Study Says Foreclosure Crisis Affecting Las Vegas Homes Caused by Borrowers Who Overreached

dsnews.com, May 07, 2010 – A study
conducted by the Economists at the University of Arkansas tried to find out the
truth about the matter regarding the foreclosure crisis that is affecting Las Vegas homes. They tried to find out
if it’s true that banks took advantage of unsuspecting consumers or homeowners
did borrow more than they could afford.

The study group compiled information about
demographics, properties, and foreclosures then created profiles of households
who were in foreclosure during the third quarter of 2008. They came up with 21
categories, each with specific characteristics that grouped them together.
According to the results of their statistics, the group with the highest
foreclosure rates was “Cash & Career”. This group is characterized by
adults born between the mid 60’s and early 70’s; this group had high incomes,
none to a few kids, and high levels of education. Most of this group lives in
areas of rapid real estate appreciation, like California, Nevada, Arizona, and
Florida.

“Although we did find evidence
that low-income households had a higher statistical likelihood of foreclosure,
most households in foreclosure were relatively affluent and well educated,”
Yeager said. “Also, these household defaults were strongly clustered in
southwestern and southeastern states, which is consistent with the
overreaching-consumer explanation of the foreclosure crisis.” (Quoted from: www.dsnews.com)

All in all, the study concluded that most
of the foreclosed households, including Las Vegas homes, were not deceived into
bad loans. But rather, both the consumer and the lenders were too aggressive
and were caught up in a housing price bubble.

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