Details of the foreclosure rescue bill passed by Congress and awaiting President Bush’s signature are coming out. Before we take a closer look, keep in mind we have 2.2 million vacant homes on the market, sales of new homes are plunging, and the trend of increasing foreclosure rates shows no sign of stopping.

Back to the bill. First, it won’t come into effect until October. If things continue as they are, there will be another 700,000-1,000,000 foreclosed homes on the market by then. The bill is estimated to help about 400,000 people (a little more than half the number of homes in the foreclosure process in the second quarter of 2008).

It will only apply to owner-occupied homes with mortgages dated 1/2005-6/2007 (one 30 month block). It will do nothing to help renters who dutifully pay rent and live in homes with defaulting mortgages. The homeowner has to prove that the mortgage payment is at least 31% of their monthly income, and that they won’t be able to afford paying it anymore.

Now, here’s the deal-breaker. The old mortgage company has to agree to write down the loan to 90% of the current appraised value and forgive the remainder. CNN correctly points out “that will mean a substantial loss for the lender.” A new mortgage company issues a new loan for that 90% (some sources are saying only up to 85% — where is our cash-strapped homeowner going to get that 5% difference?) and the old mortgage company has to accept it as full and final payment. One of the mortgage companies has to pay FHA a 3% insurance premium up front.

As for the homeowner, they will have to pay an insurance premium to the FHA every year of 1.5% of the principal. In addition, they will have to share any profit on the house with the FHA (100% the first year, declining to 50% after the 5th year, plus a 3% exit fee). The homeowner also must accept strict limits on equity loans.

For the sake of argument, let’s flesh out these numbers. If you own a median priced house in Las Vegas, the nice folks at HousingTracker say it’s worth $225,000. Scroll down for historical median prices. Let’s assume the mortgage originated in the middle of the 30 month window, March of 2006. Median prices then were roughly $325,000. For the sake of argument, say you had a 90% LTV, or a mortgage of $292,500.

Assuming you actually meet all the other qualifications, your mortgage company would have to agree to write down what you owe to 202,500 (lose almost $90,000 — the principal has come down a little since then unless you have an interest only loan). The local experts in bank-owned properties tell me that it costs a lender $60,000-80,000 to take a foreclosure to completion., so they really only have to bet that prices won’t decline another $10,000-$30,000 over the course of 6 months to come out ahead by refusing to play along. This bet becomes even better for your mortgage holder if you financed 95% or more of your home’s value.

But let’s also look at why this deal might be bad for you. First, somebody is going to pass the 3% FHA insurance origination fee on to you. That’s $6075. Plus there is the annual 1.5% insurance fee that will be tacked on to your payments, $3037.50 annually ($253.13 per month). And even if you sell your home 20 years from now, you will still owe the FHA half of any profits you may make on the place.

Rest assured, this deal is not a bailout. It doesn’t help much of anybody.

I’ll leave you with a couple of local interest items: 2 Nevada banks taken over by the Feds; and a Nevada court upholds term limits.

Although we made our decision about potential Presidential candidates with a caucus, Nevada does have a primary election for other positions coming up in a couple of weeks.  Here’s a little more about who we will be voting for/against.

The intersection of real estate and politics is right here, in this item from the IHT called “U.S. housing bill evolves, but crisis grows deeper”.

Elections have a direct impact on you.  Primaries are in some ways more important than the Big Game in the fall.  It’s not easy finding out about these candidates and their positions, but give it a try, and remember to vote on August 12 if you are a registered Nevada voter.

Some time back I mentioned that many countries do not have the same level of regulation for real estate agents that we have here in the United States. Did you know that many states model their rules for real estate salespeople and brokers in part on the National Association of Realtors’ Code of Ethics? Well, in Britain, there is a movement to institute basic minimum qualifications and standards for “estate agents”, including a regulatory body and what appears to be disclosure requirements.

Maybe you remember when I wrote about Barbara Ehrenreich getting it wrong? Now Brad DeLong says she “has gone totally off the rails” when she insists that only the rich can afford to live in beautiful places. I suppose a lot depends on what a beautiful place means to you.

