BluefoxToday blog : March 2010

Southern Nevada was hailed as the boomtown USA just a few years ago. Those days as many as 54,000 people annually moved into the area from all corners of the country. They came here for jobs and the climate and the good old-fashioned excitement of being able to live in Sin City dominated by the gaming industry and everything that comes with it. The phenomenal growth was partially fueled by affordable housing which was soon followed by more relaxed mortgage underwriting standards that eventually opened the floodgates to an unsustainable real estate boom. And then came the bust.  

The effects have been spectacular, rivaling the oohs and aahs the many colorful and exotic Strip shows manage to elicit from their thrilled patrons. It's just that they are now growled through gritted teeth, with the words mortgage foreclosure, short sale and underwater generally dominating the conversation.

And that has actually reversed the steady in-migration Las Vegas has enjoyed at least hundred years. Census data just released shows that from July 2008 to July 2009 the city lost almost 1,300 residents. It's not much on the surface, but when it's compared to the in-migration of 54,000 during the best growth year a few moons ago, then its importance becomes quite clear. In a little bit over a two year period to beginning of this year 130,000 jobs have vanished into the thin desert air. Real estate prices have spiraled down without much resistance, prompting many underwater mortgage borrowers to either do a short sale, pull a strategic default or go into foreclosure. Whichever, they still tend to leave the area in search of a new start.

The chances of Vegas bouncing back are good. The climate won't go anywhere, nor will the desert beauty all around, nor the Strip and its universal appeal. They are important parts of the foundation. The job outlook, though, needs to improve before a sustainable rebound can take hold and that can be a while. One thing local governments ought to do is widen the economic base in Southern Nevada, being so dependent on one industry - gaming - leaves few options when a major recession comes knocking on the door. This has been discussed and written about for years among local and national economic observers, but progress has been slow. Now that this severe downturn has totally exposed Vegas' vulnerability, action might be forthcoming.

Many Southern Nevada - including Mountains Edge, Summerlin, North Las Vegas, Henderson, Canyon Gate and Spanish Trail - mortgage borrowers are still dealing with the effects of the great real estate meltdown. Short sale has recently become a more acceptable avenue for home loan banks to address the lingering issue of delinquency, giving people a somewhat more palatable way out of a tight spot. Despite that, high mortgage foreclosure filings continue clouding the sandy landscape of Las Vegas valley. The once in a lifetime housing upheaval is by no means over and done with yet.

Sin City's homeowners have watched in horror as property values have taken a perilous plunge over the cliff, slamming them so low that scores are now in negative equity. An altogether regrettable situation. They are now spending quality time wondering about the future of housing here. More specifically, when the underwater label would be ceremoniously blacked out from the local real estate vocabulary.

First American CoreLogic, a real estate research boutique, has taken the brave step of trying to answer that tricky question. It took a close look at ten markets, one of which was Las Vegas, in order to arrive at a time frame when the average mortgage recipient would break surface and again breathe fresh air. It used unpaid principal balances, short-term housing forecasts, a standard measure of long-term value trends, amortization and predictably some other exotic proprietary data to make it happen.

Las Vegas real estate market has a long way to go according to FACL findings. The average mortgage borrower in Southern Nevada will break even by 2020, ten years from now, it says. The valley's price erosion has been very uneven. Some areas have suffered only mild losses while others have seen multiple G-force dives. It's the latter category that will likely linger in the netherworld well past 2020. These subdivisions generally were built right in the middle of the bubble when new home prices in particular were shamelessly hiked just about monthly, if not faster, steadily hauling them to bizarre heights. Buyers were undeterred, as were mortgage lenders, feeding the frenzy that soon made the term underwater, or upside down, a household word.

For some Southern Nevada real estate owners it will unfortunately be a long road to salvation, for others likely under ten years. It's all about the location.

