BluefoxToday blog : Nevada leads in underwater mortgages

Nevada leads in underwater mortgages

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.  


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 14 commentsEsko Kiuru • December 21 2008 05:10PM


It's very accurate to point out that the states with the highest percentages of "recent" appreciation are the very ones that have given it back over the last 3 years. The fortunate bit is that home ownership is now affordable for more families. Let's hope the employment outlook doesn't slide any further.

Posted by Vickie Nagy, Vickie Jean the Palm Springs Condo Queen (Coldwell Banker Residential Real Estate) over 10 years ago

Esko, this is a top ranking no one wants but Nevada will just have to make its way through this inventory.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) over 10 years ago

Lots of prices are down to mid-90's level, this is so unsurprising!  We are playing 2004 all over again in reverse:  sales going up, prices still going down!

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) over 10 years ago

Esko it is never a good feeling to be at the top of a list like that.  Let's hope that we will see a turn around in 2009.

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


The weak employment situation is now delaying the upcoming recovery, I'm afraid.

Posted by Esko Kiuru over 10 years ago


We are working hard to get this thing turned around as soon as possible.

Posted by Esko Kiuru over 10 years ago


Prices are largely attractive now and it's starting to stir up demand, which is what we need.

Posted by Esko Kiuru over 10 years ago


Frankly, topping a list like that is bad for your digestion. 2009 or bust!

Posted by Esko Kiuru over 10 years ago

Hi Esko,

I thought we were number 1! First time I wouldn't want to be number one. But hey we are underwater with you. Have a Happy Holiday!

Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (eXp Realty) over 10 years ago


Hopefully this being underwater thing can be erased from the vocabulary in Florida, Nevada and everywhere. Happy Holidays.

Posted by Esko Kiuru over 10 years ago

Nevada landed on the top spot of its ranking with 48% of mortgaged homes in the state being underwater.

Whew!  That's rough.

Posted by Bruce Brockmeier, Coached By Crouch (Internet Marketing Consultant to REALTORS®) over 10 years ago

Are you seeing homeowners that are underwater giving up, or are they hoping for an increase later and hanging in there? 

Posted by Brian Griffis (Realty Choice) over 10 years ago


Homeowners here are rightfully concerned.

Posted by Esko Kiuru over 10 years ago


Little bit of both right now.


Posted by Esko Kiuru over 10 years ago