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UW Election Eye 2012

Campaign 2012 through the eyes of UW faculty and students

February 3, 2012 at 11:32 AM

Leaving Las Vegas: foreclosure capital of America, but still standing

Hardest hit zip codes in Las Vegas

LAS VEGAS — Ground zero in the nation’s housing crisis can be found near the intersection of Ann Road and Clayton Street in North Las Vegas. Those crossroads are smack in the middle of the 89031 zip code, which had more home foreclosures last year than any other in America.

That’s where we met Pacita Valerio.

Valerio is a single mother with two children, and she bought one of the first homes in her subdivision in 2005, for $255,000. Valerio said she moved from Hawaii to Las Vegas three years earlier so her daughter, then 18, could attend college on the mainland. To make the home downpayment, Valerio cashed in her retirement savings.

“I was one of the first to move in,” said Valerio, 55. “When you passed by here six or seven years ago, you didn’t see hardly anything. Then the homes grew like mushrooms.”

The subdivision was built by Pardee Homes, which according to a recent report has built homes for more than 40,000 families in southern Nevada since 1952.  Unfortunately, many of the homes in Valerio’s neighborhood never filled because the economy slowed and then went into freefall. To make matters worse, a large number of those who did buy eventually found themselves unable to make the mortgages.

This double whammy decimated market prices. Today, Valerio’s home is worth $95,000 according to her 2011 tax assessment, she said.

“There are probably 300 homes in this community, and I walk around and I see a lot of signs and empty houses,”  Valerio said. “Maybe 30% of the homes have people in them. The home two doors down they bought for $110,000 not long ago. It’s better, bigger than mine. I pay $1500 a month (for a mortgage). They pay $700.”

It’s a story that is all too common in the Las Vegas area.

Land use sign - Eldorado subdivision

In the United States last year, 1 of every 634 housing units received a foreclosure filing, but in Nevada the number was 1 in every 177 — the worst in the nation (in Washington state it was 1 in every 1,438). In the 89031 zip code, there were 2,469 foreclosure filings alone. The next four hardest-hit zip codes in America also were in the Las Vegas area.

In Nevada, which depends on tourist dollars for the bulk of its economy, the foreclosure crisis has been driven by the high rate of unemployment. According to the U.S. Department of Labor, Nevada’s unemployment rate of 12.6% in December 2011 was the highest in the nation (Washington state’s was 8.5%). The U.S. employment rate in January, announced this morning, was 8.3%.

In early 2009, the Obama administration created the Home Affordable Modification Program, which offered options — including refinancing, longer loan durations, and interest-rate reductions — for people with mortgages that had become beyond their financial reach. Chase Bank, which has a branch office in the 89031 zip code around the corner from Valerio’s subdivision, has 82 community foreclosure centers to work with struggling homeowners, spokesman Gary Kirshner said. Two of those are in the Las Vegas area, and more than 4,500 homeowners have come in the door.

Valerio said that she went through the HAMP program and that she was able to make some adjustments to her loan type. But the process of working with her loan entity was onerous: “We went back and forth, I called them, I begged them. I had to write a hardship letter.”

Candidates for the Republican Party presidential nomination have made the housing crisis a central part of their messages. In Florida, where Republicans voted on Tuesday, about half of voters said foreclosures were having a major impact on their communities.

Here in Nevada, GOP frontrunner Mitt Romney has emphasized the need to address the foreclosure crisis, including his opening remarks following his endorsement yesterday by Donald Trump.

Last year Romney got into political trouble when he told the Las Vegas Review-Journal editorial board, “As to what to do for the housing industry specifically, and are there things you can do to encourage housing. One is don’t try and stop the foreclosure process. Let it run its course and hit the bottom, allow investors to buy homes, put renters in them, fix the homes up, and let it turn around and come back up.”

In the past month the Romney camp also has blasted opponent Newt Gingrich and his close ties — to the tune of $1.6 million in consultant fees — with mortgage giants Freddie Mac and Fannie Mae. This relationship is the focus of an anti-Gingrich TV advertisement running with regularity in Las Vegas. We saw it three times in a half hour of watching Fox News last night.

President Barack Obama also is honing in on the housing crisis. In a speech on Wednesday in Virginia, he called on Congress to take steps to help homeowners take advantage of historically low interest rates. Thirty-year mortgages last week hit an interest rate of 3.87%, the lowest since 1971.

It will take a while for hard-hit communities to come back.

Around the corner from Valerio’s home, we met Taylor Richardson, 22, at a local coffee shop. She said she moved away from Las Vegas in 2009 and returned four months ago, to find that all of the neighbors around her father’s home were no longer there.

A few blocks over we met David Green, 83, who was in his front yard raking leaves. He and his wife worked for North America Rockwell Space Division — which was acquired by Boeing in 1996 — in Southern California for decades. They visited Las Vegas one Thanksgiving weekend and Green returned to their hotel room to find housing floor plans that his wife had left there after a day visiting with friends.

“I said ‘What are these?’ And she said, ‘Do you know how cheap houses are here?’” Green recalled with a chuckle. On the drive back to Southern California, they decided they were interested in retiring in Las Vegas. They moved into the 89031 zip code in 1996, when there were four houses in their subdivision, a mile or so from Valerio.

Green pointed to several houses that have gone vacant for periods of time. “There were a couple down that way, and on that street there were several. We don’t notice a lot that is different, except that you don’t see the people.”

But there are signs of hope. The number of foreclosures, the declined market prices, and the lower interest rates have produced an attractive market for buyers. Mark A. Lemmon, branch manager for a Coldwell Banker office that covers North Las Vegas, said his office sold more homes in 2011 in Las Vegas than in any year previously.

“The difficult housing market has affected the community dramatically,” said Lemmon, who has worked in Las Vegas real estate for 32 years. “Most all the small businesses have closed up, because people aren’t going to bars or getting their dogs groomed, for example. But we’ve leveled off. I don’t know if we’re on the way up yet, but we’ve leveled off.”

Comments | Topics: 89031, Foreclosures, HAMP

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