FORTUNE – Over the past few months, a growing number of economists and analysts have suggested that the U.S. Housing market has turned the corner. While a recovery might be under way, many people still disagree and see a much longer road ahead. One unlikely indicator might settle any debate: Auto loan delinquencies.
Before the housing market crashed in 2007, consumers were most likely to pay their mortgage payment first each month, ahead of car loans and credit card balances in order of priority. In the years following the crash, consumers became more apt to pay down their credit cards before their mortgages. The divergence emerged as home prices plummeted and millions either lost their homes to foreclosure or remained stuck with homes worth less than their mortgages.
Now auto loan payments have risen to be a bigger monthly payment priority than credit card and mortgage debt.
In 2011, 9.5% who were delinquent on an auto loan were current on their credit cards and mortgages; 17.3% who were delinquent on their credit cards paid their mortgages and car payments on time; 39.1% who missed mortgage payments were current on their credit card and car loan payments, according to a report by the credit monitoring firm TransUnion. The report was based on analysis of a sample of approximately 4 million consumers in each quarter of 2011 that had at least one auto loan, a mortgage and a credit card. In each quarter, the study found that consumers preferred remaining current on their auto loan ahead of their credit card and mortgage.
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The trend was most pronounced in Florida and Michigan, which saw some of the most severe declines in home prices and where the vast majority of residents rely on their cars for transportation. It was less severe in states like Texas, where house prices fell less.
More broadly, the shift in payment patterns suggests that consumers have placed a higher value on their automobiles than their homes. Which isn’t altogether surprising, given that many rely on their cars to go to and from work, says Steve Chaouki, vice president of financial services for TransUnion. And unlike credit cards, auto loans aren’t revolving loans. So the implications of repossessions are probably bigger than the loss of a credit card.
What’s more, the dip in late payments reflects a bright spot in the auto industry. Home prices might have declined 34% from their 2006 peak, but the value of used cars has actually risen for the past two years. Following the financial crisis and subsequent recession, the supply of used automobiles shrunk as consumers began holding onto their cars longer and as they opted for previously owned vehicles over new ones. Last year, prices jumped 3% from 2010, according to the National Automobile Dealers Association.
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Ultimately, access to credit will play an important role in America’s housing recovery. What’s perhaps most interesting about the reverse in payment patterns is the way banks and finance companies have responded. While lending standards remain tight for home mortgages, they’ve extended auto loans and credit cards even to borrowers with not-so-perfect credit. Clearly, they’re a relatively safer bet. Last year, households with credit scores below 700 were issued $169 billion in car loans, a 26% increase from the previous year. And last May, credit card issuance reached a three-year high.
In other words, auto loans and credit cards have become a safer bet than home mortgages. “I expect things to stay like this as long homes are not appreciating,” Chaouki adds.
So if a housing recovery is up for debate, perhaps it’s best to find answers in the value Americans have placed on their plastic and rides.