Foreclosures are the name of the game in Las Vegas for the next few years. It appears that continued problems with mortgage payments will be the primary problem.
Adjustable rate loans will be resetting to new, higher interest rates, balloon payments will come due and more defaults will be th result. There are approximately $2.5 trillion in adjustable rate loans due to reset from now until August 2011. If borrowers were having problems before they will have huge problems after the interest reset. The forecast is more pain for borrowers.
The second flood is now the more credit-worthy borrowers who purchased mid to high end homes who are now defaulting. Home values have evaporated and jobs are being lost. These borrowers cannot sell their homes and are now losing them to foreclosure.
Asking prices are down 16% in Vegas. According to Pete Flint of Trulia.com "It would not surprise me to see double-digit declines in Las Vegas over the next 12 to 18 months. Until employment levels off and starts to get better we expect foreclosures to continue toplay a big role in the 2010 housing market".
Larry Murphy of SalesTraq believes that Las Vegas has yet to see the crest of the foreclosure wave. "If two out of three homeowners in Las Vegas are upside down, it's a matter of time. If the economy doesn't improve, a lot of people are going to take a walk and they're not showing up on the radar right now."
Four states are leading the way in these foreclosures - Nevada, Florida, California and Arizona. However emerging trouble spots are Boise, ID; Provo, UT; Portland, OR; Joliet, IL; and Fayettevill, AR.
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