Underwater mortgages in Las Vegas sink even further
The September median home price in Las Vegas fell 11.5% from one year ago and remains 63% below the peak, according to analytics firm DataQuick. A home that sold for $312,000 during the peak of the housing bubble in November 2006 is now worth $115,000. September was the 12th straight month the median home price fell from the year before. The decline has fallen to levels not seen since the mid-1990s, DataQuick said. "This can be attributed to several factors: home price depreciation; robust sales of low-cost foreclosures; robust sales to investors, who mainly target low-cost properties; extraordinarily low new-home sales (new homes tend to sell for more than resale homes); and higher-than-usual condo resales (condos tend to be the least expensive homes)," DataQuick said. President Obama gave a speech Monday in Vegas, promoting changes to help more underwater borrowers refinance announced the same day. The Federal Housing Finance Agency will waive some representation and warranty risk, appraisal requirements, and negative equity caps for the Home Affordable Refinance Program. How effective the program is remains in question for the nearly 4 million Fannie Mae and Freddie Mac borrowers underwater. In Vegas, 80% of the local homeowners owe more on their mortgage than the home is worth, according to RealtyTrac. Principal reduction remains the largest tool yet to be taken up by the largest banks or by any government agency on a large scale to combat the negative equity problem in the U.S. Department of Housing and Urban Development Secretary Shaun Donovan said principal reduction will be a major function of the still pending attorneys general settlement with the largest mortgage servicers. Many Republican AGs and lawmakers say such lengths would only promote strategic default, not entice more people to stay current on their mortgage. Meanwhile, the number of default notices in Vegas increased 190% from July to August, according to DataQuick. More than 4,700 default notices were filed, led by Bank of America (BAC), the same findings states along the West Coast found. "It is unclear whether the higher levels of NODs seen in August and September are the beginning of a longer-term upward trend in default filings, which could mean far more distressed properties on the market and more downward pressure on home prices," DataQuick said. Write to Jon Prior. Follow him on Twitter @JonAPrior.