Monday, March 14, 2005

Coming Jump in Interest Rates May Pop Las Vegas Housing Bubble

Foreclosures.com
Monday March 14, 9:01 am ET

SACRAMENTO, Calif.--(BUSINESS WIRE)--March 14, 2005--Northern California-based Foreclosures.com, an investment advisory firm specializing in distressed property, reported today that steadily rising yields of the benchmark 10 year treasury bill would put upward pressure on mortgage rates in the near future and could throw cold water on the super-hot speculative Las Vegas housing market.

Foreclosures.com president Alexis McGee said that the Las Vegas market has already cycled over the top, and that increasing mortgage rates could produce sharp price declines. "The yield on the 10 year note jumped to 4.53% on Wednesday partly because all twelve Federal Reserve districts reported upward pressure on prices," Ms. McGee said. She added that, because of inflation fears, her firm saw the increase as a trend rather than a temporary jump such as that which occurred late last year.

"Resale homes are glutting the Las Vegas market with the inventory at nearly 14,000 homes in January," said Ms. McGee. She went on to say that while most of the new homes offered by builders were pre-sold, the price appreciation curve had flattened out, and, in some cases, builders had cut prices, and that some out of state speculators in new homes were taking losses. The year over year price appreciation for existing homes dropped to a half percent in January, while the increase for new homes fell to 6%.

"The Las Vegas market is very fragile right now," said Ms. McGee. "An increase in borrowing costs, which we now see as inevitable, could knock many prospective buyers out of the market, drive the speculators out of town and create a new wave of foreclosures."

Foreclosures.com has been tracking foreclosure activity and assisting investors since 1992. The company also offers investor training and pre-foreclosure lists in the metro areas of Phoenix, AZ, selected major California counties, the metro areas of Chicago and New York, and the state of New Jersey.

"Our company wants to prevent needless foreclosure as well as help investors make profits," Ms McGee said, adding that investor clients are trained to counsel troubled homeowners on solving the problem as well as to make purchases with win-win scenarios for both sellers and investors.

"It's really about helping people in a time of need so they don't lose everything in a sale on the courthouse steps," said Ms. McGee.

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