Southern Nevada single-family house prices fairly stable - May sales slide

Las Vegas real estate statistics continue on an unsteady path, as they’ve been for the past several months. One sector could show a bit of sunshine peeking through while anther struggles with a curve heading in the wrong direction. But anyhow, let’s go right to the cold, hard numbers.

The median price for a single-family house came in at $142,000 for May which equals the figure for the previous month, so reported GLVAR, or Greater Las Vegas Association of Realtors. When placed side by side with May of 2009 it’s up 1.4%, a tentative improvement but nothing much to trade hugs and kisses over. Nevertheless, the real estate values are holding on at least for now while talk about the ominous housing double-dip on a national scale is gathering momentum.

In addition, GLVAR bravely informs that 2,884 single-family houses were closed in May, signaling a 2.3% drop from April and a second consecutive monthly deficit this year. It certainly is a concern. And more so when the decline of 11.4% from May of 2009 is reluctantly hustled into focus. Those who have been quietly praying for an impending real estate turnaround in Vegas should scale back their anticipation. It isn’t over until the fat lady sings.

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Las Vegas effective homeownership rate perilously low, per Fed study

Southern Nevada homeowners were dealt a hand in the real estate and mortgage tragedy for the ages that had very little chance of keeping them in the game for long. Severe price erosion has yanked tens of thousands way underwater – a suddenly everyday term in Sin City where the mortgage balance is higher than property value – that has pushed them to reconsider the merits of continuing to honor the original home loan agreement. Making payments on a, say, $400,000 mortgage when the house is only worth $200,000 is bothering increasingly many as something they probably should not be doing. Renting is becoming a viable option.

The Federal Reserve Bank of New York has taken the underwater factor into account in its recent study on homeownership in the U.S. The Census Bureau supplies quarterly the official numbers on it, for instance reporting that the all-time high of 69% was reached in 2006. At the end of 2009 it leveled off at 67.2%, clearly pulled lower by the adverse effects of the housing meltdown. But with the underwater dynamic included, the Fed estimates the national “effective” homeownership rate should be 5.6% less over the next several years. It means then that the number ought to be around 61.6%. In itself, nationally, it’s not that drastic.

But the issue is about to spawn a cardiac arrest-like impact when Las Vegas figures are flashed up on the wide screen, at least among those residing in the desert entertainment oasis. In August of 2009 the Census Bureau’s official homeownership rate in Southern Nevada showed 58.6%, the peak being 65% a few years ago. And here comes the numbing shocker; per the Fed’s calculations the “effective” rate here now is a mere 14.7%. Ouch. Due to the underwater metric the gap widened by over 40%. Case-Shiller home price index was employed to come up with an estimate for the count of underwater mortgage borrowers in Vegas.

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Mortgage foreclosure protection bill moves ahead in California - Nevada eyes it with some interest

Homeowners in distress have encountered a myriad of challenges when trying to save their properties from foreclosure. Many have successfully navigated around all the different shoals and rocks strewn along the way. Others, far too many actually, have not. Mortgage lenders and servicers often lack the staff to handle the volume the housing meltdown has thrown at them, industry training of staff is suspect, their systems are in many cases inadequate and it’s also evident that their commitment has been at best lukewarm. The frustration level among struggling mortgage borrowers is understandably high.

California just introduced a fresh mortgage foreclosure protection bill addressing some glaring shortcomings in the state’s current rule book. One provision gives homeowners recourse if they were foreclosed on due to a home loan servicer’s error. They could collect limited damages based on the seriousness of the mistake and in some situations even repeal the foreclosure sale altogether.

The other noteworthy provision prevents mortgage lenders from beginning a foreclose process until the borrower has received a decision on a loan modification application and been properly notified of it.

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The Fed could make a bundle on mortgage-backed securities

When the housing market began recently unraveling at warp speed and quickly lugged the overextended mortgage industry along with it things looked quite bleak for the U.S. economy. Housing, after all, is one of its major components and should it be hit with a serious medical condition, taking a simple pain killer wouldn't help much. Then if ever, when the fury of the real estate sector's downturn became better understood, drastic action was called for.

The Federal Reserve bravely stepped forward intent on showing how it's done. Right on the heels of the private investor vanishing from the secondary mortgage market the Fed knew that to avoid an utter disaster with global consequences it had to quickly fill the vacuum. It began buying MBS, or mortgage-backed securities, insuring that home loan interest rates wouldn't shoot through the roof. That was essential to keep the housing market on its wobbly feet, giving it something concrete to rely on. There was some early howling against this vast government interference but it soon abated as stark reality set in. Without the Fed's decisive action Stone Age would have been right around the corner.

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