Article by Jennifer Shubinski

Affordable Housing Crunch Forecast

Home builder Astoria Homes can't keep up with the demand for its Las Vegas-area houses with a starting price below $150,000, so it releases them in small increments.

For Astoria, it's a Catch-22. Its homes are built to meet the demand from buyers who cannot afford the median price of a new home in Las Vegas--now $205,546--but that demand is so great the home builder can't keep up.

"We could build more than that, but we can't build them unless we hire double the work crews," said Sia Howe, vice president of marketing for the private company.

Every four weeks, Astoria sells 25 more homes in its Silverado Place development in southeast Las Vegas. The community, which began selling and building homes in February 2002, will sell out in the next 60 days.

"The price of property is going up faster than everybody's income," Howe said.

The need for more affordable housing in Las Vegas will only become more acute as mortgage rates and housing prices increase, real estate experts said Tuesday during a presentation by the Meyers Group, a research firm.

"People may not get qualified anymore," said Rick Piette, owner of New Home Resource, a mortgage company. "They can't qualify with higher mortgage rates."

Mortgage rates rose from 5.23 percent for a 30-year fixed-rate mortgage in June to 6.32 percent for the week ended Aug. 29, lending giant Freddie Mac reported.

The median price of a new home in Las Vegas in July increased 14 percent over last year's price of $180,305, bringing July's price (the most recent data available) to $205,546, according to Home Builders Research Inc.

Slightly more than half--56 percent--of Las Vegans can afford to buy a home at that price, according the Meyers Group.

That's compared to the national average of 54 to 55 percent, according to the Meyers Group.

For the last decade, the percentage of people who can afford a new home in Las Vegas has remained largely unchanged.

In 1993 the percentage of Las Vegans who could own a new home was 57.3 percent, according to the Meyers Group. That number increased to 59.6 percent in 1998. Since 1998 that number has dropped slightly to its current 56 percent.

Timothy Sullivan, principal of the Meyers Group, said the percentage of Las Vegas-area residents who can aford to buy a new home will decrease as prices continue to increase.

Rising interest rates and higher home prices are to blame, he said.

Gail Burks, director of the Nevada Fair Housing Center in Las Vegas, said while much of the population can afford a home, almost as many cannot.

"I think Las Vegas will become very challenging in terms of affordability," she said. "We are becoming less affordable because land is scarce."

Burks said a recent land auction at which developers bid more than $200,000 an acre for land also does not bode well for affordable housing in the Las Vegas Valley.

"Obviously that land is not going to be used to build affordable housing," she said. "It will become even more challenging as we grow."