Las Vegas’ rate of underwater borrowers is better than it was last year, but it’s still highest in the country and poised for little improvement, a new report shows.
Some 27.8 percent of local homeowners with mortgages were upside-down — meaning their debt outweighs their home’s value — in the third quarter. That’s down from 39.6 percent a year ago and a peak of 71 percent in early 2012, according to Zillow.
Despite the improvement, Las Vegas’ rate was highest among the 35 metro areas listed in the company's report. Nationally, the rate of underwater borrowers is 16.9 percent, down from 21 percent a year ago.
The valley’s rate is expected to slide to 24.4 percent in the third quarter of 2015 — the highest forecast in the report.
Nationally, housing problems such as low inventory and weak sales volume won’t be solved overnight, largely because many homeowners will remain underwater for years — “easily into the next decade in some hard-hit areas,” Zillow chief economist Stan Humphries said in the report.
“But we’re moving in the right direction,” Humphries added, “and time will heal all wounds.”
Las Vegas was ground zero for the housing bubble last decade, with bloated prices across the valley. But it was also one of the hardest hit by the bust, causing the majority of local borrowers to fall underwater.
Homeowners have escaped underwater status the past few years largely because investors, after the economy tanked, started buying cheap homes in bulk to turn into rentals, pushing up property values at one of the fastest rates nationally.
But now, with fewer bargains out there, investors have been backing out of Las Vegas, and the market has slowed. More listings are being ignored, sales volume is dropping and prices aren’t rising nearly as fast anymore.