Wednesday, March 24, 2010

Las Vegas: America's most underwater housing market

U.S. News and World Report names "America's Most Underwater Housing Markets."  Las Vegas, Nevada has the devastating distinction of being number one:
Las Vegas was ground zero for the housing market's historic boom and bust. Loose lending standards and speculative fervor helped send home prices surging more than 104 percent from 2002 to their 2006 peaks, according to Moody's "We all knew in our hearts it was unsustainable and there had to be a correction," says Larry Murphy, the president of SalesTraq. That correction came as the housing bubble popped and the economy tanked: Home prices in Las Vegas fell more than 56 percent from 2006 to the third quarter of 2009. This steep decline has pulled a vast swath of mortgage borrowers underwater. "If you bought a home in Las Vegas since 2004 up to about 2007, whatever you bought—I don't care if you bought a big house or a little house, in a great neighborhood or a crummy neighborhood—it's worth about half what you paid for it," Murphy says. More than 81 percent of single-family home mortgages in Las Vegas had negative equity in the fourth quarter of 2009, according to Zillow. And it may take 20 years for some of these home values to climb back to the levels they hit at the peak of the housing boom, Murphy says. (emphasis added)
The burden of negative home equity in a state with an unemployment rate of 13% (second only to Michigan) is a heavy one for any family.  I wonder how much comfort Nevadans took from Senate majority leader Harry Reid's remarks after the Senate passed its $18 billion jobs bill last week:
"Thousands of Nevadans and millions of Americans are struggling to find work and are worried about being able to support their families," Reid said after the Senate passed its $18 billion jobs bill last week. "Today's vote is vital because more than 1 million jobs will be saved or created by this bill," he said, indicating that more such bills are coming."
Jobs created or saved.  He sounds like the robot from "Lost in Space" in the 1960's.  I thought that phrase already had a fork stuck in it.  I'm quite sure the good people of Nevada aren't counting on Reid's empty promises.  And they are likely wondering why their senior Senator, the most powerful member of the U.S. Senate, squandered an entire year pursuing a health care bill that Americans don't want and ignoring the economic pain, suffering and joblessness in his own state.

In case you're interested the rest of the "top ten" underwater cities are:

2. Merced, California
3. Phoenix, Arizona
4. Orlando, Florida
5. Greeley, Colorado
6. Bend, Oregon
7. Minneapolis-St. Paul, Minnesota
8. Memphis, Tennessee
9. Cleveland, Ohio
10. Grand Rapids, Michigan

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