Unaffordable housing

Soaring prices are squeezing many Las Vegans out of home ownership

By Larry Wills

The rising value of real estate in Las Vegas may be great news for homeowners but not for those who are being shut out of the American dream of owning a home.

"There are some people affected by it," Lee Barrett, president of the Greater Las Vegas Association of Realtors, says of skyrocketing housing prices. "There's not going to be the affordable housing you and I started out with."

The average price of a new home in the valley broke the $211,000 mark in November, up 10 percent from the year before, while average existing home prices reached $173,000, an increase of about $20,000. The increases were highest in the north, northwest and Henderson areas, which saw appreciation rates of about 15 percent. Even condominiums, the historic low-cost route for home buyers, reached a new high of $100,000.

Those figures are about double what they were a decade ago, when Las Vegas boasted a more affordable standard of living than other cities in the Southwest. Barrett blames the cost spiral on the continued growth of Southern Nevada as thousands of people, packing cash from properties sold elsewhere, are willing to pay more for a home. "Migration," he says. "That is what's driving this market."

Brian Sagert, housing and development director at the Clark County Economic Opportunity Board, says the higher costs are squeezing many out of the market. "The average joe is having difficulty," Sagert says. "Just imagine what lower-income people are dealing with."

U.S. Department of Housing and Urban Development figures estimate the median family income in Southern Nevada at $54,000, enough to afford a $200,000 home. But those figures may be deceiving. "The majority are probably working well below that," Sagert says. "The big question is what percentage of people made the median family income."

Sagert's organization assists families with the down payments for homes, but the high costs are making that difficult. "The amount we're able to allocate is about $5,000 typically. What we're seeing is that assistance is not enough."

He hopes to garner more federal funds to provide a more realistic down payment. As it is, people are jamming into the EOB program. "We have a waiting list galore, 200 to 300 people. They are camping out the night before to get on the list."

Parviz Ghadiri, executive director of the Las Vegas Housing Authority, sees some indigents in a better position than the working poor. "Low-income people are getting housing. It's the working families who can't find a place."

Ghadiri says the crush of applicants has forced him to close the authority's waiting list, which lasts about two years. "If we opened it, we could get another 3,000 people."

He cited a recent UNLV study that showed about 15 percent of the homes in the valley were selling for more than $250,000, an indicator of a bull market in real estate. "Everything goes up except for the middle-income person who's not getting that much of a raise," Ghadiri says.

Blame much of the situation on a lack of low-income housing, limited wages and local inflation, the darker side of the rosy economic reports that insist jobs are plentiful in Southern Nevada. "I see people getting overextended," Sagert says. "The foreclosure rate is something to be concerned about." He worries about whether foreclosures will increase as the cost of home ownership goes up.

And as land available for development diminishes, he wonders about the effect on housing and rental costs. "As for affordable rentals, I don't know if you can build enough." One answer may be to build higher. "There's not a lot of high-rise housing, yet it's coming."

Barrett believes it's time to get more creative. "We need to look at other kinds of housing, maybe condos and cluster homes. Try to get the highest density." He notes that some local apartment complexes are being converted to condos as a way to provide lower-cost homes.

Barrett insists maintaining an affordable market for first-time buyers is critical for his industry. "Our goal, the lifeblood of real estate, is getting people into a home and then moving up."