Nearly Ten Years Later: Housing Crisis Continues
Foreclosure Crisis Slows, But Nevadans Still Losing Homes
By Frank X. Mullen
Nationwide, U.S. home foreclosures fell to a 10-year low by the end of 2016, but Nevada remains among a handful of states still reeling from the subprime mortgage crisis that plunged the nation into recession in 2007.
The Silver State’s foreclosure rate, among the five worst in the country for years, dropped to sixth-worse in 2016. About 12,872 residential properties were in foreclosure in Nevada last year, down 22 percent from 2015. It was an 89 percent drop from 2010, during the height of the foreclosure crisis.
But many Nevada households remain caught in the mortgage crunch, causing some state lawmakers to back an extension of Nevada’s Loan Modification Program, which is set to expire in June.
“There are a whole lot of families in my Senate district who are still suffering from housing instability,” says state Senator Becky Harris, who represents a portion of Clark County in the Nevada State Senate. “…I’m thrilled that the real estate values are coming back and that the housing market is looking better in Nevada, but it doesn’t mean that there are not families that are still struggling.”
Things are getting better, the statistics show, but Nevada is still at the rear of the pack when it comes to full recovery. The signs of the recession are most visible in the Las Vegas area.
In Clark County, nearly 14,000 homes remain vacant, according to ATTOM Data Solutions year-end report for 2016. Of the vacant properties, 375 are so-called “zombie homes,” houses that are abandoned and boarded up. The presence of vacant and abandoned/deteriorating houses in neighborhoods drags down property values and downgrades the quality of life, real estate experts say. In addition, the large numbers of vacant housing slows down new home construction and stifles the economy.
The foreclosure pipeline is still flowing, but around the nation conditions are improving. According to ATTOM’s year-end report, 933,045 foreclosure notices were active nationwide in 2016, a 14 percent decrease from the previous year and the lowest since 2006, which had 717,522 properties under foreclosure.
Last year was the third in a row that the rate stayed in a “historically normal range,” Daren Blomquist, senior vice president of ATTOM, says in a prepared statement. He says much of the activity is still traced to “legacy” foreclosures – properties that have been in the process for several years. The time it takes to foreclose on a given property increased in the fourth quarter of 2016 to a new record high of 803 days, the longest time for the process since ATTOM began tracking in 2007.
In Nevada, about 14 percent of the homes now in foreclosure are “underwater,” meaning that the homeowner owes at least 25 percent more than the home is now worth. That submersion of assets is the worst in the nation. Yet, it’s a big improvement over 2010, the height of the crisis, when more than 66 percent of foreclosed homes in Nevada were underwater.
The crisis continues at a smaller scale, but families are still being forced out of their homes for an inability to pay mortgages. And debtors report that it’s hard to reach lenders to try to find a way to adjust payments and keep their homes. That’s what the state program is all about: getting homeowners face-to-face with lenders to find a pathway out of foreclosure.
“There’s a strong appetite (in the Legislature) to keep the loan modification program going,” says Sen. Tic Segerblom, who with Harris is shepherding the extension of the law through the Legislature. “Foreclosures in Nevada have gone down but they are still way up there. A lot of people’s homes are underwater. That’s why we hope to get the extension through early in the (Legislative) session.”
Several other states have it worse than Nevada. The ATTOM report identifies 15 states where foreclosure starts have increased, including Delaware (37 percent); Connecticut (35 percent); Maine (30 percent); Rhode Island (26 percent); Arizona (15 percent); and Massachusetts (12 percent). For once, Nevada, with its marked decrease in foreclosure activity, isn’t bucking a positive national trend.