Understanding the Foreclosure Crisis in Nevada. Federal Reserve Bank of San Francisco

1. HOUSING AND LABOR
MARKET TRENDS: NEVADA
May 2011
Community Development Research
Federal Reserve Bank of San Francisco

2. National Trends

3. Unemployment dips below 9%
U.S. Unemployment Rate
12
10
Unemployment Rate
8
6
4
2
0
Recession
Source: Bureau of Labor Statistics, November 2010

4. Recovery, particularly in labor market, remains
elusive
Months Since Start of Recession to Employment Recovery
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48
0%
1980 1974 1981 1990
Percent Decline in Employment from Peak
-1%
-2%
-3%
-4%
-5%
2007
-6%
-7%
Source: Bureau of Labor Statistics, December 2010

5. Case-Shiller Index shows continued softness in
housing market
Case-Shiller National House Price Index
(2000 = 100, Quarterly)
200
180
160
140
120
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Case - Shiller Home Price Index

6. FHFA House Price Index Dips Again at End of 2010
FHFA (formerly OFHEO) House Price Index
170
(2000=100, quarterly)
160
150
FHFA House Price Index
140
2000=100
130
120
110
100
90
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Federal Housing Finance Agency (formerly OFHEO), includes refinancing and is not seasonally adjusted

7. Nationally, delinquencies drop in 2010, but still
more than 4.5 million homes in distress
6,000,000
5,000,000
4,000,000
Number of Mortgages
3,000,000
2,000,000
1,000,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
All Mortgages Past Due Loans in Foreclosure
Source: Mortgage Bankers Association, National Delinquency Survey

8. Despite improvement, high rates of delinquency remain
concentrated in western and southern states
Source: Lender Processing Service Inc. Applied Analytics, November 2010

9. HAMP modifications down; borrowers still face challenges in
obtaining permanent modifications
120,000
100,000
80,000
Modifications
60,000
40,000
20,000
0
February March April May June July August September October November December January
2011
New HAMP Trials Started New Permanent Modifications Started
Source: HAMP Service Performance Report Through January 2011

10. Composition of distressed sales
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Arizona California Florida Industrial Pacific NW South Northeast Rocky
and Midwest Mountain
Nevada
Damaged REO Move-In Ready REO Short Sale
Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions, Feb 2011

11. Neighborhood stabilization: concerns over
investor purchases of distressed properties
Who Is Buying Properties?─February 2011
100%
90%
80%
70%
Investor
Percent of Property Type
60%
50%
First-Time
40% Homebuyer
30%
Current
20% Homeowner
10%
0%
Damaged Move-In Ready Short Sale Non-Distressed
REO REO
Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions, Feb 2011

12. Financing for home purchases
100%
90%
16% 18% All Other
28% Financing
80% 5%
5%
2%
14% VA
Percent of Buyer-Side Transactions
70% 4%
60% 19%
Fannie/Freddie
50%
40% 20% 55% 75% FHA
30%
20%
30%
Cash
10%
11%
0%
Current First-Time Investors
Homeowners Homebuyers
Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions, Feb 2011

13. Many states within 12th District face severe budget
shortfalls
Total End-of-Year Shortfall as Percentage of 2010 Budget
Source: Data from Center for Budget and Policy Priorities

14. Nevada Trends

15. Unemployment rate in Nevada falls below14%,
still highest in country
16
14
12
Unemployment Rate
10
8
United States
6
4
Nevada
2
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Recession
Source: Bureau of Labor Statistics

16. Unemployment in Nevada by county
Source: Bureau of Labor Statistics, February 2011

17. Nevada house prices falling to 2003 levels
FHFA House Price Index (formerly OFHEO)
(2000 = 100, quarterly)
230
Nevada
210
FHFA House Price Index
190
2000=100
170
United States
150
130
110
90
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Federal Housing Finance Agency (formerly OFHEO)

18. Las Vegas house price index down to 2001 levels
FHFA House Price Index (formerly OFHEO)
(2000 = 100, quarterly)
230
210
FHFA House Price Index
190
2000=100
170
Carson City
150
130
Reno
110
Las Vegas
90
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Federal Housing Finance Agency (formerly OFHEO)

19. The number of distressed properties – delinquent
and in foreclosure – continues downward trend
120,000
100,000
80,000
Number of Mortgages
60,000
40,000
20,000
0
2005 2006 2007 2008 2009 2010
Loans in Foreclosure All Mortgages Past Due
Source: Mortgage Bankers Association, National Delinquency Survey

20. Maps

21. Las Vegas Data Maps
Areas Affected by Concentrated Foreclosures
February 2011
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

22. Las Vegas Data Maps
Areas at Risk of Additional Foreclosures
February 2011
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

23. Las Vegas Data Maps
Change in House Values Since 2007
February 2011
Source: CoreLogic Home Price Index and FRBSF CD Calculations

24. Reno Data Maps
Areas Affected by Concentrated Foreclosures
February 2011
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

25. Reno Data Maps
Areas at Risk of Additional Foreclosures
February 2011
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

26. Reno Data Maps
Change in House Values Since 2007
February 2011
Source: CoreLogic Home Price Index and FRBSF CD Calculations

27. Conclusions

28. For More Information:
FRBSF Community Development Website
 Links to other resources
and research on
foreclosure trends and
mitigation strategies
 All publications,
presentations available on
our website
 Conference materials also
posted shortly after
events
http://www.frbsf.org/community/