The Las Vegas Real Estate Market: Proceed with Caution
We see headlines that the housing crisis is over and that Las Vegas is almost out of the woods. However, these headlines may not be entirely true. The ten-year notes that were given before the recession are coming due, the Troubled Asset Relief Program is ending, and the Nevada Foreclosure Mediation program is running out of money. While our economy could overcome one of these events, it may not be able to take all of these without some effect.
Ten-Year Notes Coming Due
While housing prices in Las Vegas have begun to rise, this year they have been largely flat or even down. When you consider prices of upper-middle-class homes in 2006 to today, prices are down nearly 40 percent. This is very bad for those who took out a 10-year interest-only adjustable-rate mortgage. This type of loan is going to revert from interest only payments to principal and interest payments, which will double or even triple the amounts overnight. With homes underwater or homeowners not making as much as they did, they may not be able to qualify for other refinance programs, which could lead to foreclosure.
Troubled Asset Relief Program Ending
Normally, homeowners would have some nontraditional programs to choose from, including modifying their loan, underwater refinancing, short sales, etc. They can use these programs, but the time to use them is running out, as most end on December 31, 2016 and are unlikely to be renewed. Those homeowners who have not converted their mortgage or enrolled in one of these programs may find it very hard to get help when their loans convert next year if they do not plan ahead.
Nevada Foreclosure Mediation Program Ending
Another program, the Nevada Foreclosure Mediation Program, also ends on December 31st. While there is a possibility that the Legislature could renew it, it is a program of last resort and it is so be used if HAMP cannot be used, it is likely to be left in limbo and left hanging, which would leave it to be expired.
While this all sounds like bad news, it is not all gloom and doom. It is merely a word of caution to keep an eye out for changes in the horizon as far as real estate changes and foreclosure rates.