Housing dream deferred - over uncertainty

Carson City's housing market has worked against Donaldo Palaroan. He bought his Silver Oak subdivision home in 2004 - when every other California refugee was trying to get in, which fired up the market. Palaroan tried to sell in 2006 - the year the bubble burst.

Last year, Carson City's housing market saw the fewest amount of homes sold in 18 years, at the largest average sale price ever recorded by the city Assessor's Office, which has tracked all home sales since 1988.

"The worst is over," said Assessor Dave Dawley. "I don't see home prices going down more, but with more houses on the market - I think they are going to be on the market for a while."

That's little comfort to Palaroan, a 32-year-old civil engineer who moved from a San Diego apartment so that he could afford a home for his growing family. He and his wife, Veronica, had wanted to upgrade to a bigger home following the birth of their second child, Camryn.

Now it's a dream deferred.

"We backed out of the idea of moving into another home until this one sells," he said.

They've had their Taylor Way home listed on For Sale By Owner.com for $464,900, which they've reduced by $10,000 since October. They bought it for $347,000 in 2004; prior to that it was flipped by two other owners within four years, according to assessor records.

Carson City's housing market peaked in 2002, with the sale of 1,181 single-family homes, the most ever recorded by the city, at an average cost of $199,000.

Housing experts say the rush to buy property was fueled by Californians with heavy pockets eyeing fat square footage in a low-tax environment. Nevadans competed with these relocating buyers and speculators, who used creative mortgages and all-time-low interest rates to purchase above their means.

Speculators looking to fix up and flip these properties before their adjustable-rate mortgages or interest-only loans increased in late 2005 were searching for buyers. Property values continued to decrease in 2006, what many in the real estate business call "a really bad year."

"The market was tenuous," said Debra Nevins, broker/owner of Sierra Valley Mortgage. "By then, 646 houses only sold because people were so cautious about buying and selling in an unstable market."

Buyers were uncertain where prices would go - so they waited.

The number of homes sold in Carson City decreased by 31 percent from 2005 to 2006. It decreased 45 percent from 2002, the height of the boom, to 2006.

Meanwhile, prices eclipsed the salaries of many locals.

From 2003 to 2004, the average housing price increased 24 percent, from $227,935 to $283,165. Average prices increased another 20 percent from 2004 to 2005, $283,165 to $339,800.

John Vettel, broker/associate at Realty Executives, said 2-6 percent is the annual sales increase that should be expected in a normal market.

"I think (prices) are pretty close to bottoming out," he said. "Everybody knows a sustained rate like that can't continue. Already we've had indications that the market is receding."

Houses that sold were priced reasonably, Vettel said. The average price in 2006 of $345,200 may seem high, but there were many properties priced much higher than that, and those are the ones that languished on the market.

• Contact reporter Becky Bosshart at bbosshart@nevadaappeal.com or 881-1212.

By the numbers

The number of homes sold in Carson City decreased:

31 percent from 2005 to 2006

45 percent from 2002 to 2006

Average housing price increased:

• 24 percent from 2003 to 2004, from $227,935 to $283,165

• 20 percent from 2004 to 2005, from $283,165 to $339,800

Average home price in 2006:

$345,200