On April 21, The Washington Post ran an article about the sudden, unpredicted rise in home prices in the United States. Apparently, many of the cities affected worst by the land bubble, including Las Vegas, are seeing single-family home prices rising again, but the implications for Las Vegas homeowners, particularly those considering filing Las Vegas bankruptcy, aren’t clear. Here are six things to know:
- This time, rather than banks lending money to people who otherwise wouldn’t qualify for a mortgage, it’s Wall Street financial firms that are buying up single-family houses. The fear is that the recovery in the housing sector is being driven solely by such purchases.
- Normally, investors prefer not to own houses and rent to tenants as managing properties can be quite a hassle. Homeowners are almost always more diligent at identifying damage in need of repair than renters are. They’re also more prompt at dealing with problems. Now, it appears that the lack of good investments elsewhere has stoked Wall Street’s interest in properties in distressed areas of the country.
- The consequence is that cash-rich institutional investors are crowding-out credit-needy Americans who need homes for living rather than rents and resale. Much of the revenue to the firms comes from a federal government program called “Section 8” that subsidizes low-income tenants.
- In Las Vegas, home prices have risen 15 percent, but most of the activity is going on in Florida.
- Thus, the good news is that for Las Vegans who are underwater on their mortgages, the price war over neighboring properties might push them into positive equity or even higher. If this is the case, it might be easier to refinance at lower interest rates, or sell the home without a deficiency. It might even help people avoid bankruptcy entirely. Some municipalities might see an increase in property tax flows.
- On the other hand, the after-bubble isn’t resulting in much positive economic activity. People whose incomes are low will still be unable to build up much in savings or equity. At some point, the institutional investors will pull out of the market, causing another crash.
The housing after-bubble might positively or negatively affect your financial and homeownership situation, so it’s worthwhile to discuss any developments with a Las Vegas bankruptcy lawyer to see what can be done.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.