Do you just want to vent?
Are you angry that you didn't do some research before you moved?
Do you think that knowing the answers to your questions will solve your problem?
A lot of those residents have owned the house for a long time.
A lot of those people make more than you.
A lot of those people are renting?
A lot of those people are in serious trouble with their mortgages.
A lot of those people have a 2 hour commute to work.
It is, what it is.
Live 1 mile from the beach, 1 mile from our work, and 1/4 mile from a golf course PLUS if anything goes wrong, call the landlord and go back to sleep. Owned 5 houses, would have never thought i would be a "renter" (losers, right?) but folks, I am here to say...Home ownership is WAY overrated!
Renting and loving it!
Though $200k income takes you a long way in Texas...in Los Angeles it does not in terms of buying a home. Most people in LA bought a long time ago or inherited a large sum to make downpayments...
To get the standard of living you want, you probably need to make double what you are making now or have a $599k downpayment. As crazy as it seems, I represent people buying and selling multimillion dollar houses all cash quite often. All I can say is welcome to LA -What's your dream?
Lets just say for the sake of answering your question, a buyer using 3.5% down on a house priced at 700k would be looking at a payment of around 4,100 per month est. To qualify for a loan, this hypothetical buyer would need to bring home at least 10k a month. Other agents may disagree with my math and that's fine, but I guide buyers with a conservative route towards their purchase so that they are not merely working to keep up with payments.
Now I would recommend expanding the area you are looking in. Depending on where you work there are some really great options at that price range that won't leave you feeling like your getting a dump.
Good luck and happy house hunting!
I live in LA (Lake Balboa specifically... ok it's technically Van Nuys, lol). I purchased my first house in 2007/2008ish for 325K. It's a smaller 2BD 1BA and the lot is just under 7000sqft. Our household income is around 150K (32 & 29 years old). We live very comfortably with two dogs, no kids, 2 cars, weekly gardener, cable internet/tv, etc.
Would I like to be able to get a 700K house? Sure. But right now that is above our means. I'm not saying that it's impossible, but we travel a lot, and would lose out on seeing the world.
Our neighborhood is decent. A few of the homeowners have been there for >20 years. Sure, it's not West LA or Santa Monica, but living in the San Fernando Valley isn't bad. We chose to live relatively close to our work, instead of doing a long haul commute and putting miles on the cars.
Occupations - IT Professional & Advertising
The sad fact is that the houses in SF / LA aren't worth 1/5th of what they cost in in pure materials, which means either the land is making up the difference (it is more expensive, but lot prices only account for about 1/2 the difference on a house in this range), the construction labor is making up the difference (it isn't... there's almost no new construction), or people in CA are being ripped off on a monumental, criminal scale.
And I absolutely guarantee you that it is the last of those. Go to Zillow and compare the number of blue dots -- foreclosures -- in CA to everywhere else in the nation. It is absolutely astronomical. Why does this continue? Because much of the construction is old, and the demand is high, the banks aren't losing any money. They foreclose on the home owner, they keep all of the interest they made, and they resell. Meanwhile, the agents get a percentage and everyone's happy except the poor sucker who lost his house and who, despite CA's vaunted "quality of life" has to drive 2 hours a day and doesn't have enough room in his backyard to throw a baseball with his kids. That sounds like a really bad deal to me, so, no thanks.
As for property taxes, the guy below from Houston is only telling part of the story. In the Dallas-Fort Worth area you will not find anywhere with property taxes much above 2.5%. Most locales lay between 2% and 2.5%. In Texas in 2014, you can get a house for $500K that is the equivalent of a $1.5 - $3 million dollar house in SF / LA. That will be $12,500 in property taxes. I have been looking for just the right house in Texas for some time, and I see houses all the time here in that price range with taxes between $7000 and $13000, depending on the municipality + county + school zones, so $12.5K is on the high end. No good right? But wait, there's no state income tax. What do you think you'd pay each year in income tax in CA? With a $200K salary, in 2014 you pay 9.3% + $2,191.48, or $20,791.48, you live in a house that is comparatively a dump and have an hour + commute to work in heavy traffic. Heaven forbid you get a bonus and cross the magic $254,250 mark, because CA will take almost the entire bonus in extra taxes up to 10.3% + $21,207.75 ($47,395.50!!)! How do you think it feels to work you butt off, get a bonus as a reward, and realize the STATE government took 94% of it from you? I think the Founding Fathers are rolling over in their graves. To top that off, sales tax in Texas is 8.25% almost everywhere and in CA it's 7.5% up to 9.5%, depending on the municipality. Did I mention that in your house will also be on a minimum of 0.15 acres, up to 1 or more acres, depending on the area you're buying in? Most houses in SF area -- 0.08 acres or less.
