Don and Janet KnightÂs home went from $350,000 to $177,000… (Isaac Brekken / For The Los…)
Reporting from Las Vegas — One morning in the nation's foreclosure capital, several dozen property owners filed into the Clark County Government Center, their expressions as dreary as the gray sky outside.
Carrying manila folders thick with documents, they settled into a cavernous room, praying an obscure board would lower the values of their homes.
This might seem counterintuitive. But one odd consequence of the recession is that, in Clark County, more people than ever are trying to drag down their property values, which are already in the dumps.
Moody's Economy.com has pegged Nevada as the only state stuck in a full-blown recession -- the rest are starting, slowly, to heal. It's a nexus of a terrible real estate market, a terrible unemployment rate (13%) and, for many people, a terrible feeling about the future.
Last month, President Obama announced a $1.5-billion mortgage program aimed at Nevada, California and three other foreclosure-vexed states.
But many owners -- saddled with home prices that, since 2006, have tumbled nearly 50% -- have given up on prices bouncing back. The swagger that once defined Las Vegas real estate has given way to homeowners begging for smaller valuations and presumed property tax breaks.
Nowhere is this more evident than at the county Board of Equalization, which is charged with answering an increasingly imponderable question:
When prices have fallen so far, so fast, how do you judge the worth of anything?
Before the crash
Don Knight bought his three-bedroom home for about $180,000 in 2003, when Las Vegas' sprawl was barreling toward the nearby mountains.
But Knight, a salt-of-the-earth fellow, had little use for master-planned communities. His 1975 house sat on more than half an acre, where he and his wife, Janet, raised horses, chickens, geese and guinea hens.
Janet worked at a lumber supplier. Don left a job at Lowe's for a company that sold windows and doors. Home prices soared. "Anybody in construction knew they were inflated," Janet said.Around 2007, when the Knights considered moving to California, their home's value had nearly doubled, to $350,000.
Then came the foreclosure crisis.
In early 2008, the lumber supplier closed. Janet was out of work. She couldn't even land a job as a gas station cashier. A few months later, Don got laid off. He is 67, she 59.
By last year, the value of the Knights' home had dwindled to about $177,000. They were on the verge of joining the two-thirds of Las Vegas homeowners who are "underwater," meaning their mortgage debt would outstrip their home's worth.
A number of folks endured short sales -- when a home is sold for less than the remaining mortgage -- or simply walked away. The Knights' ZIP code, 89108, tallied the second-most foreclosures in the Las Vegas region last year, according to SalesTraq. Eventually, the Knights did go underwater.
Although sales volume in Las Vegas has regained some strength recently, home prices are expected to remain listless, possibly for years. So when the Knights got this year's property value notice, they gasped: about $153,000. It couldn't be worth that much, they thought. One home similar to theirs, but with a swimming pool, had recently sold for $132,000.
And this is why the Knights were now before the board. Last year their property tax was about $1,500, a tough amount with two people unemployed. They contended their home was worth $125,000.
Since 2005, Nevada law has capped annual property tax increases, somewhat similar to California's Proposition 13. That hasn't diminished complaints to the Board of Equalization.
When the market was scorching, owners griped that homes got too pricey, too fast. When it cooled, they griped that home values -- and corresponding tax bills -- didn't drop quickly enough.
This year, whiplashed property owners tried to regain some feeling of control. The board will hear a record 8,300 commercial and residential appeals, about six times more than in 2008.
Don had fidgeted through a dozen or so appeals, and things did not look good. Some homeowners did not get their property values lowered at all.
One woman complained, to horrified laughter, that the assessor had factored in her built-in microwave. She got a reprieve. Don had no such cause for outrage.
Don came to the lectern and leaned into the microphone, a resolute, if rumpled, man with thick white hair, a Col. Sanders mustache and glasses.
"Before we came down here," he told board members, whose faces were mostly hidden behind computers, "we drove around. There are 10 foreclosures within a mile of my house!"
Don mentioned the home that sold for $132,000. Board member Tio DiFederico, a commercial appraiser, had some questions: Was that a bank sale?
"OK, it probably wasn't in very good shape."
"Actually, I was in that house. It was in fairly decent shape."