Talk about a losing streak. For more than 16 months in a row, Nevada has recorded the nation's highest foreclosure rate among the 50 states, according to RealtyTrac. Metropolitan figures are no better. In 2007, Las Vegas registered the highest annual foreclosure rate among major U.S. cities; more than 4 percent of Sin City households were at risk of losing their homes last year, which is more than four times higher than the country overall.
But Las Vegas residents also know how to play the cards they've been dealt, and in this seemingly troubled housing market, foreclosures have become hot properties. "Everyone's out shopping the foreclosure market," says Tom McCormick, president of Astoria Homes, a home builder in Las Vegas. "They are snapping them up."
"If it's priced right, it is selling," agrees R. Scott Dugan of R. Scott Dugan Appraisal Co. in Vegas, who has been appraising real estate since 1969. "The banks and lenders who own the foreclosures are coming into reality on pricing, and they are getting multiple bids."
Why are foreclosures such a popular purchase in Vegas? Dugan says it's the affordability; foreclosures probably sell for 25 percent to 30 percent less than a comparable home on the market. He also thinks it's the homes themselves. While the national media have published reports on how angry homeowners are lashing out at lenders by trashing their foreclosed home, Dugan says Vegas foreclosures tend to be relatively new-two to four years old-and in good condition.
Such foreclosures sound like they could be stiff competition for new homes, both in terms of pricing and housing supply. But Astoria's McCormick says that has not proved to be the case. "Foreclosures don't pull the [new-home] market down, because they are fixer-uppers. If someone is looking to put sweat equity into their house, they are not looking for a new home," he says. "Our bigger problem is when a public builder comes in and builds homes on land written-down to zero, so their costs are lower. That's a much more severe problem than foreclosures."
Alison Rice is senior editor, online, at BUILDER magazine.
Learn more about markets featured in this article: Las Vegas, NV.