Las Vegas housing affordability challenge

For the lower middle-class home buyer the good old days here were the 80's and 90's when he could afford to buy a nice residence fronting a wide street and had a decent-sized backyard. Maybe even a pool if he had saved diligently. Newspapers across the land were writing about that. But in the early 2000's things started to turn for the worse. Mortgage guidelines by then had become increasingly lenient, allowing home buyers to borrow money way more than they could actually afford, fueling artificial demand. Then real estate speculators moved in and fanned the flames even further. Prices surged and the market badly overheated. And then stalled. And that's where we are now.

During this run-up median prices of resale and new homes reached to a little over $300,000 and are desperately struggling to hold on. In fact, they have given up modest ground so far due to a glut of property out there for sale and sluggish demand. But the value adjustment hasn't been enough for many, at least not yet. The market effectively priced itself out for the blue-collar worker, the hotel maids, bartenders and food servers, teachers and the police force. The backbone of this resort destination.

Here's a statistic that sheds more light on the dilemma. In 1999, 78% of the homes for sale here could be purchased by a family making the median income and that figure has shrunk to 14% in 2006, according to a real estate expert John Restrepo. That is a huge shift in affordability. The recent market overheat can be held accountable for just about all of the gap.

Now the talk is about how much of a downward correction is on its way? Or how much is needed to turn the market around? I wish I knew. No one does. Whatever it is, it'll make it more likely that the first-time buyer and the local wage earner can again afford to purchase a home. And it'll help the Strip resorts recruit new staff when they finish construction on all the new properties that are set to open doors over the next three years. They will add roughly 30,000 new positions during that time span. That's a lot of housing demand.