Both properties were bought and resold by investors. In Las Vegas, more than half of properties with mortgages are underwater, according to Zillow, a real estate data firm. In Phoenix, the share is a third. Someone who got a $350,000 mortgage in Phoenix or Las Vegas in 2006 probably is now more than $150,000 underwater, despite the surge in prices.”

“Those stuck owners give builders the opportunity to gear up to meet demand — at a cost. The average price of an acre of land is $400,000 this month, says Dennis Smith, CEO of Home Builders Research in Las Vegas. The same parcel would have gone for $200,000 in December, he said. ‘They’re clearly in bubbles,’ said Karl Case, one of the creators of the S&P/Case-Shiller property-value index. ‘What can go up can go down — real quick.’”

“‘We’ve got declining home sales right now, which is a consequence of declining inventory,’ said Brett Ellis, head of The Ellis Team with Re/Max Realty Group in Fort Myers. One problem is that there aren’t enough homes available to fuel a faster sales pace, he said. ‘We’ve got many people who can afford to make home payments but they’re underwater on their houses. They can’t sell — they’re locked in.’”


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