Not long ago, Nevada boasted one of the fastest-growing economies in the country. Developers had only to publicize plans for a new housing subdivision, and people would line up, ready to buy.
“People were camping out when new projects were announced,” said Jim Denton, who runs a public affairs firm here. “ When people put homes on the market, it wasn’t unusual to get 10 offers in a matter of days.”
Those days are long gone. More than 6 percent of the state’s housing units — nearly 73,000 properties in all — were the subject of foreclosure filings in 2011, according to RealtyTrac, a real estate data firm.
The rush of foreclosures has been a huge factor in the stunning decline in housing values, which statewide are down by an average of two-thirds since mid-2006. Overall, housing prices are just 9 percent higher than they were in 1990.
Government help
For many Nevadans, the financial pain caused by the crash is intensified by the gnawing realization that it will likely be many years before they fully recover. With the massive backlog of bank-owned properties and the weak pace of sales, it could take decades before the market returns to normal.
“If getting back to normal means getting back to peak prices, you are talking 20 years plus,” said Jeremy Arguero, a principal in Applied Analysis, a Las Vegas economics firm.
The housing decline has been so deep that it seemed to swallow the rush of programs rolled out to help struggling homeowners without making a lasting difference.
Early in his term, Obama initiated a mortgage modification plan that created incentives for lenders to work with strapped homeowners to lower monthly payments. Later, the administration increased incentives for lenders to write down government-backed home loans. The administration says just over 1 million mortgages have been modified under the program.
Obama also launched, then broadened, a separate program aimed at helping people refinance their mortgages even if they had little home equity or owed more than their homes were worth. In all, the administration says, 900,000 people have refinanced under the program, saving an average of $2,500 a year.
The Federal Housing Administration has a range of programs to help distressed borrowers, and the administration has worked with private counseling agencies who negotiate with lenders to encourage loan modifications.
In addition, the $25 billion deal struck between 49 state attorneys general and the nation’s five largest mortgage servicers should result in direct relief for distressed homeowners, the administration says.
Still, the bitter reality for many Nevadans is that the government help is not sufficient to fix home purchases that have been transformed into ruinous investments by the downturn.
Seeking relief
At a twice-monthly foreclosure-prevention class run by the Legal Aid Center of Southern Nevada, distressed homeowner after distressed homeowner is looking for a way out of a financial mess that seems to only grow worse.
One man, an Air Force veteran and former military contractor, quit his job after landing a lucrative overseas contract, only to have the deal fall apart at the last minute. Now he drives a cab for a fraction of his previous pay, and he has fallen behind on the payments for his four-bedroom home.
A couple stationed at nearby Nellis Air Force Base said they had not made a mortgage payment in more than three years. They bought their home five years ago for $355,000, and now it is worth less than half that.
Being in the Air Force, the couple — who spoke on the condition of anonymity for fear of losing their security clearances because of their financial problems — can be ordered to move at any time. With a turnaround in housing values nowhere in sight, they decided their money would be better spent helping other family members.
Their only hope for saving their home is through a substantial principal reduction, but the lawyer who led the class made it clear that such large-scale reductions are rare. Short of that, she said, having a bank repossess a home may not always be the worst thing.
“In some cases, maybe it is not a bad idea for a home to be foreclosed,” Venicia Considine said.
The Watts thought they had shrewdly avoided the madness stirred up by the housing bubble when they bought their home in 2009. They painstakingly compared prices before picking up their home for $145,000 in a short sale. They thought they had bought at the bottom of the market. Little did they know how far it would fall.
Months after moving into their home, Amy suffered a stroke, throwing the family’s finances into turmoil. Even though they have health insurance, co-pays and deductibles sucked away their savings, and soon the bills began to pile up.
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