We'll it ain't pretty.. in fact, numbers are fairly dismal.. and those back on the opposite coast are too distant to feel any of the actual effects of what's happening out west (although Florida's got a good idea)... the whole region California, Nevada, Arizona has been reeling.
Mortgage delinquencies are recently falling slightly in southern Nevada, but there's still a world of hurt, even after the 90-day mortgage delinquency rate for Vegas homeowners dipped to its lowest level in nearly two years, as a research firm has just recently reported.
California-based CoreLogic said just shy of 17% of homeowners with a mortgage were delinquent 90 days or more in May. The delinquency rate has fallen steadily since it was 21% in February 2010.
To put that into context though... the national rate is 7.3%. And it must be noted, as the California-based RealtyTrac reported this week Vegas continued to post the nation’s highest foreclosure rate for all metropolitan areas during the first six months of 2011. And of note and more alarming, 1 in 4 of Nevada's foreclosures involve a decision to walk away from the mortgage even though the homeowners have the ability to make payment, according to a new study. They're just so much underwater, they've lost faith paying on a mortgage more than what the property is now worth.
The State of Nevada had 11,000 foreclosure filings in May, meaning one in every 103 homes had some type of foreclosure filing, RealtyTrac reported. (Putting that Nevada number into perspective... in New York State it is only 1 in 3,000!)
The City of Las Vegas had one filing for every 89 homes, which is more than six times the national average... one in every 19 housing units had a foreclosure filing during the first six months of 2011. Filings fell 18% from the last six months of 2010, and were 18% lower than the first half of 2010. Phoenix ranked second in the nation behind Las Vegas.
According to Standard & Poor’s Vegas-area home prices fell in May for the eighth consecutive month. According to widely-followed S&P's Case-Shiller Home Price Indices, Las Vegas home prices are now 60% below their peak during the economic boom of 2005-2006. The report said Vegas prices fell 1% from April to May and were down 6.6% from May 2010.
With the deep recession continuing locally, Vegas home prices have been depressed by high unemployment (14%.. and in fact it's more than likely to be much higher than what's being reported) and resulting foreclosures. Despite recent declines in foreclosure filings, Nevada still leads the nation in the percentage of homeowners losing their homes.
Greater Las Vegas Association of Realtors reported the median price of a single-family home sold in June locally was down 1.2% from May, and down 11% from one year ago.
(Nationwide, S&P said prices for its 20-city composite index rose 1% from April to May, but were down 4.5% from May 2010.)
"These data all support a continuation of the ‘bounce-along-the-bottom’ scenario we have witnessed in the housing market over the past two years."
And Nevada real estate agents are growing more pessimistic about the market... 82% of Nevada real estate professionals now said home prices would decline over the next six months, according to s survey conducted by California research company HomeGain. The survey found that real estate professionals in Nevada are more pessimistic about prices than in the second quarter of 2010, when 42% thought prices would rise and 29% thought they would decline.
During the first quarter, 71% said prices would decrease over the next six months... NONE said prices would increase!! Nationally, 50% of agents said they expect home price decreases over the next six months, and 12% expect increases.
Where we go from here is really just anyone's guess... we're in territory never close to what's been seen before. Of all the subcontractors we used in building process... most every one of them has quit their business, some in the area for decades, with top reputations.. Others are now just barely holding on... there is NO high end home market to speak of left in town. When you're going to have to fund $300-400 or more a square foot for construction... and when it's finished, it will only be worth maybe half of that... why should you chose to do it... some are, but those numbers are ridiculously small.
There are some great buys on existing properties.. if it would be that values would level off for awhile. But as previously mentioned that's yet to happen... and as more jobs across the country continue to be lost, there is probably little chance it will.
This town is driven by big hotel and resort projects. From design through construction, they can take upwards of 15 years to finish, and they employ tens of thousands of people. None are on the drawing board at this time, so figure if things would begin to recover sometime over the next 5 years, it would really not be for a couple of decades until any real effects were felt in the local economy from such projects.
But the town continues on with life, and for the moment still offers lots of fun. More than 40 million people a year consistently keep comin through... room prices are way down, and there's lots of comps being offered, of which we're taking advantage. We've been staying at Aria, Bellagio, The Cosmopolitan multiple times, with some meals and free play thrown in... seeing shows and having an overall good time.
So come on out and visit, we expect they'll be able to keep the lights burning on the Strip for at least a few more years.
In our development MacDonald Highlands, there were to have been upwards of 1,000 homes, including a small percentage of that number being condominiums. The entire project was expected to be a 10-12 year build-out. It's now been over 15 years and half the homes are in. There are a few big homes still in various stages of construction (some of the very large structures take up to 36-48 months to complete), but they're an exception.. and it would take 100 years to finish the community at the present pace of development. Foreclosure rates in the area are higher than average, the median age being 37, everyone was speculating and constantly 'moving up'. Leveraged to the hilt, 'livin the good life,' they never heard of, or if they did, follow the rule not to have all your eggs in one basket.
We'll keep ya posted... if there are signs of life with an increasing pulse out here, ya then might be able to say there could be a light at the end of the tunnel for the economy...
... keep your fingers crossed...
... warm regards... talk soon...
