Factors adding to the foreclosure rate in Nevada
Homeownership is a major investment which requires significant assets to maintain each month. According to UNLV’s Lied Center for Real Estate, the average household income for homeowners is $90,979 per year. But between inflation, cost of living data, and home sales data, that money may not have the same spending power compared to years ago.
Complicating things is the rate of inflation in Nevada — the one thing all experts agree is weighing homeowners down. Inflation is the measurement of price increases on goods and services, such as groceries, energy, and medical care compared to a previous point in time. The U.S. Senate Joint Economic Committee shows Nevada ranks 11th in increased monthly inflation costs, spending $31,369 more annually compared to the same time in 2021.
With inflation rapidly increasing, it complicates how homeowners budget for their residences. When calculating how much mortgage a homeowner can afford, the FDIC recommends homeowners budget for two to three times their annual income, with a target mortgage payment of between 25% and 28% of their monthly income. At the average income of $90,979, that puts the target price range between around $182,000 and $273,000.
Is this a realistic target price? Data from the Federal Reserve Bank of St. Louis suggests that this may not be the case anymore in Nevada. As of June 2024, the Zillow home value index for all homes in Nevada was up to $443,103 — down from the peak of $459,325 in July 2022. At the current prices, the Lied Center says nearly 1-in-4 are paying 35% or more of their monthly income on mortgage payments each month.
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Read MoreWhat can homeowners do when they fall behind on their mortgage?
A mortgage can go into default when a homeowner breaks the terms of their contract, with the most common reason being missed payments. Each contract differs on how many payments a homeowner needs to miss before they enter into default.
The most current data from the CFPB shows 1.4% of Nevada homeowners are between 30 and 89 days delinquent on their mortgages, which can put them in default. Only 0.6% are 90 days or more delinquent, matching the national serious delinquency rate.
If your home is in default and at threat of foreclosure in Nevada, you have time to work with your lender to find an alternative to eviction. The process of foreclosure can only start after 120 days have passed since missing their payment. In the first notice of non-payment, lenders must provide homeowners a list of alternatives to explore to keep them in their home.
The first step towards resolving a default is calling your lender and asking for options to work with them on getting back to current. The CFPB says you should have information prepared to explain your situation, such as why you’re behind on payments, how long you anticipate the problem will last, and how much you have in current assets.
If they cannot provide you with a mortgage assistance program, assistance is still available through housing counseling agencies approved by the Department of Housing and Urban Development. A counselor can help you determine what programs you may qualify for, what help may be available from other organizations, and assist you with budgeting to help get back on track.
The good news is that for Nevada homeowners, foreclosure is the final step after a long process to help keep homeowners in their residences. By creating a budget and understanding what options are available to mitigate default, it’s still possible to achieve homeownership and stay in your home.
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