How much residents of each state owe on their mortgages is an interesting statistic. For the most part, residents of the states with the highest average mortgage debt are not in trouble. While the average home price in these states dropped in value during the recession, the foreclosure rates in these states are among the lowest in the country. The reason: residents of these states can generally afford to lose and owe more money than their counterparts in other states.
24/7 Wall St. examined a recent report by Credit Karma to find the 10 states with the highest average mortgage debt. Most of the states on our list have extremely high mortgage debt because of the size of their initial mortgages. States like Connecticut and Massachusetts, which have among the highest median home values in the U.S., also have among the highest mortgage debt. Hawaii, which has the second-highest average mortgage debt per person, has the highest median home value of $525,400.
Many of the states on the list also experienced the steepest declines in home value during the recession. Home prices in seven of the states with the highest mortgage debt declined during the recession. In states like California and Nevada, properties lost more than 30% of their value. Even in states like New Jersey and Maryland, which fared relatively well during the recession, homes lost between 7% and 10% of their value.
Sharp declines in home values, coupled with high mortgage debt, should translate to financial disaster. However, while home values dropped more than 7% in Maryland, Massachusetts and New Jersey — states where mortgage debt is the highest — foreclosure rates stayed low.
Meanwhile, states with the lowest median home value and relatively high mortgage debt tend to have the highest foreclosure rates. Illinois, Michigan and Florida all have median home values below the national average and relatively high mortgage debt compared to housing prices in the state. These states also have among the highest foreclosure rates in the country.
These are the 10 states with the worst mortgage debt.