Nevada Mortgage Crisis Rebound Predicted

December 04, 2007 - CARSON CITY, Nev. —

Nevada's economy should be so strong by 2009 that a housing shortage may be the big concern rather than the current mortgage crisis and heavy surplus of homes for sale, an economist told lawmakers.

While Nevada now has the highest home loan foreclosure rate in the nation, Jeremy Aguero of Las Vegas-based Applied Analysis told a legislative panel studying the state's mortgage problems that it's "a great fallacy" to have doubts about another economic boom in the state.

With some $36 billion in megaresort construction occurring in Las Vegas in the next few years, Aguero said Monday the people holding new jobs created by the building activity will buy up homes now available on the market and probably need more.

"You won't have enough housing stock for all the jobs in the near-term pipeline," Aguero said after the legislative hearing, adding, "How many markets can you point to with a $36 billion investment in their core industry alone that have long-term housing problems? Very, very few."

While a turnaround is on the horizon, Aguero and other economists and experts told the legislators that Nevada's problems related to foreclosures and overbuilding are likely to get worse during 2008.

Douglas Duncan, chief economist for the Mortgage Bankers Association, predicted that the problems with Nevada's foreclosure rate and other housing industry woes won't bottom out until late October in 2008.

Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, added that a drop in building permits should continue in 2008. But he said the upcoming resort expansion should cut deeply into the number of vacant housing units _ more than 27,000 _ now on the market.

Mendy Elliott, director of the state Business and Industry Department, recommended against a state "bailout fund" to help deal with subprime loans. Former state Sen. Joe Neal of North Las Vegas agreed, but said a freeze on subprime loan rates would help consumers.