Las Vegas’ housing market got beat up so badly during the recession that not long ago it seemed almost everyone with a mortgage was underwater.
The share of such borrowers has shrunk drastically in recent years amid a rebound in home values, and overall the market and broader economy are much more stable than they used to be.
But in a sign of how high prices soared during the bubble and how badly they crashed during the bust, Las Vegas still is the underwater capital of America.
Statistics from housing research firms vary, but they don’t paint a pretty picture:
■ CoreLogic says 17.6 percent of Las Vegas-area homeowners with mortgages were underwater — meaning their debt outweighed the home’s value — in the second quarter, second-highest among the largest metro areas. Nevada was tops among states at 15.3 percent.
■ Zillow says 19.5 percent of local borrowers were underwater in the second quarter, down from a peak of 71 percent in early 2012, but still highest among large metros.
■ Attom Data Solutions says Las Vegas’ rate was 25 percent in the third quarter, highest in the country and more than double the national average of 10.8 percent.
Ed Coulson, for one, isn’t surprised that Las Vegas still holds this dubious title.
Coulson, director of UNLV’s Lied Institute for Real Estate Studies, points out that homes sold rapidly around the peak of the bubble a decade ago. And prices, despite bouncing back, remain well below the levels of those years, when easy lending and widespread house flipping pushed property values to record, bloated levels, until they burst.
“It will be a really long time before they get that high again,” he says.
The median sales price of previously owned single-family homes — the bulk of the market — was $233,250 last month. That’s up 5 percent from a year ago and almost double the market’s low point of $118,000 in early 2012. But it’s still far below the peak of $315,000 in mid-2006, according to the Greater Las Vegas Association of Realtors.
Other markets also dealt with a rising volume of underwater homeowners during economic slumps. It happened in Texas in the 1980s when oil prices dropped, and in Southern California in the early 1990s amid cutbacks in military spending, according to Coulson.
Home prices eventually recovered in those markets, and upside-down borrowers got above water within five to 10 years, Coulson says. But that length of time “has not been enough” for Las Vegas, whose price drops during the Great Recession were much more severe.
The valley’s housing market is moving in the right direction. But given how bad it got in Las Vegas, a poster child for America’s housing boom and bust, one thing seems certain: As Coulson put it, “complete recovery is a long way off.”