Objective data — actual real figures — show that the Las Vegas real estate market is getting better, thank you very much, with 3000 pending sales and an additional 4000 contingent.

As for the much hyped RealtyTrac figures that 1 out of every 118 Nevada homes got a foreclosure notice in May, that figure seems a bit odd. The last time I found a foreclosure figure “odd” it turned out to be totally bogus. Their figures also indicate that “Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices,” while Foreclosures.com said that nationally, “Lenders took possession of 74,570 homes in April, down more than 5 percent from March….” They also found that “Clark County had 4,426 preforeclosures in April, more than double the 2,029 preforeclosures in the same month a year ago. The number is down from a record 6,152 preforeclosures in March. REOs, or real estate owned by the lender through foreclosure, declined to 1,911 in April, compared with 1,937 in March.” In fact, you can see their stats right here: Nevada had 4,985 new foreclosure filings in May, compared to 5,177 in April and a high of 6,876 in May. And they saved me the trouble of adding up the number of homes total in each county: 742,752 total homes in the state. One out of 149 homes is still alarming, but improved. You can click on Nevada to get a county-by-county list: Clark County as a whole had 24,585 foreclosure filings year-to-date, including 4,222 in May as part of a 2 month decline, for a total of 4.80% out of our total 512,253 households. Keep in mind that many of the foreclosures from earlier in the year are already in the hands of the bank — and in some cases sold already. So the real news turns out to be both better and worse than originally reported.

And I promised a bonus: You know you’re a real estate investor when….

That’s all for today. Make it a good day.

Most people have never heard of Ivanpah. No, not the “ghost town“. The proposed solar power farm? Well, that’s closer.

I am referring to Ivanpah International Airport — currently a hunk of desert near Jean, Nevada — a facility well supported in Nevada and almost unanimously supported by Congress. It is supposed to take some of the passengers that currently fly to McCarran International Airport in Las Vegas, a facility projected to reach its capacity within a few years. Eventually, Ivanpah is supposed to be able to handle 35 million yearly visitors, compared to McCarran’s projected 53 million visitors.

Of course, it doesn’t take much thought to realize that it is going to take some infrastructure to get those visitors from Ivanpah to Las Vegas proper. Proposals include more roads and high-speed rail. Of course, in my mind even better would be high speed rail from Vegas to Los Angeles, perhaps with a stop at Ivanpah. That would sure take a load off McCarran and LAX too, to say nothing of saving fuel as motorists decide to take the train instead of drive.

While most people don’t have a lot to say on the matter, not everyone is happy. Some people worry about the impact it might have on the nearby Mohave Desert, and argue that even if we need an airport it should go elsewhere. Due to military restrictions, such a facility cannot be built north of town, and terrain restricts many other locations. Others argue that between the problems airlines are having and fuel costs, we don’t really need the facility at all, and certainly not in the middle of the desert.

The real strength of Ivanpah is not as a passenger airport. Fares would have to be ludicrously low to get most people to give up flying into McCarran (5 minutes from the Strip) to land in Jean (a half hour away, according to Google). Ivanpah’s real purpose is as a cargo airport. Some experts estimate that bypassing Los Angeles with international cargo could shave days if not a whole week off shipping times.

Of course I would be remiss if I did not mention the jobs that will be created building and subsequently staffing this airport. Jean is close enough that it is commutable from Henderson and the southern half of Las Vegas, although I would expect more development down the I-15 corridor between the two.

Thinking of the Children:  Child advocacy group First Focus has reported that roughly 40,000 Nevada children will be affected by foreclosure.  This is part of 2 Million kids nationwide. Meanwhile, there are about 2,000 homeless teenagers in Las Vegas. Efforts are underway to get them “survival kits” that include “hand wipes, anti-bacterial hand gel, a toothbrush and toothpaste, shampoo, deodorant, sunscreen, bandages, socks and snacks.”