Mountain's Edge February 2010 Real Estate Resale Market Report:

• Listings (3/15/2010):  168
• Under Contract (3/15/2010):  406
• Sold February 2010:  59

Since Last Month:  Listings are DOWN -28, Pendings are UP +27, Sales are UP +4

Last Month's Mountain's Edge Real Estate Market Report

Mountain's Edge is a newer community so many of the listings are short sales or bank owned.

The housing market meltdown seems to be truly making life miserable for Bank of America. As things started unraveling in the residential real estate sector and pushed countless mortgage lenders to either bankruptcy or to the brink of one, BofA figured it'd buy one of them on the cheap and really grow even bigger just like that. It promptly acquired Countrywide and apparently got much more than it bargained for. The once dominant mortgage lender had plenty of bad paper in its books which then became BofA's headache. On top of that it may have had its own internal issues, but Countrywide certainly wasn't as clean as it seemed to be.

BofA has been snail-slow in approving short sales, argue numerous real estate agents, home sellers and buyers and anyone involved in these sometimes complex transactions. A lot of fingers are pointed at its incompetence, or calculated foot dragging. More of the same is evidently going on in its handling of HAMP, so much so that Washington state homeowners recently filed a lawsuit against it, claiming it "intentionally" and "systematically" frustrated their efforts to arrive at reasonable mortgage modifications to stop foreclosure. In addition, many states and Washington are pressuring it, and other lenders as well, to seriously and meaningfully help in foreclosure prevention. The heat is on.

Now it is coming up with a mortgage principal reduction program, obviously seeking to quell the rising furor over its inadequate actions. It'll be part of its NHRP, or National Homeownership Retention Program. Some of the basic criteria includes the borrower has to be HAMP qualified, certain subprime, pay-option and 2-year hybrid ARMs are eligible, the underlying mortgage is 120% over the property's current value and the loan needs to be at least 60 days delinquent. BofA likes to call it "earned principal forgiveness" and the word "earned" is the key here. The program works in stages over five years during which the mortgage borrower is expected to miss no payments and then can reduce the principal up to 30%. These are just some of the details how it works. According to the bank, it'll launch the program in May when it'll supposedly start contacting eligible homeowners to find out whether they'll make the grade.

Frankly, based on the information so far released the plan is quite complicated and the many requirements will greatly limit participation. Maybe it's more of the same, just labeled differently. BofA has taken constant flak for its lack of responsibility in helping mitigate the home loan foreclosure problem and this, if administered properly, could give it some breathing room. Only time will tell if it is serious this time about cleaning up its tarnished reputation.

Cash or Credit for Your REO Purchase?

Cash is the obvious dominator with overall Las Vegas Area REO Purchases.  Cash not only dominates but CRUSHES financed purchases under $75000.  The primary reason is the stuff priced under $75000 is unhabitable and ineligible for financing or is condo ineligible for financing. 

Asset managers for REO also may choose cash offers that may be lower than financed simply because financed offers have exceeded their appraised price on the property or because there are less contingencies and they can close quicker (which takes the asset - or liability - off of their books quicker.)

Condo financing is currently a challenge in the Las Vegas Area.  Lenders want to see low investor concentration, low HOA deliquencies and no construction defect or other litigation against HOA or community.  To determine if a condo is eligible for financing, a condo certification may be ordered from the HOA (this does cost money) and have it run by an underwriter.

Whether you are all cash or a financed buyer, you can search Las Vegas Area (Henderson & North Las Vegas too) homes right here for free and no obligation!

View other REO Stats for the Las Vegas Valley!

Las Vegas Area March 15, 2010 Active Listings by Type

• REO:  1467 (15%)
• Short Sale:  4803 (48%)
• All Other:  3709 (37%)

February 2010 Sales by Type:

• REO:  1683 (57%)
• Short Sale:  694 (23%)
• Other:  592 (20%)

This is just a guide for consumers to see what types of properties are closing vs what is listed.  Currently we have the most closes in the REO sector and the least inventory in the REO sector and it is an extreme seller's market.

