LV ‘most depressed’ housing market

WASHINGTON -- Las Vegas' housing industry got more bad news Tuesday.

Two reports showed that more than half of home mortgages are underwater, meaning the owner owes more than the property is worth, according to two reports.

Another report indicates that housing prices continue to decline.

"Las Vegas remains the most depressed market," according to Standard & Poor's, which publishes the Standard & Poor's Case-Shiller home price index of 20 major cities.

"Prices have fallen for 37 consecutive months (in Las Vegas)," S&P said.

Las Vegas prices fell 0.9 percent in the third quarter from the second quarter. Prices are off 28.6 percent from a year ago, according to S&P.

The index showed posted minor improvement overall.

The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 0.3 percent to 144.96 in September, but it was the fourth straight monthly increase. The seasonally adjusted index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in April 2006.

Another reading of home prices by the Federal Housing Finance Agency held steady from August to September.

Analysts expect prices to dip again this winter as foreclosures increase and economic growth remains modest.

In Las Vegas, home prices appear to be at the bottom of the pricing spiral in the existing home segment, housing analyst Dennis Smith of Home Builders Research said. He reported the median price of a recorded resale in October at $125,000, the fifth consecutive month around that number.

Two analysis firms reported that the majority of Nevada home borrowers owed more than their home is worth.

Zillow.com reported that 81.8 percent of Las Vegas home borrowers are underwater. First American CoreLogic of Santa Ana, Calif., calculated that 65 percent of home borrowers in Nevada owe more than the value of their home, according to The Wall Street Journal. A copy of the report from First American CoreLogic was not provided to the Review-Journal, as requested.

Home prices are a key ingredient to rebuilding the economy. Homeowners feel wealthier when their property appreciates in value and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the bank than their homes are worth.

Nationally, roughly one in four homeowners are in that situation, according to First American CoreLogic. And a record 14 percent of homeowners with a mortgage are either behind on their payments or in foreclosure, the Mortgage Bankers Association said last week.

"We are very worried about the potential for a huge wave of supply next year, both from private sellers and banks," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics. "Prices could easily reverse their recent gains."

Spring and summer are typically the best times of the year for the housing market, because families prefer to move. Home Builders Research counted 4,254 resales in October, and the number has topped 4,000 in four of the last five months. For the year, sales of existing homes in Las Vegas have increased 47 percent to 36,843.

In the winter months, fewer homeowners put their properties on the market. That means a bigger proportion of the sales will be foreclosures.

In the Case-Shiller report, home prices rose in 11 major cities, with the strongest gains in San Francisco and Minneapolis, according to the Case-Shiller report. That's a shift from the summer, when price gains were broad. In July, for example, prices were up in 17 cities.

Prices fell by the most in Las Vegas and Cleveland. Compared with a year earlier, the 20-city index was down about 9 percent, the smallest year over year decline since January 2008.

Review-Journal writer John G. Edwards contributed to this report.