YBK, Part 3: Previously (here and here), I wrote about the frightening possibility that the Housing Bubble might burst at or before the time the new Bankruptcy Law goes into effect. To show the strong correllation between the number of bankruptcy filings and the value of residential property, I have compiled a chart to show the relationship between the percentage of bankruptcy filings per state in 2004 and the rise in property values since 2000, based on statistics from the U.S. Trustee's Office and the Office of Federal Housing Enterprise Oversight.

The numbers in red represent states that have an above-average percentage of bankruptcy filings per 10,000 residents (for example, Utah, which has had the lowest growth in residential property values over the past five years, also had the highest ratio of bankruptcy filings in the country). As you can see, states where the value of residential property has skyrocketed in recent years are at the top of the list in terms of bankruptcy avoidance, while states that have experienced mild growth are at the bottom (the big exception, of course, is Nevada, which, for reasons easy to understand, has seen both a property explosion and has had a relatively high number of filings over the years). If/when we begin to see a decline in states like California, Massachusetts and New York, which have relatively few filings in relation to their population, the result could be catastrophic.