Click here to see last month's Listing and Sales Type Report

Click here to view the most recent stats (scroll to bottom)

When the notorious housing bubble was forming some years ago a lot of factors were aiding and abetting its run to those dizzying, unsustainable heights. One of them was mortgage fraud. Banks were so busy crafting new and glitzy home loan products and making money hand over fist with them that often they overlooked questionable mortgage loan applications. When opportunity knocks, it has to be taken full advantage of, seems to have been the going motto then.

But things have changed drastically in the mortgage world since the air rapidly hissed out of the bubble. Investors, who bought mortgage-backed securities, or MBS, have increasingly requested lenders take back fraudulent loans. That has prompted them to tighten their mortgage guidelines, as it really hurts their bottom line to buy back all sorts of wayward paper. Besides tougher guidelines, application information is also more carefully verified for a change.

First American CoreLogic recently released a study stating that one in 200 mortgages closed in 2009 was fraudulent. In money terms it added up to $14 billion. It sounds like a lot, but it is actually down roughly 25% from a historical high in 2007, now progressing steadily south. It's also predictable that this trend will continue in the coming years, at least as long as mortgage lenders keep hurting the way they do today.

Las Vegas mortgage fraud doesn't make top of list

According to First American CoreLogic's analysis - based on 80 million mortgages scrutinized by its proprietary national fraud data depository - California, Florida, Georgia, North Carolina and South Carolina were among states with most fraud-tainted home loans. The first two were kind of expected to be there due to their overheated markets a few years ago and subsequent high foreclosure rates. In the firm's findings 25% of foreclosures display fraud at the time the original mortgage application was taken. Nevada, spearheaded by the populous Las Vegas valley, for once isn't included among top contenders on a list like this. It has definitely adorned many of them already, so being outside now is certainly cause to hoist a cold one for. Even though Nevada's foreclosure figures are the highest in the nation, it still didn't break into the top five here.

Mortgage fraud for now is decreasing, an entirely encouraging sign. Once lenders climb back on their feet one of these days, it's anyone's guess what will happen then. Will this crippling downturn teach them a lesson to last? Or will the lure of ever increasing earnings again push them into reckless behavior?

Las Vegas Area REO Inventory has FALLEN since last report (-670 units), Under Contracts have FALLEN (-96) units  Closing data has FALLEN (-867) units.  Low interest rates have spurred a flurry of buyer interest & activity this December and it continues.  

REO sales accounted for 57% of all Las Vegas Area Valley resale closings in January 2010.  REO listings account for only 15% of total resale listings.

Multiple offers are streaming in as banks continue to lower to fire and auction sale prices.

Current Listed Bank Owned Statistics:

• Listings (3/15/2010): 1467
• Under Contract (3/15/2010): 3192
• Sold February 2010: 1683
• Absorption Rate:  0.9 Months (THATS LESS THAN ONE MONTH = VERY LITTLE INVENTORY)

View Last Month's Report Here  

To find the most recent report, click here

Charleston Heights February 2010 Real Estate Resale Market Report:

• Listings (3/15/2010): 81
• Under Contract (3/15/2010): 141
• Sold February 2010:  33
  

Since Last Month:  Listings are DOWN -6, Pendings are UP +11, Solds are DOWN -8

Why Las Vegas Pendings Are Not Closing

Last Month's Charleston Heights Real Estate Market Report

For More Las Vegas Communities and Reports Click Here

Southern Highlands February 2010 Real Estate Resale Market Report (Homes For Sale/Pending/Sold):

• Listings (3/15/2010):182
• Under Contract (3/15/2010):  250
• Sold February 2010:  37

Since Last Month:  Listings are DOWN -20, Pendings are UP +21, Sold Units DOWN -1. 

Last Month's Report

For More Las Vegas Communities and Reports Click Here