Housing Hardship Index: Coronavirus crushes some state economies, spares others

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Some patients infected with the coronavirus suffer devastating health effects, while others feel only mild symptoms. COVID-19’s economic effects are proving unpredictable, too — some states are being hammered by the resurgent disease, while others remain economically robust.

The tourism-dependent states of Nevada and Hawaii have reported relatively few COVID-19 deaths, but their economies are suffering the most among U.S. states. That’s according to the Bankrate Housing Hardship Index for May.

Our metric sums mortgage delinquencies and unemployment to show which states are enduring the most extreme slowdowns during the pandemic. Michigan, New Jersey and Rhode Island also struggled with the one-two punch of soaring delinquencies and mass layoffs in May.

“States experiencing high unemployment will see mortgage delinquencies surge if unemployment remains elevated as forbearance periods expire,” says Greg McBride, CFA, Bankrate chief financial analyst. “This year may see the worst for unemployment, but 2021 will likely bring the worst for mortgage delinquencies and defaults.”

For now, foreclosures remain rare. Mortgage giants Fannie Mae, Freddie Mac and the Federal Housing Administration unveiled forbearance programs that allow borrowers to miss up to a year of payments without penalty. Real estate markets are local, as the saying goes, and the Housing Hardship Index indicates which regions may face protracted recoveries, and which areas might emerge comparatively unscathed.

Some states — especially those in the upper Great Plains — have weathered the coronavirus storm well so far. Nebraska had the best showing in the Housing Hardship Index, and Idaho also was performing well. Neither state’s unemployment rate had cracked double digits in May, when the national jobless rate reached 13.3 percent.


The 5 hardest-hit states from coronavirus

The fallout for real estate and labor markets is severe in some corners of the country. These five states fared the worst in May:

  1. Nevada. Its mortgage delinquency rate rose to 9.99 percent in May from 7.97 in April. Unemployment fell to 25.3 percent from 28.2 percent in April, for an overall reading of 35.29. Nevada also was the hardest-hit state in April.
  2. Hawaii. Another tourism-dependent state, Hawaii saw its mortgage delinquency rate rise to 9.30 percent in May from 7.12 percent in April. Unemployment edged up to 22.6 percent in May from 22.3 percent in April, for an overall measure of 31.90. Hawaii remained No. 2 in Bankrate’s hardship ranking.
  3. Michigan. The long-struggling state had reported more than 6,100 deaths from COVID-19 as of June 30. Its delinquency rate rose to 6.59 percent in May from 5.70 percent in April. Unemployment dipped to 21.2 percent in May from 22.7 percent in April, for an overall reading of 27.79.
  4. New Jersey. Another state hit hard by the coronavirus, New Jersey saw its delinquency rate jump to 10.49 percent in May from 8.81 percent in April. Its unemployment rate of 15.2 percent dipped down from 15.3 percent in April.
  5. Rhode Island. Mortgage delinquency rates jumped to 8.41 percent in May from 7.27 percent in April. Unemployment was 16.3 percent.

A deserted Las Vegas Strip

The Housing Hardship Index aims to show how states’ real estate markets could fare after the coronavirus recession. It’s inspired by the Misery Index, a tried-and-true gauge of prosperity that sums inflation and employment. By that measure, the “stagflation” days of the late 1970s and early 1980s were especially difficult.

Inflation isn’t a factor these days, so the Housing Hardship Index tracks two other statistics: mortgage delinquency rates issued by data firm Black Knight, and jobless numbers from the Labor Department.

Nevada has experienced a near-shutdown of its economy, which is driven by casinos, conventions and concerts — all victims of the coronavirus. The state hasn’t diversified its employment base much beyond tourism, and hospitality employment plunged 39 percent from April 2019 to April 2020, says Stephen Miller, an economics professor at the University of Nevada, Las Vegas.

“Things don’t look very good here in Las Vegas,” Miller says. “Leisure and hospitality was the worst-hit sector, and 30 percent of our employment in southern Nevada is in leisure and hospitality.”

Las Vegas’ vulnerable economy has scared off some real estate investors. For instance, Unison Home Ownership Investors, a company that takes equity shares in homes, says it won’t do deals in Sin City in the near future. “A place like Las Vegas would just be far too risky for us to invest right now,” says Brodie Gay, the company’s vice president of research.

It’s familiar territory for the Nevada real estate market, which was pummeled during the Great Recession. “Our recovery is going to be, like the last one, longer than the rest of the country’s,” Miller says. One saving grace, he hopes, is that many of Vegas’ visitors can drive from California.

Intriguingly, the virus itself hasn’t gained as much of a foothold in Nevada. The state had 536 deaths from COVID-19 as of June 30. By contrast, Connecticut, a state with a population similar to Nevada’s, counted more than 4,300 deaths from the coronavirus, according to the Centers for Disease Control.

Hawaii also has suffered only a glancing public-health blow from COVID-19. The state had reported 18 deaths as of June 30. The sharp economic slowdowns in Nevada and Hawaii illustrate that the pocketbook effects of the contagion can be crippling.

The 5 least-affected states

On the other hand, some states are doing better. Those least affected by the slowdown:

  • 47. South Dakota. Its unemployment rate of 9.4 percent was well below the national average, as was the delinquency rate of 4.68 percent.
  • 48. North Dakota. The unemployment rate was 9.1 percent in May, and the delinquency rate was 4.83 percent.
  • 49. Montana. Unemployment was 9 percent, and just 4.92 percent of mortgages were delinquent
  • 50. Idaho. Its unemployment is a comparatively low 8.9 percent, and just 4.29 percent of mortgages are late.
  • 51. Nebraska. The mortgage delinquency share is 6.12 percent, and the jobless rate is 5.2 percent.


To calculate the Housing Hardship Index, Bankrate used state-by-state mortgage delinquency data from Black Knight Inc., a prominent data firm, and state unemployment rates from the U.S. Department of Labor.

Featured image by Elena Pueyo/Getty Images

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