And believe me, I know how lucky I am to be making what I am. I grew up very much lower middle class, and $200K a year is a TON of money in most parts of the nation. But when comes to CA and the real estate there, it's marginal.
Besides Texas, I have lived on both coasts and in the Rockies and I am not a fan of TX as far as climate and nature goes, but there are a lot of nice places to live that won't rob you blind like CA.
The short answer -- most people cannot afford houses at the going rate in CA metro areas like LA and SF. The foreclosure rates in CA are in the top 10 in the nation (or top 5 depending on the list) and almost 3 times that of Texas. It won't change until people flee CA for saner pastures. I realize the climate and scenery are a draw, but at the cost of your sanity?
In the outlying burbs of LA, you can see the meltdown. New homes going up for 600K, and others around it for sale/foreclosure/repoâ€™d/quick sale for 375kâ€¦.you know someone is taking a butt kicking. But idiots keep buying!
If you make 200k a year, get a house WAY out and commute. Or, rent.
It seems like you do not like the answers and you are shooting the messengers. There is no secret. You want to live in a beach community in California, you gotta be loaded. You do not have money, then maybe you want to try renting (though is still very expensive).
In Va our home is on 5 acres, 6000 sq ft home, it's with about 950 now. Our mtg is 3500 and my dh makes over 500k per year. we have 6 kids and 2 dogs . I've lived in San Diego, OC and Santa Barbara. We can't afford to move. I'd love to live in Santa Barbara but a home with no land and 1/3 the size of my current home is 1.4 million. If we move down south, I'd only want to live in Seal Beach, Hermosa...small beach communities.
So, I wish real people with real situations would answer your question as well. Seems as if the only options are to live pay check to pay check or rent. Neither of these options seem viable to me. But who knows I am desperate. And perhaps that is the key... Once you've lived in California, you never want to leave and that makes up for everything else.
Artificially low interest rates, low inventory (due to new restrictive foreclosure policies and cost and difficulty to build new) and prop 13 also keep California home prices artificially propped up higher then they should be.
I see that the responses you got all came from realtors and I was hoping to see more feedback from real buyers. Iâ€™m afraid there wasnâ€™t anything very useful in the feedback I saw. But donâ€™t let the negativity from some accusing you of not doing your homework affect you. This market has changed drastically within the past few months and even professional realtors are surprised by this hot market. And Iâ€™m sure you already knew ahead of time that the standard of living in Southern California is vastly different than Texas before you moved. I wish us both luck in home buying search!
As far how much the average home buyer in L.A. makes and their occupations - I would have to Google that but much of the higher end jobs are executives, self employed, film related - whether it is acting, production, etc and technology jobs - from website/internet design to game creation as well as Government contract for engineers for military equipment etc. Granted, this is just a rough summary but it gives an idea.
If you are currently living in the immediate Los Angeles area you may want to consider looking into San Fernando Valley area. You will have to contend with the commute, but you may be able to find a more affordable home that can suit your needs. In actuality, your combined income and lack of debt puts you high above most California residents. It is a very different lifestyle here and way of thinking in regards to money compared to most of the U.S. I'm still getting used to it after 20 years.
buy the house ~ 900k and rent the guest house which goes for 2200 with todays interest rate that makes affordable
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1) I don't know anybody under the age of 30 who owns a home. (I don't run in highly paid circles for the most part, but I come into contact with a lot of people, with varying degrees of wealth.) This speaks not only to the high prices, but the need for a very large down-payment that is difficult to amass while in the early phases of a career.
2) Most people rent because land prices are ridiculous.
3) While the extremely wealthy can afford to buy, pay off and keep their homes, most look at home buying as an opt out for rent. You buy a home, pay down the mortgage while you live there, sell it and move somewhere else. It's not really home "Ownership" so much as an investment, and paying rent that you might see returned down the line. Most people aren't really buying a home expecting to sink the entire list price into it and then pass it on to their kids... (That used to be the case, but not in the last 15 years as far as I can tell...)
4) Those that are buying now, and are not in the "Super-rich" category, that want to keep the house (again, not the majority of buyers) are doing so with the expectation that retirement will come much later than for most in other areas of the country. i.e. they will be paying off the house for looooong time.
