Like a lot of vacationers, Rick and Kristie Santos would return from trips to Lake Tahoe during the housing boom wondering what it would take to own a second home there.
They were always disappointed when they looked at the listings. "You'd jump online and never could afford it," Kristie Santos said. "It was out of reach."
Lately, however, with interest rates dipping below 4 percent and home prices seeking bottom, the Fair Oaks couple started thinking differently. The Santoses recently joined a growing number of would-be buyers scouting the Tahoe area for second homes.
On Saturday, the couple went on their first trip with a real estate agent to look at vacation properties in the sprawling, wooded Tahoe Donner subdivision near Truckee. Most were listed in the $300,000 to $400,000 range, a big drop from the peak.
The outdoor enthusiasts came away feeling their long-held dream of owning a mountain getaway might be attainable.
"It's a compelling time to buy for families that a few years back thought, 'There's no way we can do this,' " said Alison Elder, a top agent in the Truckee area who showed the couple a half dozen homes.
In fact, the real estate market around Lake Tahoe has been hopping lately, with buyers scooping up relative bargains.
Home sales in many ZIP codes surrounding the California side of the lake nearly doubled from 2007 to 2011, DataQuick figures show. On average, roughly three homes per day sold last year on the California shore.
The pace of sales has picked up significantly since the first of the year, real estate agents from Donner Summit to South Lake Tahoe said.
"We're as busy in South Lake Tahoe as we were in '06, which is a big turnaround from the Great Recession, and what we called a real estate depression," said Doug Rosner, a broker on the south shore.
The driving factor: Tahoe-area prices are the most affordable they've been in years. Prices per square foot around the lake dropped by anywhere from 25 percent to 45 percent between 2007 and 2011.
It's the same dynamic that's played out here in the Central Valley: Short sales and bank-owned homes have been keeping prices low, though a shortage of inventory is now creating some upward pressure
The result is that homes in most ZIP codes surrounding Lake Tahoe sold for a median of roughly $280 per square foot last year, similar to the cost of homes in the college town of Davis. Homes in South Lake Tahoe sold for about $180 per square foot, a bit more than prices in Folsom.
Median-priced homes in Tahoe City, one of the most popular lakeside ZIPs, sold for $875,000 in 2007 but fell to $505,000 in 2011. In Kings Beach, the median price dropped from $517,500 to $313,000 in the same period, according to market researcher DataQuick.
In South Lake Tahoe, the median-priced home plummeted from $425,000 to $250,000 during the five-year free fall in the housing market. Sales volume there increased by about 30 percent from 2007 to 2011, DataQuick said.
Rosner said the market in South Lake Tahoe is a combination of full-time residents, investors and second-home seekers, who generally fit a certain profile.
"You're dealing with people who have made it through the recession," Rosner said. "They have equity in their homes, and they have cash in the bank. They're prepared to take advantage of a huge correction in the market. They're done waiting."
That pretty much summed up the situation for Rick and Kristie Santos. The couple both have good jobs in local government. They bought their Fair Oaks home 12 years ago, before prices drove skyward, and built up equity.
"We didn't run up credit card debt," Kristie Santos said. "We didn't trade up during the boom. We hunkered down, and it's really paid off for us."
Many buyers in the Tahoe market are from the Bay Area, where both the housing and job markets are recovering faster than in the Central Valley. When buyers do come from the Sacramento region, they often hail from wealthy enclaves such as Granite Bay.
For a large share of the region's residents, still unemployed or underwater from the housing crash, buying a second home is the last thing on their minds. And even moderately priced homes in Tahoe far exceed Sacramento County's median home price, which was $156,000 in March.
Even so, some middle- and upper-middle income families from the Sacramento region are wading into Tahoe housing. They tend to buy in the under-$400,000 category, a bracket that agents said has been especially active lately.
The Santoses, for instance, told Elder their top price was $375,000. With that in mind, the trio toured homes Saturday that ranged from simple cabins for about $280,000 to spacious, comfortable homes for less than $400,000.
They especially liked a three-bedroom, two-bath house built in 1994 that had a small but sunny private deck facing a slope of boulders and conifers. It listed at $389,000.
Elder, the agent, thought it was a solid value and could probably be had for as as low as $375,000. "I'd buy this all day long," she told them.
They drove home to think about it. Later, still enthused, they decided they they wanted to look at additional listings.
Another local couple, Jennifer and Peter Imrieof Roseville, have been enjoying a house they bought last month in Tahoma, on Lake Tahoe's western shore.
They, too, had been longtime visitors but didn't think they could afford to own. Then over Christmas, they saw homes listed for around $300,000. They decided to start looking.
Before long they found a 1,200-square-foot, three-bedroom house that had been extensively updated by its former owner, a San Francisco resident who bought it in 2004 for $440,000. Jennifer Imrie said he had spent nearly $100,000 on upgrades and wanted to cut his losses.
The Imries picked it up for $325,000, including all the furniture and accessories.
"He left all his pots and pans," she said. "He had really nice taste."