A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Post-Gazette reports this morning on the continued strain that high unemployment is putting on the safety net in Pennsylvania.

• Ann Belser, Pittsburgh Post-Gazette — Gradual economic recovery belies personal realities

There are 1.8 million people in Pennsylvania so short of cash that they qualify for food stamps. That translates to 14.4 percent of the state’s population receiving at least part of their food budget from the Supplemental Nutrition Assistance Program.

The slow economic recovery from the Great Recession is not yet translating into personal recoveries…

Pennsylvania does not keep unemployment trend records on a month-by-month basis but in the fourth quarter of 2011, 33 percent of the state’s unemployed had been out of work for more than six months and the state’s labor force participation rate was 62.8 percent, lower than in the fourth quarter of any of the previous three years…

When Just Harvest advertised a part-time job paying $12 an hour to help people apply for food stamps, the agency was inundated with applications — including people with doctorates seeking a job that just required some education past high school.

Laura Tobin Goddard, executive director of the Pennsylvania Hunger Action Center in Enola, Cumberland County, said food pantries around Harrisburg are still reporting seeing a lot of new faces even 2 1/2 years after the recovery began.

Her agency, which is also a nonprofit that helps people access government programs and directs them to food pantries, received 500 calls in 2007 from people seeking assistance. Now it receives 100 calls a month.

Those of you betting that 2012 will mark the year the housing market in Pennsylvania came roaring back need to pay up. The Pocono Record reports on the percentage of borrowers that owe more on their homes than those homes are worth if they were put up for sale.

• Howard Frank, Pocono Record — Monroe County leads Pennsylvania in underwater mortgages:

Almost half the homes in Monroe County are worth less than what homeowners owe on their mortgages, according to a recent study.

That’s the highest “underwater” rate in the state, according to data from RealtyTrac.

The data show nearly one-third of all Monroe County homes are seriously underwater. That’s where borrowers owe at least 25 percent more on their mortgages than their property is worth…

By comparison, about 27 percent of homeowners across the state are, on average, underwater.

Chances on mortgages not looking good

A blog post by Mark Price, originally published at Third and State.

Economic forecasters predicting strong economic growth in the next several years rest those hopes on a robust recovery in residential construction. In light of that, The Philadelphia Inquirer has some troubling news this morning in a story about a surge in foreclosure filings over the last 12 months.

The rise in foreclosure filings may be the result of lenders moving forward with long planned foreclosures rather than a worsening of economic conditions. More troubling is the rise in 90-day delinquencies, which could be the result of the end of Pennsylvania’s Homeowners Emergency Mortgage Assistance Program (HEMAP). The permanent end to HEMAP also means rising costs for future taxpayers.

• Alan J. Heavens, The Philadelphia Inquirer — Pennsylvania foreclosure filings rose 24 percent from January 2011

The rise in 90-day delinquencies in Pennsylvania during 2011 coincided with the end of the state’s highly touted Homeowners Emergency Mortgage Assistance Program (HEMAP), which provided loans to borrowers behind on their mortgages that were repaid either when their financial crises ended or within 24 months.

In 2010, 13,654 homeowners applied for the assistance, and 2,798 were approved, said John Dodds, director of the Philadelphia Unemployment Project.

“All of those who applied were informed of housing counseling, and many probably had their mortgage modified or were otherwise able to save their homes,” Dodds said Wednesday.

Funding for HEMAP, which began in 1983, ended in August, as did the Act 91 requirement that defaulting borrowers be sent notices by lenders informing them of the program and available counseling assistance, Dodds said. Read the rest of this entry →

A blog post by Chris Lilienthal, originally published at Third and State.

The Pennsylvania Budget and Policy Center launched a new series today featuring stories of Pennsylvanians impacted by five years of state service cuts.

The first installment looks at the demise of the Homeowners’ Emergency Mortgage Assistance Program (HEMAP) after it was cut deeply in the 2011-12 budget and how it nearly cost a Western Pennsylvania woman her home. Check out the full story below and keep up with all the stories in the coming days and weeks at our Facebook page.

Judy earned a modest income from her clerical job until an unexpected health problem hit. She needed to work to pay her mortgage, but her doctor and physical therapist told her she had to take time off to recover. Judy, who lives in Allegheny County, went five months without income and fell behind on her mortgage payments. She faced the awful prospect of losing her home.

The Homeowners’ Emergency Mortgage Assistance Program (HEMAP) was designed to help Pennsylvanians like Judy. It provided short-term, low-interest loans to help homeowners continue making mortgage payments after losing their job or having their work hours cut through no fault of their own. Once the homeowners regained their financial footing, the loans were repaid. Over 28 years, the program helped more than 46,000 families stay in their homes, according to the Pennsylvania Housing Finance Agency (which administered the program).

When Judy turned to HEMAP for help, she hit a wall. Funding for HEMAP was cut so deeply in the 2011-12 state budget (by $8.5 million or over 80% from the previous year) that the Pennsylvania Housing Finance Agency had no choice but to shut HEMAP down in July 2011.

