‘I can barely make it’: This Nevada woman earns a decent $5K/month — but says she’s just 1 job loss away from living on the streets of Vegas. Why foreclosures are spiking in the Silver State

Perkins’ situation is one that’s becoming increasingly common across the state, reflecting bigger nationwide trends. The latest data from the Consumer Finance Protection Bureau shows 1.4% of Nevada homeowners are between 30 and 89 days delinquent on their mortgages — a number that has been trending upward since the lowest point in June 2021.

Moreover, foreclosure activity in the Silver State is climbing. Research from real estate data aggregator Attom shows through the first half of 2024, Nevada was fourth in foreclosures nationwide, with 0.19% of homes in active foreclosure, ranking behind New Jersey, Illinois and Florida. The rate is higher than the national average, where one in 794 homes are in foreclosure.

Although mortgage defaults and foreclosures are on the rise, it doesn’t mean homeowners are powerless to do anything about it. Here’s what you need to know about default and foreclosure, and what options are available to stay in your home.

Factors adding to the foreclosure rate in Nevada

Homeownership is a major investment which requires significant assets to maintain each month. According to UNLV’s Lied Center for Real Estate, the average household income for homeowners is $90,979 per year. But between inflation, cost of living data, and home sales data, that money may not have the same spending power compared to years ago.

Complicating things is the rate of inflation in Nevada — the one thing all experts agree is weighing homeowners down. Inflation is the measurement of price increases on goods and services, such as groceries, energy, and medical care compared to a previous point in time. The U.S. Senate Joint Economic Committee shows Nevada ranks 11th in increased monthly inflation costs, spending $31,369 more annually compared to the same time in 2021.

With inflation rapidly increasing, it complicates how homeowners budget for their residences. When calculating how much mortgage a homeowner can afford, the FDIC recommends homeowners budget for two to three times their annual income, with a target mortgage payment of between 25% and 28% of their monthly income. At the average income of $90,979, that puts the target price range between around $182,000 and $273,000.

Is this a realistic target price? Data from the Federal Reserve Bank of St. Louis suggests that this may not be the case anymore in Nevada. As of June 2024, the Zillow home value index for all homes in Nevada was up to $443,103 — down from the peak of $459,325 in July 2022. At the current prices, the Lied Center says nearly 1-in-4 are paying 35% or more of their monthly income on mortgage payments each month.

What can homeowners do when they fall behind on their mortgage?

A mortgage can go into default when a homeowner breaks the terms of their contract, with the most common reason being missed payments. Each contract differs on how many payments a homeowner needs to miss before they enter into default.

The most current data from the CFPB shows 1.4% of Nevada homeowners are between 30 and 89 days delinquent on their mortgages, which can put them in default. Only 0.6% are 90 days or more delinquent, matching the national serious delinquency rate.