Federal funds will help LV economy

Rick Shelton

Fri, Mar 12, 2010 (3 a.m.)

When President Barack Obama came to town last month and announced that Nevada will get about $100 million to help homeowners, friends, fellow Realtors and others asked me how this would help Southern Nevada.

My short answer is that such federal funds can only help our local economy and housing market.

Helpful as this may be, I see an even bigger effect from the federal tax credit for first-time and repeat homebuyers that is about to expire.

Late last year, Congress extended the existing $8,000 tax credit for first-time homebuyers and then expanded it to offer a credit of up to $6,500 for qualified repeat buyers.

Statistics from the Internal Revenue Service and others have shown this tax credit has helped thousands of Nevadans buy their first home. It has had a significant effect on the local and national housing markets — and on the overall economy.

The IRS reported last year that 20,222 Nevadans sought the credit for first-time homebuyers when filing their 2008 taxes. And research shows a large percentage of these buyers would not have bought a home if not for the tax credit.

First-time homebuyers can seek a tax credit of up to $8,000 if they sign a binding contract on a home before April 30, and close on their home by June 30. Likewise, repeat buyers who act by these same dates are eligible for a tax credit capped at $6,500 for those who have owned a home for five consecutive years within the previous eight years.

Back to Obama’s Feb. 19 visit to Las Vegas, when he and Sen. Harry Reid announced that “at least” $100 million in federal funds will be funneled into Nevada, they indicated that this money is intended to help homeowners who are facing foreclosure; and even some who are underwater — they owe more on their mortgage loans than the home is worth.

Unfortunately, this money isn’t expected to be available until June.

I think it’s also fair to say that $100 million for all of Nevada is not going to heal our housing market.

In Southern Nevada alone, housing analysts estimate we’ll see about 24,000 more homes fall into foreclosure this year.

We don’t have all the details on how this money will be used, but it should help hundreds of local homeowners.

The money will reportedly be used for things like bridge loans, providing incentives for lenders to modify home loans and to help people who have lost their jobs and are in danger of losing their homes. Government officials also said they intend to use at least some of this money to help underwater borrowers and to help homeowners struggling to pay their second mortgages.

This federal assistance comes when our local foreclosure rate is already declining. Statistics from the Greater Las Vegas Association of Realtors show the number of local home sales involving bank-owned properties has been declining for months. At the same time, the number of local homes being sold in short sales is increasing at a corresponding rate.

Lenders are being more responsive and more willing to work out short sales — which occur when a lender agrees to sell a home for less than the borrower owes on the mortgage. This is positive, since short sales are a better option for everyone involved than going through the foreclosure process.

No matter how much help we get from these federal funds, I see a less tangible benefit to these efforts to help homeowners here. To me, the gesture alone is important. It shows that the federal government is paying attention to the challenges we’re facing in Southern Nevada, where we have the highest foreclosure rate among all U.S. metro areas.

You can ask why such efforts weren’t made sooner. But, again, I say every little bit helps.

Rick Shelton is the president of the Greater Las Vegas Association of Realtors. He has worked in the real estate industry for nearly 20 years. His group has nearly 12,500 members. For more information, visit lasvegasrealtor.com.