Mortgage foreclosures more common in Las Vegas suburbs

Very little has changed in the last few months. Nevada still ranks as number 1 in the country in mortgage foreclosure filings with 18,087 for the first quarter of this year, according to California firm foreclosures.com. The state just can't seem to shake that undesirable position. Clark County has nearly 16,000 of that total which in turn aims the red spotlight right on Las Vegas.

The noteworthy aspect here is that the large majority of the foreclosures are in the outlying suburbs. In the new home subdivisions where builders large and small kept putting up house after house during the recent exceptional boom. By zip code the two top "performers" are 89131 in northwest valley and 89031 in North Las Vegas, as tallied by the research shop SalesTraq.

Most of the investors who came to town to fuel the runup in prices bought new houses. They signed contracts while the homes were still under construction, then contently watched as the builders kept hiking the prices due to high demand and when they took possession, the property was promptly sold at a nice profit. They are actually called flippers because of the quick turnover.

Another thing that attracted them to the new subdivisions was the flexible mortgage service the builders provided. It became like an assembly line for the developers to put through buyer after buyer to their spanking-new homes and the mortgage process was just one easy step along the way. Just about any flipper would qualify for a loan, one important reason why the sales figures soared.

The outlying suburbs also attracted upward-mobile homeowners who were seeking bigger houses so they could brag about it at work and on the golf course. Many really didn't need a larger home but the status factor made them throw prudence into the wind. Besides, the builder was so accommodating with the financing and the value increases showed no signs of slowing down. How can you go wrong in that kind of a real estate market? Getting a big house was one thing, the bonus was to turn into an instant and successful investor on the side.

The end game of those excesses is being played out now.

It is quite ironic how the business cycle works. The new subdivisions were getting most of the action when the market was hot a few years ago in terms of sales and price increases. It's getting most of the activity again, only this time on the downward side of the curve with foreclosures and price decreases.