BluefoxToday blog : Nevada heads problematic mortgage ranking

Nevada heads problematic mortgage ranking

Silver State's residential real estate was wounded badly in the bubble that burst so spectacularly some time ago. Of course it's not alone in it but that's scant relief. Sales at least in Las Vegas have slowed to a crawl, although especially resales have picked up lately, prices have headed south and the inventory is still high. Now another statistic is published to inform how deeply the housing mess has affected the state.

Nevada tops the list that ranks states by how many homes each has upside down, meaning the existing mortgage balance is higher than the property is worth. This marvel is also called being under water. The figures were provided by First American CoreLogic that estimates that 48% of single-family houses here are caught in this menacing vise. An unpleasantly high number. The comparable national number is 18%.

Some homeowners are more upside down than others. When one can be so by $20,000, another across the street could be on the hook by $150,000. It's the latter that makes people really think what to do about it, if anything. To wait for the market to narrow that discrepancy can take a long while. Unfortunate life-changing events can come into play, an illness, job loss, a move, and force a household's hand that requires a sale. But who has that sort of money, $150,000 to be exact in this example, to take to the closing table to make up for being that much under water? 

This First American estimate likely mirrors conditions in population-heavy Las Vegas more than the rest of the state. It's of course news the city could do without. One thing is worth remembering, however. Real estate speculators were all over the valley during the boom and those who joined in too late are now owners of vacant investment properties they can't sell or rent. Therefore, although it's hard to be accurate, it could be that up to half of these under-water houses are owned by them. What are they likely to do is easy to guess?



Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 10 commentsEsko Kiuru • November 01 2008 07:02PM


Esko, sorry to hear that.  This is one ranking that you don't want to be on the top of.  Hope the next report contains better news.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago

Ironic that in a state where the Las Vegas valley has been under a drought alert for years that so many homes are considered 'under water.' Our market prices are artificially depressed right now by the huge volume of distressed properties. Once we can work our way through  that (which may take as long as 12-18 months) I think we'll see a slight jump in prices and our number will be much more in line with the rest of the nation.

Posted by John Novak, Henderson, Las Vegas and Summerlin Real Estate (Keller Williams Realty The Marketplace) over 10 years ago

Unfortunately John, I don't think our numbers will be in line with the rest of the nation any time soon.  Many of these homes that are "under water" were purchased after 2005 when the market was at its highest.  So in order for these homeowners to get out from "under water" prices would have to increase at a very high percentage which is just not going to happen.  Like you, I do believe prices will begin to stabalize and even begin to rise but not to the levels these homeowners would need to get "above water".  I won't be suprised if many just walk away and let their homes go into foreclosure which would cause prices to continue to fall.

Posted by Tony Sena, Broker/Property Manager (Shelter Realty, Inc) over 10 years ago

Esko: it probably means that Nevada will recover positively in a big way. And probably sooner than the rest. We all know that there is a huge migration to the Southwest due to the weather and I expect this trend to continue as we age. It's nice now that property is more affordable as I heard the runup was crazy. Good luck and hang in there!

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) over 10 years ago


Five years ago Las Vegas topped the list for fastest growth and now this. Go figure.

Posted by Esko Kiuru over 10 years ago


There are tons of good buys out there now with all the low-priced bank REOs on the market.

Posted by Esko Kiuru over 10 years ago


True, homes purchased in 2005 and 2006 are the ones that really are deeply under water.

Posted by Esko Kiuru over 10 years ago


The latest data indicates that still about 4-5,000 new residents move in Las Vegas every month. Not bad.

Posted by Esko Kiuru over 10 years ago

Thanks for taking the time to post this ... excellent information

Posted by Debbie Salmon (keller williams) over 10 years ago


Thanks for stopping by.


Posted by Esko Kiuru over 10 years ago