Underwater Mortgages Improve
Underwater mortgages improve moving into the New Year in Las Vegas as home prices rise, gaining home equity for homeowners. However, more than one-in-four mortgage holders (27.8%) are still upside down or owe more on their homes than their current market value, down from 39.6% a year ago, according to Zillow.
The real estate listing service said Las Vegas peaked with 71% of homes underwater in 2012, the highest in the nation. The figure still remains at the top of underwater metros in the 35 cities the company tracks. Only an average of 16.9% of home mortgage borrowers in the U.S. are upside down, the Zillow study indicates.
Las Vegas homeowners have gone from owning homes in the worst foreclosure market in the country to the most rapidly appreciating (30%) in the span of five years in 2014, but home sales and the rate at which home values are rising has slowed. The median price of a home increased 30% through October from one year ago. But the average increase in home values is estimated to have increased an average of about half of that or 16% for the year through November.
Upside down homeowners are also projected to decline to 24.4% by the third quarter of 2015 as underwater homeowners improve in Las Vegas, real estate analysts forecast. The rate at which the market is healing is transforming into a healthier pace as investors back-off from buying property in many areas of the valley.
A robust inventory of homes listed on the market for sale in Las Vegas and near record low mortgage rates should help to push the marketplace into even stronger stability. Las Vegas topped the Freddie Mac market survey for being the most stable market in the U.S. in October. Home owners were also helped by investors in the last few years as cash flush buyers and real estate investment groups came into Las Vegas to buy up cheaply priced homes.
As underwater mortgages improve, the recovery is entering a new stage in Las Vegas in the New Year as banks prepare to release thousands of homes on the market at lower home prices that were foreclosed, and left sitting uninhabited for years. Lenders are expected to follow the same procedures, however, they have in the past few years, slowly releasing the inventory on the market in efforts to help stabilize home prices.