‘Large and widespread’

It was with much fanfare that Nevada Attorney General Catherine Cortez Masto announced the state would receive $1.5 billion as part of a $25 billion national settlement with U.S. banks over their foreclosure policies.

Yet that deal hasn't slowed the spate of bad news about the local housing market.

A report issued this week showed that new home sales in Las Vegas hit an all-time low in January, falling to 216, down almost 9 percent from the same month in 2011.

It's another indication that until the inventory of vacant houses is reduced, the region will continue to struggle economically.

Some 200,000 homes in the Las Vegas area remain underwater -- meaning they're worth less than what people owe on them -- making it risky for builders to invest in new construction. Home prices simply will not appreciate until thousands of foreclosed or short-sale residences are taken off the market.

In that sense, the bank settlement could be a blessing. Foreclosures slowed over the past year because lenders were wary of proceeding until they knew the result of any government intervention. With the deal finalized, the number of foreclosures is expected to rise again -- bad news for those delinquent on their mortgages, but vital if the region is to rebound.

"The problem is so large and so widespread," said Dennis Smith, president of Home Builders Research, "the only fix is to let the free-market system work."

Case in point: A USA Today story on Monday detailed how some banks, including Bank of America and Wells Fargo, are becoming more willing to sign off on short sales -- and even offer cash incentives to homeowners -- because such deals "can save lenders money compared with the expenses involved in completing foreclosures."

Let's hope such an approach becomes more widespread in Southern Nevada -- and helps stabilize the local market.