Wednesday afternoon and it is raining.
I love the thunder and a good rainfall. This is a big deal in Las Vegas.
The sounds of rolling thunder and raindrops are a release after the past few hot days. It truly is a relief for all of Vegans. I take time to enjoy the storm.
The sixty minutes of rain has amply watered the yellow lantanas, honey mesquite, and my vegetable garden. The summer squash, lemon basil, beef master tomatoes and Japanese eggplant loved the shower.
Now the wind is swirling in from the Southwest. Funny thing is that my handyman, Victor, and his wife are here to work on the sprinkler system. This rainfall is better than any adjustment to the well pressure or replacement of sprinkler heads.
Summer storms are good because they create change.
Change is in the air.
I think we are all up for that.
Now…let that thunder roll!!
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Bottleneck Banking Doesn’t Work!
As a real estate broker in Las Vegas, I am not seeing any STIMULUS MONEY. I am seeing the City of Las Vegas called “FORECLOSURE CITY” due to our high rate of foreclosure. The foreclosure process includes properties listed for sale as short sales, where the homeowner owes more than the current market value, or a bank-owned property taken back by the bank due to default on payments.
To my knowledge, as I speak with concerned homeowners, successful mortgage modification is both difficult and uncommon. The lack of ability to modify loans is creating instability in the housing market. Families throw their hands up and let the property revert back to the lender.
Currently in Clark County, reduced median resale prices are at $142,000. This was the median price point back in March 2002. New homes now have a median value of $220,000, consistent with the approximate values of March 2004. (Economic INsight, April 2009 – Restrepo Consulting Group)
Our sharp millennium price increase has been followed with equally sharp decline in value. Current affordability is good, yet the current condition is very unsettling and traumatic for homeowners. If you purchased a house or refinanced between 2002 and 2006, during the go-go boom, you are probably upside-down on your loan. You currently have such a negative value that you do not qualify for loan modification. Most homeowners I speak with tell me in the current declining market, they have little liquidity or are seriously upside-down.
The market continues to decline because the banks that now own all these properties are not your local friendly mortgage broker, but a large lending institution that is now overwhelmed by thousands and thousands of calls from distressed homeowners attempting to modify their adjustable loans to a fixed rate. Frequently, they simply up and give the keys to the lender since the home bought in good faith during the go-go boom is worth less than half the purchase price. Owners wanting to modify have not been able to change their loan. Buyers want to buy a short sale or bank-owned property and end up with six months to close escrow due to delays of processing. Cash is king but you still have to beat multiple offers on most affordable properties. There is NO comprehensive plan for helping our city of neon lights. Loan modification is needed on a massive scale in many of the new growth areas – Southern Nevada, Arizona, Southern California, and Southern Florida. Taking one loan at a time in such a financial crisis is a joke. Lenders that delivered short-term adjustable loans to the consumer now need to step up and modify these loans to a fixed 4.5%. No qualifying, no appraisal – Just stabilize what the banking industry has undone.
Banks are receiving trillions of dollars of taxpayer funds and yet I STILL DON’T SEE A COMPREHENSIVE PLAN TO MODIFY EXISTING LOANS in high-growth areas. The lending spigot to many small consumers has been turned off in Washington. As a real estate broker, I don’t see stimulus. I see broken families and empty houses. Many of our senior population, approximately 21.4%, who have chosen to relocate within our upscale retirement communities now find themselves upside-down in their final nest. A fixed income and diminished stock portfolio is not going to remedy this scenario. There is no bailout – only people bailing out of their houses because the value has plummeted 50% and they can’t afford to pay anymore on a seriously upside-down loan. Our unemployment rate now reflects our housing plight. Nevada unemployment is 10.4%, a 100% increase from March 2008. (Nevada DETR Press Release, 03/09/2009) Washington needs to listen to the outcry! The American family works too hard and deserves much more than Bottleneck Banking. It’s irresponsible and it doesn’t address the regional plight in high-growth city areas.
Our new high-growth cities need regional solutions and regional loan modification. Banks continue to take money from the government (i.e. taxpayer funds), yet our taxpayers here are left holding the bag with upside-down mortgages. Homeowners will not spend additional funds upgrading in such a destabilized environment.
The current recession will not end until we demonstrate six months of job growth. Job growth in Southern Nevada will not improve until the current housing market balances with stable interest rates. Fixed rate modification is a responsible choice that the financial system (Fannie Mae, Freddie Mac, FHA) needs to extend OPENLY to homeowners NOW.
Is anyone in Washington listening?
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