You might have seen the recently run story on MSN.com, “Housing recovery boom, bust states”. This top 5 list of best and worst states for market recovery awards Nevada the dubious honor of #1 “bust” state. The criteria for rankings on these lists are the number of delinquent mortgages, foreclosures, and the number of mortgages being issued to home buyers.
Although it makes sense to take these three factors into consideration when ranking the health of a real estate market, using just these three criteria in my opinion is too simplistic of an approach that does not really reflect what is actually going on. This list points out that the number of new mortgages in Nevada is fairly low, while the mortgage delinquency rate is the highest in the nation and the foreclosure rate is near the top
What this story DOESN’T say is that cash is king in Nevada real estate, and there is a significant number of buyers who don’t need new mortgages. Prices in our market are still low, which has attracted a large number of these cash-toting buyers who are snapping up homes often as soon as they hit the market. Sales are so brisk in the Las Vegas area that we actually are experiencing a shortage of inventory for the level of demand, and prices ARE increasing. Although the mortgage delinquency rate is high (which is unfortunate for the home owners who cannot keep up with their payments), combined with the foreclosures the cold, hard fact is that these homes represent a pool of inventory that eager buyers are waiting to purchase with their cold, hard cash.
Is Nevada real estate still experiencing problems? Of course it is; to deny the fact that a large number of families are still losing their homes would be a lie. But to exclude the fact that their homes are being snapped up by new buyers who don’t need mortgages tells only part of the story, and leaves the rest of the nation thinking that all is doom, gloom and despair in Nevada.
The moral of this story is to not believe everything you read, especially when writers try to explain complex issues without considering all the facts.