In places like Las Vegas, California and Arizona the foreclosures are going to keep going up and the value of homes are going to keep going down. There are $2.5 trillion adjustable mortgages that will adjust from now until late summer of 2011. By next year there is an expectation of 4 million foreclosures nationwide. It is predicted that half of them will occur in Florida, Arizona, Nevada and Arizona. Las Vegas is experiencing an unemployment rate that is nudging near 14%. If this continues for a year or so the prices of Las Vegas Homes will continue to fall through the floor. The subprime debacle brought on the first Foreclosure Tsunami. The second Tidal Wave will come from homeowners who are underwater in equity - who lost their jobs - got cut back on their jobs - and can't sell their homes. What is left for them to do?
They can come to us for a Loan Modification and if we can get it for them they might be okay for awhile. Problem is at this point in time it is almost impossible to talk a lender into a principle reduction. The bank may decrease the rate and make the payment low enough to be affordable but the homeowner is still underwater in equity and will remain underwater in equity for a long time barring some miracle or act of God. The average recovery time for a $100,000 loss in equity is over twenty years. I don't know about you but I don't have twenty years to wait on lost equity. It is better just to move on.
What does this all mean to Realtors and Brokers? It means that in almost every case of lost equity and mortgage resets the only financially sane and sound action for a homewoner to take is to either short sell their property or walk away. We encourage them not to walk away. They really shouldn't walk away for obvious reasons. Short Sale is a bitter pill to swallow but not as fatal as a Foreclosure Sale. If you do a Short Sale you credit worthiness is usally impacted for 2 years opposed to five to seven years if you allow the bank to foreclose on your property.
FROM MY CURRENT VANTAGE POINT MOST UNDERWATER PROPERTIES WILL EVENTUALL WIND UP IN SHORT SALES. WE SEE IT EVERY DAY.
If you have any questions contact me and I will be glad to help. Call Robin Basichis at CBC Property Soloutions.
702-279-8025
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