This means, people in your position will typically "buy" an $800,000- $1 million home to live in and pay down for a few years to a decade, with the expectation that they will then sell it off for something approaching the price paid for it ostensibly having lived for relatively cheap as compared to paying rent that just goes down a hole. I'm not saying that that is a good policy, or a smart one, or even the way home buying should work. I don't know, and it's far out of my reach anyway, but that seems to be the understanding that people are operating under as far as I've seen.
Hope that helps!
Many young professionals in LA, SF and other expensive cities across California and the rest of the USA are working with me at Wells Fargo as there aren't many lenders that will do a mortgage loan up to 90% of the value of the house without mortgage insurance or PMI. Rates are in the mid 4's on this loan.
If you'd like the lowest rate on a 30 year fixed mortgage then 20% down would be best and you can go above the million dollar loan threshold as well.
If you are serious about buying then feel free to contact me via phone or text at 858-805-5347 and I can get you pre-approved for these special Jumbo loans.
desire for financial aid. If interested please give us a feedback with loan amount needed and purpose for loan as well as repayment
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Let me know if you need help, have questions, or want to start looking :) I love working with out of state clients! :)
...sudi has solved the situation in 18 months.
But for other readers in a similar situation.....
You have many options.
Just this week a buyer, voicing a similar situation, but actually seeking a solution, did find a house that they did buy The house was presented right here on Trulia and the buyer was secured via the First Look option. Now if this buyer does not appreciate the advantage presented to them, and goes goofy, they will be dealt out and the next buyer will replace them As many buyers are finding out, the good stuff has no shortage of buyers, sells in nano seconds. IN such markets a buyer needs an advantage. Those advantages are created for them.
What should buyers do.
Drop the attitude.
"No Realtor BS" does not suggest a buyer are open to alternative buying methods therefore a professional should not waste a second of time in helping them. In the end such an attitude promises the buyer will look for others to blame for bad choices they make. (low ball offers, stuffed with contingencies, extended close date, big bank paper)
Face it, a buyer going to need to meet up with a few professionals, (sorry, not BS) to review their situation and the buyer situation will dictate the options that will prove successful. One such outcome is the buyer may need to adjust their expectations. No BS.
Here is additional 'No BS," that may prove useful. This IS a business, not a hobby. If a buyer is serious, they will do what serious folks do, contact professionals. There are solutions. Unfortunately, they are not FREE. We need to keep our light on too.
$200,000 income, little debt, no blemishes, there are solutions.
NO BS, those who successfully help buyers and sellers dozens of times every year just might have solutions you don't know about and won't be made public.
maybe its more of a culture shock of the differences in prices between the two states? Depending on what part of la you have to commute to, id suggest looking in Ventura county there's some very nice homes and will likely get the newer look youre interested in
Purchasing an REO Forclosed or Short Sale property and making necessary repairs/updates gives you INSTANT EQUITY as often mentioned on HGTV's Property Brothers cable broadcast. That equity then affords you the means to obtain either a HELOC or other home improvement loan/grant to complete the phased updates. This is an option many are using.
Some also are doing much of rehab themselves. Never hurts to learn how to wield a nail gun or remove some unwanted, old tile! Think: "Money Saved equals More Money for Updates!"
Enabling Factors for the Continued Practice of Overpriced Housing:
Density of Populace
(willing/able to pay) plus
The % of New Housing as compared to Existing Housing. Homebuilder's were hit hard in last economic downturn and had to literally under price too much inventory properties to pay their bills. This created a higher desire for existing housing and spurred the current rehab craze as many felt there best chance of homeownership laid in rehabbing the "THEN" throng of foreclosure & REO properties. But R.E. Investors also saw 'GOLD' and jumped in to snatched up what they could causing an even greater price increase scenario which the gov't. soon put a cap limit on that activity. BUT AGAIN, the damage to the market was already done ....... and price increases were left 'AS-IS', to borrow a r.e. term!
So those enabling factors were all contributors.
Now how do they afford such prices:
As 'House Hunters' Cable Broadcast shows it is majority demographic of:
Caucausians and very few minorities
IIncomes from $ 35K - $80 a yr.
(Of course, some donated monies from parents for young newlyweds and older children is often seen as well.)
Employment Status: Individuals with 'in-place' Telecommuting positions or Self-Employed positions. And many job relocation's or job offers are seen on HGTV's House Hunters broadcast's.
