Las Vegas hits median for affordable homes in nation

Forrest Barbee is convinced he is reliving the 1849 Gold Rush.

Barbee, a residential real estate broker with Prudential Americana Group in Las Vegas, sees a constant stream of prospectors hoping to strike it rich snapping up homes on the cheap.

Now, a new study reveals fresh data on the downward spiral that spurred the buying bonanza, tracking the city's three-year journey from expensive to affordable.

Coldwell Banker Real Estate's 2009 Home Price Comparison Index placed Las Vegas squarely in the middle of the nation for housing affordability, with an average price of $213,120 for a 2,200-square-foot property with four bedrooms, 2.5 baths, a family room and a two-car garage.

Compare that to an average sales price of $361,250 in 2006 and $359,500 in 2005. Not only have local prices dropped precipitously from their bubble days, today's average approaches the preboom 2003 average of $204,975.

"This is true affordability," said Bob Hamrick, chief executive officer of Coldwell Banker Premier Realty in Las Vegas. "For people who are up-and-coming in the world and making income, this is an absolutely tremendous buying opportunity."

Barbee said roughly 42 percent of his closings each month are cash transactions. The high cash volume comes partly from the number of investors, and partly from the large proportion of foreclosure properties in need of so much rehab that banks won't lend on them, he said.

Grayling, Mich., ranked as the nation's most affordable market, with an average price of $112,000. La Jolla, Calif., topped the roster of priciest communities, with an average of more than $2.1 million.

About a third of the markets surveyed boast an average price below $200,000, the highest number in the past five years. Nationally, prices are down 30 percent from their peak in mid-2006.

For homeowners looking to move up, though, it's a buying opportunity only if they can sell their existing property. And that's where consumer frustration dwells in today's market, Hamrick said.

The Coldwell Banker numbers compare move-up homes -- properties for buyers who already own their first place. The market there is struggling, because owners don't have the equity that would make a sale and a subsequent move-up possible.

But the first-time homebuyer tax credit of up to $8,000 has spurred sales of homes in the lowest price ranges, allowing sellers to become move-up buyers. Buyers are getting more for their money because of low prices and attractive mortgage rates.

The newest Coldwell Banker figures also show a striking drop in the affordability divide between Reno and Las Vegas.

Reno has always claimed higher home prices than Las Vegas has experienced. But the difference has fallen big-time. Reno's average price was more than $80,000 above the Las Vegas average in 2004 and 2005, but that discrepancy fell to $59,189 in the latest Home Price Comparison Index, an indication Reno's housing market has taken at least as bad a beating as the real estate market in Las Vegas has. Plus, Reno is even closer to its preboom average. It's at $272,309, almost even with $270,424 six years ago.

"I don't think any part of the state has been completely insulated from the upside-down market," Barbee said.

Known as a solid second home market, Grayling took a hit after the troubled economy, particularly the U.S. auto industry, led owners to sell off property in their recreation destinations.

Sales lagged until recent months, and prices are starting to stabilize at affordable levels, said Laurie Jamison of Coldwell Banker Cornell Realty in Grayling. For about $200,000, a buyer can get a four-bedroom home on the AuSable River.

Joining Grayling in the five least expensive markets were Akron, Ohio, with an average price of $121,885; Fayetteville, N.C. ($130,875); Canton, Ohio ($131,867); and Detroit ($132,000).

La Jolla residents are paying a premium for its proximity to a big city, access to the Pacific Ocean and sunny weather. Other California markets like Beverly Hills and Palo Alto have similar qualities, and also are in the study's five most-expensive markets.

While La Jolla also experienced a slight downturn, the area has seen sales improve by about 6 percent year-over year, said Rick Hoffman, president of Coldwell Banker San Diego.

California claimed eight of the top 10 most expensive U.S. housing markets. Completing the top five were Beverly Hills ($1,981,750); Greenwich, Conn. ($1,519,250); Palo Alto ($1,489,726) and Santa Monica, Calif. ($1,460,912).

California also had the largest difference between its most and least expensive markets. Lancaster, Calif., had an average sales price of $165,205, more than $1.9 million lower than La Jolla.

Oklahoma had the smallest difference, with about $9,400 separating Oklahoma City ($164,250) and Tulsa ($154,800).

For buyers wondering what a 2,200-square-foot house with four bedrooms, 21/2 baths and a garage would cost overseas, Coldwell Banker surveyed 57 markets in 29 countries.

The most expensive market is Singapore, where the sample home averages $1.9 million. The least expensive is Salinas, Ecuador, on the Pacific coast. The average price of the sample home is about $69,000.

The Associated Press contributed to this report.