Tags: Bulk | Las | Vegas | Homes | Underwater

USA Today: Bulk of Las Vegas Homes are Underwater

Wednesday, 09 Feb 2011 08:41 AM

Some 71 percent of the homes in Las Vegas are underwater, according to USA Today. At least half of homeowners with a mortgage owe more than their homes are worth in 17 of 386 U.S. counties, the newspaper reports citing CoreLogic data.

The U.S. economy and financial sector are still feeling the pain of the housing bust, which brought the financial system into crisis.

Nationwide, 27 percent of borrowers owe more on their homes than they're worth during the fourth quarter of last year, up from 23 percent in the previous quarter, according to Zillow.

A foreclosed home in Miami.
Foreclosure moratoriums and falling home prices are the culprit.

"Home value trends in the fourth quarter remained grim, but the good news is that these declines, while painful in the short-term, mean we’re getting closer to the bottom," Zillow’s chief economist, Dr. Stan Humphries tells CNBC.

Negative equity is a primary driver behind mortgage default, but as banks ramp up repossessions, the percentage of underwater loans should recede somewhat, although they will remain high.

Home values, meanwhile, fell 2.6 percent in the fourth quarter compared with the third, the largest drop since the beginning of 2009.

The home buyer tax credit pumped up home prices in the first half of 2010, resulting in a correction during the latter half of the year.

Home prices plunged 5.9 percent compared to the fourth quarter of 2009.

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