Your home value has dropped - now what?

The bottom line:
Clark County residents have been hearing about declining home values and climbing foreclosures for more than a year. In August, median Clark County homes sold for $240,000, down $42,400 from a year earlier, according to Vancouver-based Riley & Marks, a real estate appraisal and data company. Here’s what first-time buyers, long-term owners, and anyone looking for a home equity loan need to know.

How does this affect my ability to take out a home equity loan?
-- IT’s HARDER: “The guidelines for these loans have become more stringent,” said Vancouver-based mortgage broker Matt Elerding. Home equity loans are riskier for banks, and in today’s risk-conscious environment you will need more documentation than in the past, and getting the loan will be harder.
-- LOAN LIMIT: You will not be able to borrow against 100 percent of the value of your home, Elerding said. If you already have significant equity, it will be easier to get a loan.
-- VALUE DROP: “I have seen moments of harsh reality, where a house that was seemingly worth one amount is now worth less,” Elerding said. If you are appraised for less than what you owe — or even if it’s close — it may be a challenge to get a loan.

What do I need to know about foreclosures and short sales?
-- FORECLOSURES: 292 Clark County homes entered the foreclosure process in August, more than double the number foreclosed upon a year ago, according to the RealtyTrac service.
-- SHORT SALES: One in every three to five home sales in the U.S. is for less than the owner owes on his or her mortgage. The number in Clark County is also on the rise, according to local real estate professionals.
-- YOUR NEIGHBORHOOD: Foreclosures and short sales push down the value of nearby homes. Those sales are up across the county. Areas with new construction have been hit hardest, while older neighborhoods have done better.

Where are home values headed?
-- HIGH-END: Houses priced over $550,000 are still losing value, said Dick Riley, owner of Riley & Marks. Houses are on the market for many months before they sell - if they sell at all.
-- MID-PRICED: Houses priced between $325,000 and $550,000 may see incremental drops in value, but mid-priced home values seem to be stabilizing. Sales are still slow, Riley said.
-- ENTRY-LEVEL: Houses valued between $125,000 and $325,000 seem to have bottomed out and sales are picking up. Especially in the lower half of this range, prices have no lower to go, Riley said.

What should I do now?
-- FIRST-TIME BUYERS: Talk to a mortgage broker now, even if you don’t think you will be ready to buy for a while, Riley said. It is getting more difficult to obtain a loan, so start early. Prices and interest rates are good for first-time buyers, said Glenn Crellin, director of the Washington Center for Real Estate Research in Pullman.
-- CURRENT OWNERS: “If a homeowner doesn’t have a need to sell immediately, don’t even try,” Crellin said. “You can still start looking and get educated on the market while you stay put,” Marks said.
-- NEED TO SELL: This is a tough time to sell a high-end house, so you may be better off if you can wait a few years, Marks said. “But if you need to move, the biggest risk is not doing anything.” Start talking to real estate professionals to find out where you stand.

Courtney Sherwood covers banks and the economy. Cami Joner covers real estate and development.