‘Not a cause for alarm’: Mortgage defaults going up in Las Vegas

Nicholas Irwin, the research director at the Lied Center for Real Estate at UNLV, said the number of defaults has been rising steadily since January 2022.

“Anytime you see a rise in notices of defaults, it’s always something you want to keep in mind when we’re thinking about the health of housing,” he said. “It’s not a cause for alarm but we have to consider this a piece of the puzzle in terms of understanding the broader health of our local economy and our housing market.”

Irwin cautioned that it is important to distinguish between notices of default and actual foreclosures where homeowners lose their homes as there is not a direct correlation.

UNLV’s data goes back to January 2022 when there were 34 notice of defaults in Clark County. Default notices rose steadily since then, hitting a high-water mark of close to 200 in January of this year. They have since dropped to 151 notices in June — still significantly higher than in January 2022.

Single family residences make up the bulk of notices this year (809) followed by townhomes (81) and then condos (65).

Irwin said there are a multitude of reasons notices are on the rise, but said the current interest rate climate is potentially the biggest factor.

“This could be a symptom of a lot of people starting to fall behind on their mortgages,” he said. “They were using a lot of their leftover money from COVID and some of the various federal efforts and people who were maybe trying to string a lot of this together are just not able to do that.”

The study also provided a heat map to where notices of default were centered. In 2022, they were largely centered around North Las Vegas. However, Irwin noted that hot pockets have risen all over the city in 2024, including in the northwest, southwest, central and eastern parts of the valley.

“This has very much spread across the entire valley,” he said.

The zip code with the highest amount of notices is 89031 which is in North Las Vegas, north of the North Las Vegas Airport and south of the Beltway. North Las Vegas has the highest amount of corporate ownership when it comes to the housing market as another UNLV study estimates close to a quarter of the housing stock could be owned by investors and Wall Street-backed hedge funds.

Las Vegas finds itself in the middle of a housing crisis as a lack of land and rising prices have pinched the entire market. Higher interest rates are keeping a lot of potential buyers on the sidelines, locking many homeowners into their properties.

The Federal Reserve is now expected to start cutting the overnight funds rate this September, which should lead to lower mortgage rates.

Meanwhile rents continue to rise in the valley and home prices are inching toward record highs again. Last year was the worst year for real estate sales in the Las Vegas Valley since 2008, according to MLS statistics obtained by the Las Vegas Realtors.

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.