these 7 states in which Republicans are usually very competitive or winners, McCain lost in all but two. One of these was his home state, which one ought to be able to assume he would win. So of 9 remaining high mortgage foreclosure rate states, McCain won only one, Georgia. Of six remaining states which the Republicans usually have to win to win the presidential election, he won only one.

These usually competitive states have 72 electoral college votes, which would not have been enough to have won McCain the election. But, if we give Missouri to McCain, which still seems to be undecided, then McCain only would have needed to have won North Carolina, which he barely lost. In fact, Missouri had a mortgage foreclosure rate of 9.1 and North Carolina had one of 7.4, both of which are on the high side for the remaining 40 states (Yes, Obama, after the ten states listed, there are only 40 more, not 47 more.), so these two states may have gone into the Republican column without the sense of economic distress that these high foreclosure rates brought about.

Of course, it was not primarily the Republicans who were actually responsible for these foreclosure rates. The Democrats have been the prime movers in limiting home building which drives up home costs and forces more people to obtain subprime mortgages if they are to get a home at all. In some of the Rocky Mountain and other western states, the excessive Federal ownership of land plays a major role in driving up the cost of housing. This is a factor in Nevada, Colorado, Arizona, and in California. Again, the Democrats are more responsible for this. But, the people have a delusion that the party with control of the presidency is in power and responsible for all problems. Consequently, the high foreclosure rates worked against the Republican presidential candidate more than the Democrat candidate.

Of course, there were many problems with McCain in other respects and this one factor was probably not enough to explain the results. But, it was probably not of trivial importance either.