Las Vegas was one of the hardest hit housing markets when the economy crashed, and while some parts of the country are seeing a steady improvement, people who call Sin City home are continuing to suffer. In fact, a recent report found that 20% of homeowners in Las Vegas owe double of their homes’ current value! Out of those homeowners, 10% have defaulted on their loans.
Even if homeowners are staying current on their payments, these underwater mortgages – which refer to a situation where the homeowner owes more on the mortgage than what the home is actually worth are detrimental to these homeowners for several reasons. In most cases, it prevents them from refinancing their mortgages. It also can prevent the homeowner from selling their home, unless they have money available to pay off the difference on their loan. Since most people don’t have that kind of cash just lying around, these people are literally trapped in their homes!
Underwater mortgages are even more problematic, because if a person or family can’t repay or handle the payments, chances are good the home will fall into foreclosure. Not to mention how disheartening it is for a family to know that there home is worth less than what they still have yet to pay on it!
When you’re tallying underwater mortgages, 20% is a very large number for a city to be faced with. And, when you consider that this number only accounts for people who owe DOUBLE what their homes are worth (not just people who are underwater in general), it’s absolutely astronomical. In fact, it could be devastating for Las Vegas’ housing market as a whole.
In many cases, when people face a situation like this, they decide to just walk away from their home and let it go into foreclosure. People feel like the situation is hopeless and figure there’s nothing they can do to fix what they consider to be a bad investment. If that were to happen here, it would create a glut of abandoned, foreclosed homes.
But things aren’t all bad. There is a slight glimmer of hope. Property values are starting to increase, which, in time, will start to lower the number of underwater mortgages. Once property values get high enough, people here will start to break even. If they wait long enough, they may even see value in their homes and decide they are able to sell.
On another positive note, fewer Las Vegas homeowners are delinquent on their mortgage payments this year than last year. When you combine that with slowly-increasing property values, it spells out a very slow recovery for Las Vegas residents. In fact, if these trends keep going, experts say 8,000 homeowners should get above water in 2013.
Right now, the best that we can do is hope that Las Vegas will soon catch up with the steady improvement that other parts of the country are seeing. Until then, people who own homes in Las Vegas will have to continue to hang on and hope for improvements.
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