A fading dream
The American Dream of owning a home on the South Shore may be fading fast for many.
Property values here have risen steadily during the last six years. In one year the median price for a single-family dwelling rose by 21 percent to $270,000 at the end of 2002. That’s double the median price of $135,000 reported six years ago, according to the South Lake Tahoe Board of Realtors.
Like the Nevada side of Lake Tahoe, the median price in El Dorado County is $350,000. Both ends of the county from El Dorado Hills to Tahoe are driving up values.
“You’re dreaming if you think people can afford to buy a house here in South Lake Tahoe anymore,” said Jim Foff, who runs Fantasy Inn. “Something has to happen.”
Foff points to the surge in second-home owners buying up property and converting the houses to vacation-home rentals as one reason many permanent residents have a hard time getting in on the American dream.
Year-round residents have to endure a double whammy.
At the same time housing prices are climbing, wages are remaining stagnant. This leads several trend watchers to believe the dream of owning a home here could be fast escaping the masses.
The mean hourly wage in El Dorado County was $14.99 in 2001, with almost half the households earning income that falls between $25,000 and $75,000 annually, according to state labor market analysts and U.S. Census figures. A household includes any number of people who occupy a house, apartment, mobile home, group of rooms or single room.
The median household income of people living in South Lake Tahoe, though not necessarily working here, is $34,707, the Census Bureau reports. Over the state border, the Zephyr Cove-Round Hill area is supported by residents in households earning $60,851. At Stateline, it’s $28,641.
“Area wages do not support the cost of living. It’s hard to get talented people if they can’t afford to live here,” said Deborah Bates, president of Job One based in Placerville. With an office in South Lake Tahoe, Bates’ company helps people find employment.
Bates believes the American Dream has slipped away to some degree, but many workers have not realized it yet. She suggests officials view the discrepancy between wages and high home prices as a regional issue.
“I don’t think there’s a quick and easy answer,” she said.
Her suggestion is to focus on tourism to bring in the tax revenue.
“My feeling is we should take what already works well and massage it. Treat (tourism) like a business and come up with a five-year plan,” she said. “It’s the most logical place to spend money and get the most out of it.”
She said many workers simply want to encourage companies to raise their wages, but Bates has found it’s difficult for Tahoe’s small businesses to afford passing out the higher salaries.
Salaries in the county fluctuate widely between $44.99 per hour for chief executives to waiters and dishwashers making $6.25, California’s minimum wage since January 2001. The latter represents a large portion of Tahoe’s service-oriented sector, which constitutes 48 percent of the lake’s economy, the county Economic Development Department reports.
Even the middle class earning above-average wages may be slipping through the cracks of home ownership — especially with a diminishing inventory and a hefty number of qualified dream seekers out looking to grab their piece of the pie.
Chris Kozlowski, a Barton Memorial Hospital physical therapist, spent the fall season hunting for her own piece of the American Dream.
Even while making a professional’s salary, Kozlowski found it difficult to find a place she could afford. In November, only four homes were listed under $200,000 — a dying breed in the real estate market.
She managed to find one through Deb Howard & Co. — but at $195,000, the place needs work.
The cinder-block house in the Tahoe Island neighborhood was appraised at $110,000 two years ago. It has no insulation, a leaky roof and single-pane windows. But these future improvements represent simple concessions to the starry-eyed homeowner.
The $1,500 monthly mortgage payment represents yet another concession of home ownership in comparison to the old $650 she paid in rent each month. However, the 1,160-square-foot house quadruples her living space.
Still, Kozlowski considers herself lucky because she hasn’t been completely priced out of the market.
“That’s what everybody’s telling me. I’m getting in,” she said.
Meyers retired schoolteacher Bill Cave went house hunting five years ago but gave up, preferring the home he rents for $1,200 a month to others he has considered buying.
“I found the house I could afford I didn’t want to live in,” Cave said.
He has a theory the housing market has changed the profile of South Lake Tahoe, with the elite gobbling the remaining houses and the lower and middle classes either leaving the area or staying put in rentals.
“The rich people are buying up houses, and people who work up here and support the basin are unable to buy,” he said.
Homeowners buying into the dream may be paying dearly, too. Many more low- and moderate-income working families are spending at least half their salaries on their mortgages or rent, the Center for Housing Policy reported. The housing advocacy group said more than 4 million households in the United States fell into that category, a 67 percent increase in four years.
Others aren’t so lucky to be able to buy or even to stay here.
Half of Barton’s staff has joined South Lake Tahoe’s city police officers in living off the hill.
“We’re challenged in this community in the employment sector. There are lots of entry-level, low-earning, service-oriented type jobs that don’t correlate into home ownership,” Realtor Deb Howard said. “People can’t afford to own in the community they work in. So we have a diminishing permanent population.”
Many believe this trend shows the changing face of Tahoe.
“We’re becoming more of a resort community — more residences are second homes,” said Board of Realtors spokeswoman Madeleine Gutierrez, who works for Coldwell Banker.
The rush to get in on the American Dream in Tahoe — especially with stock market money used on real estate and interest rates at an all-time low — has contributed to a buying boom almost rivaling the frenzy of 2000.
A recent study by the University of Georgia cited families with incomes lower than $30,000 can become successful homeowners when they have access to down payment assistance.
In addition, fewer listings have made it a necessity for agents to work harder and more creatively for the buyers. Like Kozlowski, many have bought with the idea of remodeling.
Those who don’t get into the home market and take flight from Tahoe may be priced out much like what has happened to many in the Bay Area.
“I think there’s real potential if they move off the hill, they might not be able to come back,” Gutierrez said. “And it is the American Dream to live here.”
Susan Wood can be reached at (530) 542-8009 or via e-mail at email@example.com
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