Las Vegas NowAre Banks Keeping Foreclosures Off the Market?

Are Banks Keeping Foreclosures Off the Market?

In the first half of 2009, Las Vegas posted the nation's highest rate of foreclosure. According to RealtyTrac's midyear metropolitan foreclosure market report, nearly 7.5-percent of Las Vegas homes received a foreclosure filing.

That's more than six times the national average.

Cape Coral-Fort Myers, Florida had the second highest rate, followed by Merced, California, Riverside-San Bernardino-Ontario, California and Modesto.

But number crunchers at RealtyTrac say Las Vegas could see more houses on the market. If foreclosure filings from June actually become available, it would more than double homes for buyers all at once. It's up to banks and lenders to get that done.

Right now it's tough to even get a bid accepted because so many buyers are fighting over so few homes.

One theory is that lenders hold foreclosed homes back to keep supply low and drive up price for a smaller group out there. It could skew the entire housing market and keep regular buyers blocked out. But is it a consequence of red tape or is it intentional?

It's now week 19 for Realtor Nick Nolf. For the last 18 weeks, housing inventory has dropped, quickly bottoming out. "The amount of foreclosures coming onto the market have slowed down," he said.

Nolf believes banks and lenders have homes ready for sale but they won't release them from foreclosure. "There's a long period and that's an ambiguous period because some of the banks will release properties at certain times. Sometimes they hold off," he said.

That has Nolf worried and the math backs him up. As inventory drops, bidding wars ensue and prices jump. That's good for banks and bad for buyers. But the banks also can control inventory.

In June, RealtyTrac says more than 15,000 homes in Las Vegas were in some kind of foreclosure proceeding. Without releasing some for sale, lenders can keep the prices on existing foreclosures for sale artificially high.

Bill Uffelman is the President and CEO of the Nevada Bankers Association. He says it isn't collusion or shady plans by FDIC insured banks. Foreclosures take time to work through the courts. "It doesn't happen overnight, but it isn't something they sit on. There's no advantage to them to sit on these properties," he said.

For Nolf though, stuck in week 19 over a bad trend for business. Higher prices are good, sure, but clients are getting frustrated having to fight over a smaller piece of the pie. "It doesn't matter what the prices are, we just hope that there's inventory," he said.

The foreclosures are coming, just not as soon as anyone expects.

Another problem for inventory are new laws to protect homeowners and renters. Banks and lenders can't kick people out as quickly anymore -- Nevada has a new foreclosure mediation program just underway.

All of these new rules and regulations protect people in need, but on the back end in the resale market it leads to unpredictable sales for buyers and their realtors.