Las Vegas Still Struggles With Underwater Mortgages
It’s getting better for mortgages in Las Vegas, as underwater mortgages locally continue to decline from their high two years ago.
New data from RealtyTrac shows 27.9 percent of mortgages in Las Vegas have negative equity compared to 13 percent nationwide. Those numbers placed Las Vegas third in the nation behind Cleveland (28.2 percent) and Lakeland., Fla., (28.5 percent).
Negative equity occurs when homeowners owe more on their mortgage balances than the fair market value of their homes. The 2008 recession caused some 10 million homeowners nationwide to become underwater.
Las Vegas and Lakeland, Fla., have been competing for the number one spot in the highest percentage of seriously underwater properties. The second quarter of 2013 was the worst quarter for Las Vegas with 54.7 percent of properties being seriously underwater.
By comparison Lakeland, Fla., worst quarter was the third quarter of 2013 with 49.8 percent of properties being seriously underwater, according to RealtyTrac's Second Quarter 2015 Housing Equity and Underwater Report.
Daren Blomquist, vice president of RealtyTrac, told KNPR's State of Nevada that the reason so many people still owe more on their homes is that the prices were so inflated.
"The good news is that it's coming down, but the reason it's still so high, relatively speaking, is because the housing bubble was so inflated in Las Vegas," Blomquist said.
He said that many of the people who are underwater now bought their homes at that top of the market. Nationwide, the drop in home values was about 30 percent but in Las Vegas the drop was closer to 60 percent.
Blomquist believes the underwater homes will continue to "hobble the market."
He said those homeowners, the majority of which have been in their homes for about seven or eight years, would normally be ready to become 'move up buyers,' but since they can't sell their homes and make a profit, they're stuck.
"This is going to hamper that recovery going forward," Blomquist said.
Daren Blomquist, vice president, RealtyTrac