Fortunately for Judy, a federal program modeled on HEMAP helped her save her home. But like HEMAP, the federal mortgage help is no longer available. For now, Pennsylvanians are on their own if they lose their job and fall behind on mortgage payments, making it likely that Pennsylvania’s foreclosure rate will continue to remain high.

A blog post by Mark Price, originally published at Third and State.

Yesterday, Pennsylvania’s new Independent Fiscal Office (IFO) held a conference to release its economic and budget outlook for the next five years (PDF).

The event included presentations from staff at the Philadelphia Federal Reserve, IHS Global Insight, the Bureau of Economic Analysis and the National Conference of State Legislatures.

Several of the presentations noted that Pennsylvania’s job growth weakened over the summer primarily due to substantial layoffs of teachers and other state and local workers. The director of the IFO, Matthew Knittel, very cautiously predicted that state and local layoffs are at an end.

• Mary Wilson, WITF — State’s independent economy-watchers say modest growth ahead

For Matthew Knittel, the IFO’s director, the question is: has the state moved past that end-of-year period of weakness?

He said it appears so — the third-quarter poor showing was due to state and local government layoffs, which appear to have stopped.

“The most recent data that we see now going through December suggests that the layoffs at the state and local level have abated,” said Knittel.  “So we think they’ve stopped hemorrhaging jobs.”

The keyword in Knittel’s statement is “hemorrhaging.” Job losses in local governments are most certainly going to continue over the next 12 months, and that’s before we even consider the potential impact of another round of state budget cuts. The 10,000 dollar question is whether the local job losses will approach the roughly 20,000 job losses experienced in the 12 months ending in November. Later today, we will get a full tally of the local job losses in 2011 as the Commonwealth releases the December 2011 job numbers for Pennsylvania. Read the rest of this entry →

Blog post by Mark Price, originally published at Third and State.

The Philadelphia Inquirer reports this morning on the release of new data on home sales by the National Association of Realtors which shows the association has been overstating home sales since 2007.

• Alan J. Heavens, The Philadelphia Inquirer — National Realtors says it overstated home sales

The National Association of Realtors said Wednesday that, since 2007, it had overstated sales of previously owned homes by about three million. Between 2007 and 2010, actual sales were 14.3 percent less than reported, the group said, while in 2010, there were 14.6 percent fewer sales.

For those interested, Calculated Risk does a nice job making sense out of the revisions. In the Inquirer story, an Econsult economist engaged in an unhealthy amount of revisionist history:

Why did the Realtors wait so long?

Philadelphia economist Kevin Gillen said an economic model such as this one is typically modified only if its ‘performance has relatively degraded’ compared with the way it worked previously.

‘One of the primary reasons that so many models failed to predict not only the housing bubble, but the performance of the housing market after the bubble burst, is that such an event has never happened before,’ Gillen said.

Forecast models are built from past data, he said, and ‘the model will only work very well if the future looks a lot like the past.’

Economists like Dean Baker and Robert Shiller were making the case with data during the run up in the housing bubble that it was historically unusual for housing prices to rise substantially faster than the rate of inflation. So, in fact, housing prices were not behaving as they have behaved in the past. But as in all bubbles, a lot of people had a financial interest in pumping up the bubble whatever the cost. Here is a link to my favorite book on the housing bubble era, written by an economist at the National Association of Realtors.

Below is the trend in housing prices adjusted for inflation since 1990 in the US, Pennsylvania and Philadelphia Metro Area.

A blog post by Mark Price, originally published at Third and State.

The Harrisburg Patriot News ran a story on Sunday carefully detailing the extent of the foreclosure crisis here in the midstate; it is well worth a read.

• David Wenner, The Patriot-News — Foreclosure crisis hits families, neighborhoods, towns

Nationally, about 8 percent of homeowners are delinquent, not counting people already in foreclosure.

In the Harrisburg region, less than 7 percent of homeowners are delinquent, according to Lender Processing Services.

One of the biggest causes of a foreclosure is a job loss; with unemployment still very high in the Harrisburg-Carlisle region, the number of foreclosures will remain high. Another factor likely to make the foreclosure crisis in the region worse would be the failure to extend federal emergency unemployment benefits.

The figure below shows the housing price index for the all transactions (new purchases and home refinances) for the Harrisburg-Carlisle region. I present the index without adjusting for inflation. Since the third quarter, housing prices in the region have fallen by 3% compared to a 4.8% decline statewide and a 9.8% decline on average in the nation over the same period. As long as unemployment remains high, home prices will continue to be under pressure to fall.

Of course, as overall inflation has continued to grow during this period, this means that if you consider your home in the Harrisburg-Carlisle region as a store of value, that value on average has fallen by 6.7% since the third quarter of 2008.

Remember, these numbers are averages so you can always hope that your home is below average!