Foreclosed Homes on Rise in Las Vegas, High End Home Owners Fail to Pay Mortgages

Las Vegas has the highest rate of foreclosures in the US. The crash in the value of the real estate is making the high end property owners walk away from their mortgage to cut losses. The wave of defaults had started with the subprime borrowers and the unemployed. The malaise has now spread to the upscale homeowners who see no point in staying as it doesn’t make sense to pay a $5 million mortgage on a property that is being valued at $2 million today. Las Vegas home values have plunged 58 percent since the 2006 peak and homeowners who purchased the property then see the logic of foreclosed homes as a means of cutting loses.

In the first three months of this year as many as 30 homes in Clark County with mortgages exceeding $1 million were repossessed by banks or bought by third parties in foreclosed homes sales. According to ForeclosureRadar, a company that tracks defaults, almost three quarters of them were short sales where bank had to accept less than the loan balance. Greater Las Vegas Association of Realtors indicated that over seven out of ten homes were bank owned properties that are going in for sale. Almost 100 homes and luxury apartments in the county are listed for $3 million or more while the demand does not exceed more than 20 annually.

Some of the bank owned properties are outstanding homes. One of them is an 8,550 square foot home overlooking a golf course designed by Jack Nicklaus in The Ridges. Owned by Community Bank of Nevada against a $3.2 million mortgage, it is listed for $3 million. The Nevada Association of Realtors have reported that almost 23% of delinquent borrowers have strategically defaulted or walked away from their homes by choice rather than necessity. They have chosen to walk away from a hopeless situation.

Via: businessweek

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