Las Vegas’ once-huge rate of underwater homeowners keeps improving, but as price-growth slows, the flow of borrowers escaping upside-down status has slowed with it.
An estimated 26.4 percent of Southern Nevada homeowners with mortgages were underwater — meaning their debt outweighed their home value — in the fourth quarter last year, according to a new report from housing-data firm Zillow.
That’s down from 35.1 percent a year ago and far below its peak of 71 percent in the first quarter of 2012.
Despite the continued drop, Las Vegas’ rate of upside-down homeowners was third-highest among the metro areas listed in today’s report, behind Virginia Beach, Va., at 28.3 percent and Jacksonville, Fla., at 27 percent.
Nationally, 16.9 percent of homeowners were underwater, down from 19.4 percent a year earlier.
Overall, these high rates “have become the new normal,” Zillow chief economist Stan Humphries said.
“We’ve long been expecting the negative equity rate to fall more slowly as home value growth also slows, and unfortunately that’s exactly what we’re seeing,” Humphries said in the report.
Las Vegas’ housing market was one of the hardest hit in the country during the recession but rebounded the past few years with some of the fastest rates of price growth in the nation. Some people worried another bubble was inflating as bargain-hunting investors bought cheap homes in bulk to turn into rentals.
But faced with rising prices they helped create and a crowded rental market, investors have steadily pulled back, triggering a slowdown in business valley-wide.
Today, prices still are rising at one of the fastest rates nationally but have slowed considerably.
The median sales price of single-family homes last month in Southern Nevada was $205,000, up 8 percent from a year ago, according to the Greater Las Vegas Association of Realtors, which mostly tracks previously owned homes.
By comparison, after the market bottomed out, single-family home prices jumped 57 percent in just two years, from a median $118,000 in January 2012 to $185,000 in January 2014.
Meanwhile, fewer people are escaping underwater status.
At the peak in early 2012, an estimated 236,817 homeowners in Southern Nevada were upside-down. That fell to 113,031 by early 2014 and then to 88,037 by year’s end, according to Zillow.