The share of Las Vegas homeowners who are underwater continues to slide, but it remains highest among large U.S. cities, a new report shows.
Some 22.1 percent of Southern Nevada homeowners with mortgages were underwater — meaning their debt outweighs their home’s value — in the third quarter. That’s down from 27.8 percent a year earlier and far below its peak of 71 percent in early 2012, according to Seattle-based Zillow.
Despite the improvement, Las Vegas’ current share of upside-down borrowers was highest among the 35 metro areas listed in the report.
The rate nationally is 13.4 percent, and in California’s tech-rich Silicon Valley, metro San Jose has the lowest underwater rate, at just 3 percent.
To sell their home, upside-down borrowers typically have to do a short sale, an often time-consuming, paperwork-heavy process in which their lender agrees to sell a house for less than what’s owed on the mortgage. Such deals are by no means guaranteed to be approved, though.
Underwater rates typically hover around 2 to 5 percent. But today, several years after the housing market crashed, negative equity is “one of the most persistent reminders” of the real estate collapse and remains “a major barrier to a full recovery in certain markets,” Zillow said.
That includes Southern Nevada, a poster child for the boom and bust. According to Zillow, the Las Vegas area has had the highest underwater rate in the country for 4 1/2 years.
Meanwhile, the valley’s housing woes are similar to its unemployment problems: The situation has improved but still lags at the bottom of the pack nationally.
The Las Vegas area’s unemployment rate in September was 6.8 percent. That’s down from more than 14 percent in 2010, but according to federal data, it’s highest among the country’s 51 largest metro areas.