NVAR report shows HOA foreclosures reduced Nevada property values by over $1 billion
A report from the Nevada Association of Realtors found that foreclosures by local homeowner associations have reduced property values in the state’s two most populated counties by more than $1 billion.
This was just one of the findings in a report released this week by NVAR about issues surrounding foreclosures by homeowner associations and so-called superpriority lien laws that allow HOAs to foreclose on homes in a way that places a higher priority on repaying late homeowners association fees than repaying the mortgage when these homes are sold following a foreclosure.
As part of its report, NVAR worked with the Lied Institute for Real Estate Studies at UNLV and with a research firm SGS, which surveyed more than 500 registered voters throughout Nevada to measure their views on HOAs, superpriority liens and related issues. The report concluded that: “HOA foreclosures in Nevada cause an enormous impact on home values.”
According to the report, HOA foreclosures in Washoe County sold for “a remarkable 90 percent discount” compared to comparable home sales in the area, accounting for a loss of nearly $254 million in property sales value. In Clark County, the hundreds of homes sold through an HOA foreclosure in recent years went for an average discount of 42 percent, leading to a loss of about $840 million in property sales value.
NVAR’s report found that 77 percent of all Nevadans surveyed oppose HOAs having the power to foreclose on homes over unpaid association dues. In addition, 82 percent of all respondents think that the mortgage lender should be paid first, not the HOA.
According to the survey, 44 percent of all Nevadans had an unfavorable view of HOAs, compared to 29 percent who had a favorable opinion.
The report examined 611 HOA foreclosures recorded in Clark County between Jan. 1, 2013 and June 30, 2016, plus another 71 HOA foreclosures recorded in Washoe County during this same time. It found that HOA foreclosures spiked following a landmark 2014 lawsuit between U.S. Bank and SFR Investments before starting to decline in December of 2014. Since then, the report said HOA foreclosures in Nevada “have settled at around 10 per month.”
Southern Nevada home prices and sales keep climbing amid tight supply
The Greater Las Vegas Association of Realtors reported that local home prices and sales continued to climb as homes continue to sell faster amid a very tight housing supply.
GLVAR reported that the median price of existing single-family homes sold during June through its Multiple Listing Service increased to $257,373. That was up 2.9 percent from May and up 9.5 percent from June 2016. Meanwhile, the median price of local condos and townhomes sold in June was $128,000, down 7.2 percent from May, but up 11.3 percent from June 2016.
For the first time this year, GLVAR President David J. Tina said the local housing supply actually increased, with the number of homes available for sale rising very slightly from May to June. But at the current sales pace, he said Southern Nevada still has less than a two-month supply of existing homes available for sale. A six-month supply is considered to be a balanced market.
“We’re still dealing with a housing shortage, but at least our housing supply didn’t get any tighter last month,” Tina said.
Tina said the current housing market can be difficult for prospective homebuyers, especially those looking for homes in lower price ranges. He advises would-be buyers to be aggressive and be prepared to “put a ring on it” when they find a home they like.
“If you’re looking for a home under $300,000, you’re really going to have to compete,” he said. “If you’re looking for a home between $350,000 and $800,000, you may have a better shot. The high-end market is a different story.”
By the end of June, GLVAR reported 5,174 single-family homes listed for sale without any sort of offer. While up 4.1 percent from May, that’s down 27.1 percent from one year ago. For condos and townhomes, the 639 properties listed without offers in June were up 1.4 percent from May, but still represented a 51.9 percent drop from one
Meanwhile, local home sales continue to increase. The total number of existing local homes, condos and townhomes sold in June was 4,368, up from 3,957 in June 2016. Compared to one year ago, sales were up 10.3 percent for homes and up 10.6 percent for condos and townhomes.
According to GLVAR, total sales so far in 2017 continue to outpace 2016, when 41,720 total properties were sold in Southern Nevada. That was more than the 38,577 properties sold during 2015. It was also more total sales than in 2014, but fewer than each year from 2009 through 2013.
GLVAR said 27.2 percent of all local properties sold in June were purchased with cash, up slightly from 27.0 percent in June 2016. That’s well short of the February 2013 peak of 59.5 percent, indicating that cash buyers and investors are still more active in Southern Nevada than in most markets, but that their influence has generally been declining.
For several years, GLVAR has been reporting fewer distressed sales and more traditional home sales, where lenders are not controlling the transaction. That trend continued in June, when 3.4 percent of all local sales were short sales – which occur when lenders allow borrowers to sell a home for less than what they owe on the mortgage. That compares to 4.4 percent of all sales in June 2016. Another 2.9 percent of all June sales were bank-owned, down from 5.9 percent one year ago.
These GLVAR statistics include activity through the end of June 2017. GLVAR distributes statistics each month based on data collected through its MLS, which does not necessarily account for newly constructed homes sold by local builders or homes for sale by owners. Other highlights include:
• The total value of local real estate transactions tracked through the MLS during June was more than $1 billion for homes and more than $112 million for condos, high-rise condos and townhomes. Compared to one year ago, total sales volumes in June were up 17.8 percent for homes, and up 29.0 percent for condos and townhomes.
• Homes and condos continued to sell faster than last year at this time. In June, 83.3 percent of all existing local homes and 87.2 percent of all existing local condos and townhomes sold within 60 days. That compares to one year ago, when 74.2 percent of all existing local homes and 71.2 percent of all existing local condos and townhomes sold within 60 days.