Nearly 70 percent of Las Vegas homeowners remain underwater

Sam Morris / Las Vegas Sun file

Houses sprawl across the Las Vegas Valley. When the housing bubble burst in 2007, Las Vegas became the No. 1 area in foreclosures nationwide.

Click to enlarge photo

The home-mortgage crisis in Las Vegas is showing few signs of abatement, as borrowers remain far underwater.

About 68.5 percent of Las Vegas Valley homeowners with mortgages were underwater — meaning their debt exceeds the home’s value — during the second quarter this year. That’s compared with the U.S. rate of 30.9 percent, according to a report Wednesday from Seattle-based research firm Zillow.

Nationwide, Las Vegas had the highest rate of underwater borrowers among the 30 largest markets tracked by Zillow. Pittsburgh had the lowest, at 15.6 percent.

The local rate was down from 71 percent in the first quarter this year, while the national rate dipped from 31.4 percent.

Other hard-hit regions also saw a small drop in their percentage of underwater homeowners. Phoenix, for instance, fell to 51.6 percent in the second quarter from 55.5 percent in the first.

Las Vegas homeowners remain well underwater as other aspects of the real estate market show signs of improvement.

There were 462 recorded new home sales last month, up 46 percent from 316 during the same period last year. Some 543 new home permits were also pulled in July, up 89 percent from 287 permits the year before, according to Home Builders Research.

Dennis Smith, president of the Las Vegas-based research firm, said in a recent report that the market’s housing demand is “being buoyed by cash investors.” He said numerous investors are willing to buy homes and rent them out, and there are international investors who believe Las Vegas housing is “the most affordable in the world.”

Nevertheless, when it comes to borrowers, numerous problems remain. In North Las Vegas alone, 79.2 percent of homeowners are underwater, says Zillow.

In the valley as a whole, 36 percent of underwater homeowners owe more than double their home’s value; nationally, it’s 14.5 percent.

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  1. If the Obama admin really cared about Vegas he would have done something and I am not suggesting bailout, rather let people port the underwater part to the next home they want to buy, moving up or down or out of the state so it does not tie people down to a bad situation. The underwater part should be like a student loan payable over many years and not a burden. When the people sell the next home they buy in 10 years they have plenty of money to pay the old underwater loan back.,

  2. Just what we need - more federal interference in an orderly market. The feds sticking their economically ignorant noses into the housing market is what got us into this mess in the first place and has kept us there this long. Chris Dodd & Barney Frank instigated the collapse with their blackmailing of financial institutions and then Osama Obama and his Marxist crew exacerbated it by trying to manipulate its recovery. The normal system of supply & demand would have long ago corrected the situation if those pencil-pushing bureaucratic drones had let it. My wife & I were among those who lost about 70% of their home equity because of Dodd/Frank & Osama Obama's motley crew. Time for a change. Give someone with a modicum of economic intelligence a chance to rectify the situation. Come November - vote Romney & Ryan.

  3. Forget the Government, They ALL work for The Wall Street Banks. The Elimination of Bank Regulations under BOTH Bill Clinton AND on Steroids Under George Bush ( remember his Friend Alan Greenspan who later said He Had No Idea of the coming Housing Crisis) PLUS the Banks making Liars Loans and Failing to do Basic Research and then Lying to the Ratings Agencies, created the mess. Most Americans did not know that anytime their Mortgage exceeds Three times their Annual Household Income - there will be Problems. But the Banks threw all formulas Out The Window and even Lied on Customer Applications - since they would just sell these Mortgages to Wall Street Pension Funds as Grade "A" anyway.
    Then they would charge the Pensions to Foreclose and create another profit center for themselves. There are several excellent movies explaining the Process - since our "News Media" is useless.
    So Now - If you are 40% or more Upside Down - do what any Responsible Corporation would do. Go to an Attorney and Plan an Exit Strategy. A house should never be a Ball and Chain.

  4. A home is an investment. Investments involve risk. Some homeowners added to the risk by taking out second mortgages, financing beyond the value of the property, or refinancing to take supposed equity cash out of the home. Often they spent that money on other items such as vehicles, debt reduction and personal discretionary items like expensive vacations, college educations and so on. Now, with the market down, they are unhappy that their cash cow has died, and they want to be rescued. If you invest in the stock market and lose money, you eat your losses. Why should a home be considered any differently?

  5. http://www.youtube.com/watch?v=kNqQx7sjo...
    Pay close attention to the date. Was that not a few years before Obama became a US Senator?

  6. Dopes. I learned my lesson in the early 80's, when my house became virtually worthless due to the Oil debacle in Houston. So I just left-gave it to the bank. Back when nobody knew what default meant. No problems resulted, my credit score is 850. The point? You do what you gotta' do, and move on with life.

  7. Apparently, to some, a man's reputation means little, his word is not to be believed and a contract, well, it's not worth the paper it's written so long as he does "what he's gotta' do." Typical of today's "entitlement" mentality. No shame, no remorse, no integrity and no honor.

  8. "Forget the Government, They ALL work for The Wall Street Banks."

    newnvres -- good point. You hit on a core truth too often ignored in these Discussions

    "Apparently, to some, a man's reputation means little, his word is not to be believed and a contract, well, it's not worth the paper it's written..."

    lvfacts101 -- clueless as always. Read our Supreme Court in last year's Leyva, especially the bit under "Mortgage Note," and enlighten yourself. Then come back and comment. Maybe you'll have some credibility then.

    A new, more complete and close-to-the bone article and Discussion going on @ http://www.lasvegassun.com/news/2012/aug...

    "Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them..... in America, it's far more shameful to owe money than it is to steal it." -- Matt Taibbi "Courts Helping Banks Screw Over Homeowners," found in the November 25, 2010, issue of Rolling Stone

  9. I wonder what % of the 36% that owe more then double what their home is worth are actually making mortgage payments right now?

  10. "I wonder what % of the 36% that owe more then double what their home is worth are actually making mortgage payments right now?"

    lasvegasreal -- wonder away. Why would anyone pay a stranger just because they got some letters? Surely you understand from your moniker the shell game banks play with notes. See that Rolling Stone quote from my last post