A cloud of foreclosures will hang over Las Vegas for at least a couple of more years and median prices will continue to fall in 2010, most likely by double digits, executives from two California-based real estate tracking firms said Tuesday.
About $2.5 trillion in adjustable-rate mortgages are due to reset from July through August 2011, a substantial amount of it in places already reeling from the foreclosure crisis, said Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac.
It’s difficult to pinpoint numbers market by market, Sharga said, but he’s estimating foreclosure filings could approach 4 million nationwide next year with about half of them coming primarily in four states — Florida, Nevada, California and Arizona.
“If you track states with the highest run-up, you can draw a straight line where you had the most exotic loans,” the foreclosure analyst said during a conference call.
Pete Flint, chief executive officer of San Francisco-based Trulia.com, said he’s still seeing a lot of inventory for sale with substantial price reductions. Asking prices have been reduced by about 16 percent in Las Vegas, which is surprising, he said.
“It suggests the market is still on the decline,” Flint said. “A lot of cuts are at the top of the market. It would not surprise me to see double-digit declines, unfortunately, in Las Vegas over the next 12 to 18 months. Until unemployment levels off and starts to get better, we expect foreclosures to continue to play a big role in the 2010 housing market.”
Sharga said emerging foreclosure markets include Boise, Idaho; Provo, Utah; Portland, Ore.; Joliet, Ill.; and Fayetteville, Ark. “Follow the unemployment numbers and you’ll be able to track it,” he said.
While the “subprime tsunami” brought the first wave of foreclosures to Las Vegas, the next wave is coming from more creditworthy borrowers in higher-end homes and from homeowners who’ve lost their jobs or have negative equity in their homes and can’t sell.
The Mortgage Bankers Association is reporting some 7 million home loans in default, creating what some analysts have called a “shadow inventory” of foreclosures on the way.
“We’re looking at numbers that are somewhat hyperbolic, certainly breathless,” Sharga said. “Of the delinquent loans, the ones that will probably go back to the bank are somewhere in the neighborhood of 2.5 million. That’s the shadow inventory that will gradually be making its way to the market over the next three years.”
Housing analyst Larry Murphy of Las Vegas-based SalesTraq said he’s talking to people in the industry who believe Las Vegas has yet to see the crest of the foreclosure wave.
Hundreds if not thousands of Las Vegas homeowners haven’t made a mortgage payment in more than a year and still haven’t received a foreclosure notice, he said.
“That’s how backed up it is. The banks are overwhelmed,” Murphy said. “If two out of three homeowners in Las Vegas are upside down, it’s a matter of time. If the economy doesn’t improve, a lot of people are going to take a walk and they’re not showing up on the radar right now.”
Nevada leads the nation with one in 119 households receiving a foreclosure filing in November, RealtyTrac reported. The state had 5,549 notices of default, 1,368 notices of trustee sale and 2,378 real estate-owned homes for a total of 9,295 filings, down 33 percent from the same month a year ago.
A survey from RealtyTrac and Trulia.com focusing on buyers’ attitudes toward foreclosures showed investors, trade-up buyers and renters are most likely to purchase a distressed property.
The online survey, conducted Nov. 5-9 by Harris Interactive, found a notable decrease in consumers’ willingness to buy foreclosed properties, with 43 percent of U.S. adults saying that they are at least somewhat likely to consider purchasing a foreclosed home in the future, compared with 55 percent surveyed in May.
A lot of attention has been given to bank-owned properties in Las Vegas, but the real need is to get contingent short sales approved, said Robyn Yates, owner and broker of Windermere Realty.
About 75 percent of all contingent sales in Las Vegas are awaiting bank approval for a short sale, or a sale for less than the mortgage balance. Of the 11,021 contingent home sales, 8,229 are short sales and 1,909 are real estate-owned, or bank-owned.
“There are buyers available and willing to purchase these properties. The need is for the banks holding these notes to approve these sales in a timely fashion,” Yates said.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.