BluefoxToday blog : Home ownership sliding according to New York Fed report - Las Vegas housing taking flak

Home ownership sliding according to New York Fed report - Las Vegas housing taking flak

The mortgage and real estate markets are in the midst of a major overhaul on the heels of the current housing embarrassment. The home loan sector has already seen major regulatory changes, some needed and some of dubious value. And in this climate of political gamesmanship and Wall Street lobbying more is conceivably on the way to favor large financial institutions. Mortgage lenders have also tightened considerably underwriting standards to align their operations to better handle the new market realities.

The economically significant housing sector is absorbing changes unimagined just a few years ago. One of them is the fact that homeownership is on a downward slide. The recent New York Fed's study points out that homeownership crested at a respectable 69% in 2006 and now stands at 67.3%. At this point it's down only fractionally, but this meltdown still seems to have enough legs to go another year or two. Perhaps even longer. As a result it probably will sink several more percentage points.

Homeowners being upside down - the disturbingly unpleasant experience when the mortgage balance exceeds the home's value - on their property is the underlying cause here. This has actually become a major impediment to the entire real estate market's recovery plan. According to Zillow.com, to date homeowners have lost $5.9 trillion in value since the housing market topped out in March of 2006. Any time the worth of a major asset class nosedives like this there will be serious consequences on many fronts.

Southern Nevada - with communities like Las Vegas, Henderson, Mountains Edge, Anthem, Rhodes Ranch, Silverstone Ranch, Mesquite, Summerlin and Anthem - homeownership rate over time is likely to take an even bigger hit than the national average. The real estate market here is in the grip of its worst slump in memory, easily qualifying it as one of the worst around. It puts more downhill pressure on the curve, bending it to where it hasn't been in a long while.

Many present upside down, or underwater, homeowners on a national scale will turn into tenants. Typically they expect to find the roof for over their head more affordable in an apartment or a rental home. This probably is true in many areas in today's real estate market.

Yet, for instance in Las Vegas home values in the lower end of the market have dropped to the 1990s levels, making them totally attractive. Couple that with the low cost of mortgage money and real opportunities abound all over the place. Now, the challenge is how do these underwater homeowners dispose of their existing property and still be able to qualify for a new mortgage.

Homeownership will continue declining for the foreseeable future, only to stabilize when most of the mortgage foreclosure traffic is brought under control. It'll probably one day claim back some of the lost ground, but reaching the 2006 high again appears to be a distant dream.

 

 

 

 

 

 

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Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 12 commentsEsko Kiuru • December 27 2009 09:29PM

Comments

I think the highs of 2006 are 10 to fifteen years away.  I don't know if I will be in the real estate business when they come back.

Posted by Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239, Michigan homes for sale ~ yesmyrealtor@gmail.com (Real Estate One) almost 9 years ago

Home ownership here in San Diego is increasing, probably because just four years ago only 7% of San Diego households could afford a median-priced home. That's up to 51% now.

Happy New Year!

Posted by Russel Ray, San Diego Business & Marketing Consultant & Photographer (Russel Ray) almost 9 years ago

This is painful but not surprising.  Only special people can buy right now (those with cash or those that qualify to be financed.)  This is all just part of the cycle that is our market!

Posted by Renée Donohue, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) almost 9 years ago

Russ,

You might well be right. Hang in there, though.

Posted by Esko Kiuru almost 9 years ago

Russel,

I can understand your percentages based on the lofty home prices down there.

Posted by Esko Kiuru almost 9 years ago

Renee,

Cycle is right. Our cycle just might become one of those a tad more bloated, or longer, ones. 

Posted by Esko Kiuru almost 9 years ago

Esko, I might sound like a broken record, but things will not get better until the Government stops messing in the Real Estate and Lending markets.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) almost 9 years ago

Esko:  It's here to stay so we just make the best of whatever comes our way.

George:  100% agreed!  This thing has wanted to recess since the late 90s and the government keeps messing and prolonging and the longer we prolong, the worse it will all be! (my humble opinion!)

Posted by Renée Donohue, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) almost 9 years ago

George,

Government may have overplayed its hand in some situations, but it had to step in to prevent a larger mess.

Posted by Esko Kiuru almost 9 years ago

Renee,

The hand we were dealt isn't pretty, but the next one ought to be better.

Posted by Esko Kiuru almost 9 years ago

It pretty much depends on where those homes are, and I hope that report stated that as well.  For instance, New York didn't have the same types of housing problems as the rest of the country except in the NYC area with real estate prices, so home ownership shouldn't have changed all that much in the state.  But in states with bad home loans, such as Florida and Nevada and California, with the high foreclosure rates, I would easily believe that.

Posted by Mitch almost 9 years ago

Mitch,

You make a valid point. Thanks for stopping by.

Posted by Esko Kiuru almost 9 years ago

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