This article focuses on the effects of the housing crisis on Las Vegas, Nevada. Las Vegas was found to be the foreclosure capital of America, according to RealtyTrac, a property-listings firm. In some of the poorer suburbs the foreclosure rate is one in every five houses. Some of the people have managed to hold on to their homes though. This may seem like a good thing but with property prices around 60% below the peak of 2006, this leaves 70% of the homeowners owing more than what their property is worth.
Cheap and abundant credit was rampant in the Sunbelt over the recent decades. The ten cities with the highest foreclosure rates are in Arizona, California, and Nevada. Of the other 7 only one, Michigan, lies outside the Southwest.
Las Vegas’s outside suburbs are “eerily quiet”, due to the amount of unsold and foreclosed homes. In North Las Vegas, every second house has a “For Rent” sign, offering absurdly low prices to rent. Some of have been abandoned and boarded up. The main “strip” of Vegas is even littered with abandoned construction sites that had been started during the boom.
The high concentration of foreclosures in an area creates a domino effect. The foreclosed properties drive down the price of others and the homeowners re deeper in negative equity; they have mortgages worth more than their house. Many who suffer from foreclosure do so by choice.
Local governments get their money from property taxes which they figure will lose a fifth of their income over the next few years. This ripple effect even trickles down to the local economy. Many who have kept their houses are worried they will not have enough when this occurs again so they are very frugal. Car sales are down in the Vegas area. Losing your house has many social effects on the communities as well. Children do worse in school; drug and alcohol abuse; and marriages being broken.
I decided to connect this to “Rethinking the American Economy” theme in class. We thoroughly discussed the subprime mortgage crisis in class. This article shows how it affects so many people even if it does not affect you directly. It goes to show that the system of credit we were and currently are using is flawed and can cause many issues.
This article offered many different effects of the subprime mortgage crisis. Foreclosures do not just affect the person foreclosing. They affect the communities, local governments, and local economies. The risky lending by the banks has shown to be a much more disastrous decision than I had thought of.
The article did not have any biases at all. It was very thorough with its information and no ulterior motives for the view point were present.
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