LAS VEGAS -- For the first time in almost three years, Nevada is experiencing a spike in the number of foreclosure, causing concern too many houses will flood the market.
The concern lies with the speculation that banks have figured out a way around Assembly Bill 284, making it more difficult for banks to foreclose.
The houses that banks have been holding onto and the others that haven't been foreclosed upon because of regulatory hurdles, are expected to swamp the market and drive down prices.
RealtyTrac: Nevada Foreclosure Starts Rose in October
Nevada Bankers Association CEO Bill Uffelman predicted three months ago that the floodgates would open on foreclosures held back by the regulation.
"Foreclosures will ramp up shortly," Uffelman said at the time. "I would argue probably in September."
He said that he expected 3,000 notices of default would be filed per month.
"I think we will get back to 3,000 (filings) a month, maybe 4,000," Uffelman said. "But that will happen over time."
His prediction on the numbers is a little off, but the timing is almost dead on.
Last month, 1,400 notices of default were filed, a 53 percent increase in foreclosures.
Is this a sign those flood gates are starting to open?
Broker Forrest Barbee, who watches foreclosure statistics like a hawk, said he doesn't think so.
"If you see a steady increase over six to eight months, maybe, but we just haven't seen that," he said.
Barbee, who oversees 1,000 real estate agents, said many of last month's foreclosures were brought on by homeowner associations, and is not a sign that the banks are ramping up foreclosures again.
Other real estate professionals disagree, many saying they believe there are between 20,000 to 50,000 foreclosed homes about to go on the market.
"It would not be a good thing, just for basic supply and demand, if we had a tsunami of new foreclosures," said Las Vegas attorney Tisha Black Chernine, who helped write the assembly bill.
The bill took effect Oct. 2011 and effectively slowed the state's foreclosure rate.
"I think that Nevada is going to have to prepare for more foreclosures," she said. "But that is not necessarily a bad thing. We have to get through this inventory, we have to get people back on their feet."
Barbee, the broker, said he doesn't believe an inventory of shadow foreclosures even exists. The only way he'll change his mind is if we see a steady increase over six to eight months.
If that happens, he conceded, home prices are likely to go down.