Looking for a really unique Vegas home?  Well, one is to be auctioned off in early June.  The garage alone is 6500 square feet, 2 to 4 times the size of a typical local family home.  The home itself is 9500 square feet on 2 acres.  Open house this weekend!  Opening bid is only a half million dollars, or $53 per square foot — excluding the garage. Twice this price would be a bargain by any local standard. Here’s a gallery of pictures.

“We must all hang together, or assuredly we shall all hang separately!“  (Quote from Ben Franklin): The Christian Science Monitor asks whether taxpayers will end up paying for the subprime mess one way or the other.

At least there’s one good consequence:  Our current real estate troubles are helping conservationists, both by scuttling projects in environmentally sensitive areas, and by making it easier for areas to be converted to parks and other conservation areas.

And finally, a cartoon:   “moral hazard.”

Have a terrific weekend, everybody!

Scientists have now said that whether or not Lake Mead exists in 15 years is a coin toss:

Based on models constructed from the analysis of historical records from the Federal Bureau of Land Reclamation, the researchers, Tim Barnett and David Pierce, say there is a ten percent chance the reservoir will be dry in 2014, and a 50 percent chance no water will be left by 2021.

Lake Mead was created by the Hoover Dam’s blockage of the Colorado River. The river is fed by snow pack from Rockies, which has been decreasing. The dam, of course, was one of the prototypical megaengineering efforts of the 20th century and a symbol of how human ingenuity could conquer any obstacle, including supplying water to a city the size of Las Vegas in the middle of the desert.

But the sheer amount of water that natural and manmade climate changes and human usage is drawing out of the Colorado River system is staggering. The researchers estimate that 1 million acre-feet, or 326 billion gallons, of water are being leached out of the system each year. They say that’s enough to supply 8 million people.

While this sort of story is sensational, I think it’s more than a little alarmist.  For one thing,  it ignores the springs that initially brought settlers to the Las Vegas Valley — by the way, while you are in Vegas you can check this out for yourself at the Springs Preserve.  For another, they specifically say that the current quantity of water taken out of the system would supply a city the size of New York City when Las Vegas only has a population of half a million people — the entire valley has a population of maybe 2 million. Even if all our roughly 125,000 hotel rooms were occupied, and all 42,000 additional rooms scheduled to be available by 2012 were occupied, and all the people who will be employed as a result of those rooms were counted, there would still be far fewer than 8 million people in the valley.

Los Angeles, on the other hand, may want to think about desalination.

The nice folks at Econbrowser have outlined how mortgage securitization works both in theory and in practice. Fear not; they include handy diagrams.

AlterNet has some choice opinions about the Bank of America bailout of Countrywide.

Some people are very particular about how you pronounce the name of this state.

Did you know that women are being disproportionately hit by the subprime crisis?

Don’t forget that the caucuses are tomorrow, Saturday, January 19, 2008! Here are links to help you find the closest location for the Democratic caucus and the Republican caucus.

If you’ve ever been to Hoover Dam, you understand that in addition to being a huge water management project, above and beyond creating a massive lake, even more than creating gigawatts of electricity, Hoover Dam is part of a functional federal highway.  Well, sort of.  Highway U.S. 93 is a two-lane road on the Dam as it runs from Arizona to Montana.  Even if the Dam itself were not a massive tourist destination, 2 lanes would hardly be sufficient.  Add to that the potential of the Dam as a terrorist target — truck traffic hasn’t been allowed since 2001 — and it was almost inevitable that someday they would have to build a bridge to add capacity and bypass the Hoover Dam itself.

The bridge is supposed to be finished in 2010, and the crane system needed to make it all happen should be working by the end of the month.

The new pulley-type, “high-line” crane system was designed and specifically built with the bypass project in mind, said Dave Zanetell, a Federal Highway Administration engineer overseeing the project. “The other system was basically brought in from another construction site.”

More than a year ago, two pairs of 280-foot towers that made up the other system collapsed amid 55 mph winds.

The high-line system is needed to carry up to 50 tons of materials and workers about 1,100 feet over the Colorado River via 2,300-foot-long steel cables that stretch between the towers and over the gorge.

