Posted on 07/10/2013 8:55:34 AM PDT by whitedog57
The great Nick Timiraos at the Wall Street Journal has an interesting article on the Las Vegas housing market entitled “Foreclosure Squeeze Crimps Las Vegas Real-Estate Market.“
“The number of available homes has plunged here after a sweeping state law subjected lenders to stiff new foreclosure rules and penalties. With banks exercising caution, many homeowners—including those seriously delinquent on their loans—have been allowed to remain in place. As a result, there is little on the market at a time when first-time buyers and real-estate speculators are anxious to tap both cheap prices and low-interest mortgages.”
So, The Fed puts in place a zero interest rate policy (ZIRP) to help invigorate the economy and housing market, then Federal and State governments put laws into place making market healing difficult and help drag out the recovery.
Las Vegas house prices are recovering, after a “Close Encounters of the Third Kind” mountain moment.
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John Burns’s rent-to-own gap* is currently negative, but improving. With with low mortgage rates and a rebounding housing market, it seems like the perfect time for maximum housing market healing to take place.
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So, we have a “close encounters” moment for housing market recovery, but the government has chosen the wrong kind: foreclosure gridlock.
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*Rent-to-Own Gap If the rent-to-own gap is positive for a given metro, it means that the monthly after-tax cost of owning the median priced home is more than the monthly cost of the average asking rent, whereas a negative rent-to-own gap means that the monthly after-tax cost of owning the median priced home is less than the monthly cost of the average asking rent. As the gap between after-tax homeownership costs and rental costs narrows or becomes negative, buyers are more likely to purchase a home. Asking Rent data is provided by RealFacts (100+ units) or REIS. Estimated Monthly After-Tax Housing Cost is based on a 20% down, 30-year FRM, PITI payment after-tax deduction. The analysis uses median resale prices.
Close Encounters of the Wrong Kind: New Foreclosure Laws Shut Out Las Vegas Home Buyers
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