The Wall Street Journal reports that Las Vegas remains vulnerable to further price drops, because banks are likely to acquire a significant number of new foreclosures in the coming year….Here’s a snip from the article:

For now, the market seems to be stabilizing, says Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. But if the job market gets much worse and mortgage rates rise sharply, “that could be the tipping point” for another drop in prices.

Mark Zandi, chief economist at Moody’s Economy.com, predicts that average national home prices will bottom out in next year’s third quarter, assuming that employment begins growing again in mid-2010. But prices in some metro areas still have a long way to fall, he believes. Prices in the second quarter of 2010 will be down about 30% from a year earlier in Miami, 27% in Orlando, Fla., 24% in Las Vegas and 23% in Phoenix, Moody’s Economy.com forecasts.

Foreclosures and short sales (in which a home is offered for less than the mortgage balance) dominate the markets in some metro areas. Satish M. Mansukhani, a market strategist in New York, estimates that such “distressed” homes account for 79% of home listings in the Detroit area and 75% in Las Vegas, but just 16% in Houston and 7% in Boston.

One big question is how much more the federal government will do to prop up housing. Congress is debating whether to extend the tax credit for home buyers beyond Nov. 30. Meanwhile, the Federal Reserve is phasing out its massive purchases of mortgage-backed securities and plans to conclude the program by the end of March. Those purchases have helped keep interest rates on 30-year fixed-rate mortgages around 5%. Mr. Zandi says mortgage rates are likely to rise as much as one percentage point after the Fed ends that support. Analysts at Barclays Capital in New York forecast mortgage rates will be slightly over 6% by the end of March.

The Internal Revenue Service is examining more than 100,000 suspicious claims for the first-time home-buyer tax break, another sign of potential trouble for the soon-to-expire program.

 The measure, adopted in February as part of the economic-stimulus bill, gives first-time buyers an $8,000 tax credit in an effort to boost sales and stimulate the moribund housing market. The program is set to end Nov. 30, but housing-industry leaders are lobbying Congress to extend it.

 More than a million claims for the credit have been received so far, and housing-industry experts estimated that the credit has helped generate about 350,000 home sales that wouldn’t otherwise have occurred. But some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified, or even fraudulent.

 ”I am concerned about recent reports that there have been fraudulent schemes involving the credit,” Rep. John Lewis (D., Ga.), chairman of a House Ways and Means oversight subcommittee, said in a statement. The subcommittee is planning a hearing on the problems on Thursday.

 The IRS said it was investigating 167 “criminal schemes” involving the credit, according to the subcommittee. IRS officials on Monday declined to describe the suspected schemes or provide additional details.

“The court clerks and the judges are doing a good job of getting the cases in and out,” court trustee Brian D. Shapiro said. “I don’t see any significant problems. Bankruptcy court kind of flows a lot quicker compared to other courts.”…

…Court officials and attorneys say whether the number of bankruptcy filings continues to rise or not will depend on the economy.

And Shapiro joked that until the public stops seeing all the commercials for bankruptcy attorneys on TV, you’ll know the economy isn’t getting better yet.

Hah, hah, hah.

Las Vegas home sales traditionally slump at the end of the year as people wait until the spring to consider buying, and analysts are wondering how strong the market will be as the holidays and 2010 approach.

But the focus these days is more on Washington than on Las Vegas for what the future holds.

Congress is debating whether to extend the $8,000 tax credit for first-time homebuyers that expires Nov. 30. The credit has bolstered sales and likely will be extended, analysts said.

But Congress is considering making the credit available to additional buyers — a move that could boost the housing market.

Businesses with federal stimulus contracts have created few jobs in states with the worst unemployment rates, according to data released Thursday by the federal government.

The new jobs reported (reported here) come from a small slice of a sliver of the $787 billion stimulus program: the roughly $16 billion worth of stimulus contracts that were awarded directly by federal agencies, of which about $2.2 billion has been spent so far. But the preliminary data represented the first time that the federal government has reported actual job figures, and not just job estimates, and they provided the most complete snapshot yet of how one component of the sprawling program — direct federal contracts — was shaping up.