Here’s more information about the bridge itself:

The 1,905-foot bridge will include an 890-foot span over the river. It will provide four lanes for the U.S. Highway 93 traffic that currently uses the two-lane road over the dam.

About 17,000 cars and trucks are expected to use the new bridge on a daily basis.

Today more than 2,000 trucks detour the dam via U.S. Highway 95 to a river crossing in Laughlin. Truck traffic was banned from the dam just after the terrorist attacks of Sept. 11, 2001.

The new structure will be named the Mike O’Callaghan-Pat Tillman Memorial Bridge. O’Callaghan was a popular two-term governor of Nevada, and Tillman was a patriotic Arizona Cardinals football star who joined the military after the 2001 attacks and was killed accidentally by his fellow U.S. soldiers in Afghanistan.

Pretty cool stuff.

Yikes!  Yesterday’s Case-Shiller index posted a record drop in house prices.  It was the 10th straight month of falling prices.  The experts do not expect improvement soon because “Prices will probably remain under pressure as the jump in foreclosures puts even more homes on the market just as stricter lending rules make it harder for buyers to find financing.”  Every metro area surveyed was down month-over-month, even if a few were still up year-over year.  Here’s the data in chart form.

As a little bonus, check out this two-part item on the current housing mess from EconoSpeak:  one;  two.

Despite this rather dismal news, I am optimistic that on a local basis we are closer to the end than the beginning.  We are starting to work through inventory.  There is evidence that listing prices are becoming more realistic (even when it means a short sale).  Builders only have so much inventory:  they are not breaking ground on anything not already sold;  and since the end of the year is next week, the incentive to get property off the books for tax purposes is going away.  And topping all this off is the news that Nevada is once more the fastest growing state, with 2.56 million residents and a growth rate of 2.9%.  Since “demographic experts think the county’s population surged past the 2 million mark sometime in the past few months,”  that means almost 80% of the state’s population lives here in the Las Vegas Valley.  Those 2 million people and all the newcomers need places to live.

The other day, I picked up a copy of the Las Vegas Relocation Guide. It has lots of information that is of value both to newcomers and to people who have been here for years. If you would like your own copy, they are published by the Las Vegas Chamber of Commerce each quarter. Here are some little tibdits:

You knew Las Vegas had fabulous world-class shows by top notch performers like Celine Dion and Wayne Brady, Wayne Newton and Carrot Top. You knew we had groups like Cirque de Soleil and Blue Man Group. But did you know we also have the Las Vegas Philharmonic Orchestra and the Nevada Ballet Theatre? We even have an Opera.

Maybe you’ve heard of the Elvis Museum and the Liberace Museum, but those are just 2 of the 39 museums listed in the area. Vegas has a children’s museum, a museum built around an ancient Anasazi village, another one at a turn-of-the-20th-century Mormon fort, a neon museum, a branch of the Guggenheim, and a reproduction of King Tut’s tomb.

We have over 125,000 hotel rooms (more coming soon, more jobs coming with them), over 197,000 slot machines, over 3700 conventions each year, over 315 weddings daily (so much for “Virginia is for lovers”) and over 96,000 new residents moving to Vegas every year.

In addition to now-traditional neighborhoods of single family houses, apartment complexes, and low-rise condominiums, Vegas is having a veritable renaissance of high-rise living! These modern developments often have shops, restaurants, work-out facilities, conference rooms, and other great amenities on site. As of yesterday, there were over 800 high-rise condos for sale (be sure to click the “Contact Me!” link on the left if you want more specific information on them or want to schedule a tour).

Everyone knows Las Vegas has it’s fair share of sun-seeking retirees, but did you know we have a Chinatown?

And of course no discussion of Vegas Living would be complete without mentioning that we are one of the great dining cities in the world. Name a top celebrity chef, and if he has a restaurant chances are he has one here. Last year’s “Top Chef” winner is a local boy, as is the runner-up from the previous year. That fellow at the next table that looks like Tom Collichio? Could be!

Oh yeah, I love it here. Won’t you be my neighbor?