New York And Four Other States’ Economies Are Faring Worst During The Pandemic

New York’s economy is suffering the most due to the coronavirus pandemic, according to an analysis by personal finance publication Bankrate. 

To measure the fallout, and also to determine which real estate markets could be most impacted by the pandemic in the coming years, the company determined a Housing Hardship Index based on July mortgage delinquency rates from Black Knight and July unemployment rates from the U.S. Department of Labor.

New York’s July mortgage delinquency was 8.38%, the 11th highest (though a decline from 10.01% in May) and its unemployment rate was at 15.9%, the second highest, increasing from 14.5% in May. That increased its overall Housing Hardship reading to 24.28.

Nevada, New Jersey, Mississippi and Massachusetts joined New York in the top five. 

Nevada, however, seemed to be in better shape, with casinos reopening and its jobless rate falling to 14% in July, down from 15% in June and a high of 25.3% in May. The state’s mortgage delinquency rate also fell to 8.77% in July, down from 9.71% in June and 9.99% in May

“New York and New Jersey are suffering economic slowdowns because they were the epicenter of the coronavirus pandemic in the spring,” says Bankrate.com analyst Jeff Ostrowski. “As a result, those states have been especially slow to reopen their economies. Nevada has been hit hard because its economy relies heavily on tourism, and travel has slowed dramatically since March.”

Mississippi was a new entrant in the top five based on its real estate market. 

“Mississippi had an unusually high mortgage delinquency rate even before the recession, and it continues to have the nation’s highest share of homeowners late on their mortgage payments,” Ostrowski says. 

Massachusetts had the nation’s highest unemployment rate in July, at 17.4%, though its mortgage delinquency rate was comparatively low at 5.81%.

“State and local officials remained cautious about reopening the economy, Ostrowski says, with the report noting that there were nearly 9,000 deaths from COVID-19 as of Aug. 25 in the New England state.

The five states where the economies are in the best shape are Idaho, with a mortgage delinquency rate of 3.71% and an unemployment rate of 5%, along with Utah, Montana, South Dakota and Nebraska.

Bankrate.com analysts determined that while this year may be the worst for unemployment, mortgage delinquencies and defaults will increase significantly in 2021.

The report noted that a rush of foreclosures have been staved off by the Coronavirus Aid, Relief and Security (CARES) Act, which requires government-backed lenders to forgive up to a year of missed payments without penalty, while other lenders have also voluntarily extended forbearance to more than a million borrowers.