One thing was clear: while the federal contracts have created or saved 30,383 jobs, they were not directed to states with the highest jobless rates. Businesses in Michigan, whose 15.2 percent unemployment rate in August was the highest in the nation, reported creating or saving about 400 jobs. Businesses in Nevada, which had the next highest unemployment rate, reported 159. And businesses in Rhode Island, which had the third-highest unemployment rate, 12.8 percent, reported the fewest jobs: just six.

The Review-Journal had its own story:

Nevada’s unemployment of 13.2 percent is the nation’s second-worst jobless rate. But the Silver State’s $57.4 million share of federal-contract money represents 2.6 percent of the total awarded nationwide, while North Dakota, where unemployment is just 4.3 percent, received 4.3 percent of funds granted. Its $96 million in contracts was almost twice the dollars Nevada companies collected.

What’s more, North Dakota reported creating or saving 219 jobs, while Nevada businesses formed or spared 159 jobs. Nevada has roughly five times the population of North Dakota.

Colorado, which has a jobless rate of 7.3 percent, received 26.5 percent of dollars awarded so far, with $583 million in contracts

Anyhoo, the experts tell us it’s official, as this Bloomberg article enumerates:

Confidence among U.S. consumers fell more than forecast in October, a reminder that households remain nervous about the strength of the emerging economic recovery.

The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 69.4 from 73.5 in September, which was the highest in more than a year. Measures of expectations for six months ahead and current conditions both fell. The index averaged 87.3 in 12 months leading to December 2007, when the recession began.

The highest unemployment rate in 26 years threatens to restrain consumer spending as the U.S. enters the Christmas- holiday shopping period. Minutes from last month’s Federal Reserve meeting show policy makers are still concerned that rising unemployment will curb consumer spending and lead to an anemic recovery.

“This is probably giving us a more accurate reading of what consumers are feeling,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who had the lowest forecast in the Bloomberg News survey. “They’re very concerned about how long unemployment is going to stay high, and they’ve very concerned about their own personal finances.”

Moody’s Investors Service reported Tuesday that the delinquency rate on such loans nationwide hit 3.64 percent in September, up from just 0.54 percent one year ago.

Arizona, Michigan and Nevada led the nation with delinquency rates in September of 9.32 percent, 9.29 percent and 9.14 percent, respectively, Moody’s said.

“After tapering off for two months, the delinquency tracker appears to have resumed an upward trend as expected,” Moody’s Managing Director Nick Levidy said in a statement. “The delinquency rate is likely to continue moving higher over the next several months as troubles compound in the commercial real estate sector.”

A bankruptcy judge here, joining judges across the country, is throwing a bit of sand in the gears of the mortgage machine and its ruthless foreclosure blade.

She has raised this issue: In many home foreclosures springing out of bankruptcy proceedings, the foreclosure is being triggered by a representative of the lender — a surrogate that may not have a legal, equity stake in the proceedings.

As a result, it is conceivable — though still something of a legal long shot — that the homeowner who is filing for bankruptcy protection could end up saving his house.

The argument that a lender’s surrogate can’t trigger foreclosure has drawn notice of Nevada homeowners, who are preparing a class action lawsuit. They are seeking a preliminary injunction this month to stop their foreclosures.

Sandel talks about moral outrage people are feeling about the bank bailout, and I think he’d find lots of outrage right here in southern Nevada on that count. BLV would like to hear your perspective on this, so please tell your thoughts here.

Here’s the kicker from the interview:

SANDEL: You go up to someone on one of those street corners down by Wall Street. And you ask him or her in a quiet moment, “how do you justify this frenzied way of life that you’re engaged in?” I suspect they would give you in a reflective moment an answer something like this: “By pursuing gain and engaging in risk, we are providing the lubricant for the financial system and therefore for the economic system as a whole. And we are helping contribute to allocating capital to those projects and innovations in the economy that will make everybody better off.”

I’m not saying that every single trader on the floor would give you that answer, but I know some people who would. And that can be the starting point, I think, of a wider public conversation about the underlying moral purpose that markets serve. And once we have that conversation, we might also be led to discuss whether there are certain moral limits that markets should respect.

Listen to the entire interview here: