Nevada sits atop another mortgage- and real estate-related list, a placement that no one really wants. The Silver State, together with Arizona, California and Florida, enjoyed unprecedented real estate price appreciation during the recent boom cycle and now the same states are topping the national list of most homes with negative equity, in other words underwater. Those who grow too fast usually have to pay the price sooner or later.
First American CoreLogic took a look at county real estate records across the land and then analyzed property prices with its own automated valuation models and finally issued a report on its findings. Nevada landed on the top spot of its ranking with 48% of mortgaged homes in the state being underwater. Not too long ago another study found that Nevada also had the most foreclosures, so the two appear to mirror one another. And it's fair to add that a bulk of this 48% is right here in Las Vegas. The report doesn't separate how many are underwater, say, from $1 to $25,000, which is not so alarming, or from $50,000 to $75,000, which can be devastating. Still, the high percentage is troublesome for the entire Southern Nevada housing scene.
It likely will mean that foreclosures will continue to play a pivotal role in the region's battle to turn things around. The more negative equity the more probable it is that the home will end up being foreclosed. That will push banks piling up these REOs to sell them at even steeper discounts than before, thus putting further pressure on values. This, of course, has been going on for months already over here and lower prices have recently drawn buyers, homeowner-candidates and investors alike, to go after the inexpensive inventory. Demand is beginning to build up especially in the lower half of the market, an encouraging development.
Evidently the correction is plowing ahead full-steam although it still has a way to go. It brings with it affordable pricing that better matches the area's median average income and that, the discrepancy of the two, was what really threw the market out of sync to begin with. Topping the list doesn't look good but if that's the only way to mend the housing market, then be it.
The other states on the ranking behind Nevada were Michigan with 39% of homes underwater, or upside down, Arizona and Florida each at 29% and California at 27%. The national average, by the way, is 18% and altogether 7.5 million homes fall under the unpleasant label.