And either young newlyweds/adventure-seekers/retirees
Families with 2-4 young children not yet college age.
Families forced into foreclosure due to job loss and moving overseas to live good at much cheaper cost as an Ex-Patriate.......which there are multitudes choosing this option of living overseas or on a private island.
Primarily, many are funding via retirement funding investments, higher EXPECTED wages promised by new employers, or family donations (if needed). Majority: Retirement & Investment Funds.
I only hope ALL THIS just gives you a far better of what you're truly dealing with.
Best Option for Many:
As 'Property Brothers' broadcast shows:
You can get a foreclosed/REO/Short Sale property and make 'Phased Updates/Repairs' on your affordable timeline.
Again, just trying to help you see entire picture and best avenue.
Wishing you.& yours the VERY, VERY BEST!
Other than that, have you thought about looking for a townhouse? You would be able to get more for your money, and town homes are most similar to single family residences, but generally cost less.
Here are the major reasons:
1) adjustable rate mortgages allow buyers to cut their payments by 1/3 or more (they will be sorry later when their payment resets).
2) 25% of properties have been bought by investors who hope to make a quick profit. They are asking for 20% or more over what they paid despite only owning the place for a year or less.
3) Many people bought these properties in the 80s and early 90s when prices were more reasonable. Now prices are ridiculous.
4) There are a lot of high income earners in LA.
5) Many inherited money or were given money for a large down payment by their parents.
Many families have two income earners which helps with the mortgage payments. The down payment can be a gift from the family of the buyers.
I realize it must be very upsetting coming from an area such as Texas when you see what your money will purchase here. If you research this, many major cities are very expensive, San Francisco, New York and others.
Some buyers will move to suburb areas where housing is less expensive. There are some lovely homes in Valencia and Santa Clarita and they are in the 400's for a new home.
There are some areas that are more reasonable then others. You need a really good Realtor to assist you.
On a home in the upper 400â€™s, after taxes, insurance, HOA fees, possible school bonds, etc., look at above 4K a month for a homeâ€¦I donâ€™t know what the Relator below is smoking saying 4100 will pay for a 700K home! LOL.
Rent a small crappy apt. or get ready for a LONG commute out from a crime ridden city if you want to buy a home and actually keep it. LA is insane. 100K here has the buying power of 29.5K in Texas. Welcome to the intro level pay scale in the land of fruit and nuts.
However, on the bright side, post melt-down prices never touched LA. So, if you do buy a 750K 1906 home, you will get your return on investmentâ€¦.that isâ€¦.if you can keep it!
There are some options in the Greater LA area. Which part of town are you wanting to buy in?
Once, you let us know where you're interested in buying, a realtor that specializes in that area is your best option.
For example, I specialize in the Westside, Pacific Palisades, Santa Monica, Brentwood, Westwood, Venice, Marina Del Rey, Playa del Rey! & Westchester.
Although, I'm familiar with some other areas, because I've been an investor for 12 years.
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Coldwell Banker Residential
Tel. (310) 463-8088 http://www.douglaslagos.com
It also looks like prices are increasing, there for - right now is pretty good time to buy.
I'm not sure about Texas, however there are different cities and counties close to Los Angeles where you can purchase property for less than Los Angeles - for example San Bernardino county, Riverside county, Kern county, etc...
There you have some options - and if you need to buy closer to LA you may consider San Fernando Valley, San Gabriel Valley, and other cities where I can locate properties for you at a lower price.
Hope this info will help you!
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While this is clearly a tough transition right now, I can tell you that 5-10 years down the road, it will seem easier for you. Salaries tend to be higher in California and unfortunately, so is the cost of living.
For now, you may have to rent, or live in a much smaller home than you had dreamed of. Hopefully, you moved to LA for some really good reason, and will have opportunities to move up in your housing at some point.
I grew up in midtown but live in the San Fernando Valley now and love it. Less traffic, less congestion, some breathing space.
You are going to have to pay market price wherever you choose so decide what factors are most important, how much remodeling you are willing to do and look there.
The sellers aren't kidding anybody with the asking prices. They're asking that much because that's what the market will deliver. Sellers aren't all randomly putting up crazy prices that won't result in a sale.
The average buyer in your price range makes $150K a year. There are tens of thousands of jobs like that. Since prices have come down from the peaks, homes are now more affordable and people are buying.
Texas (even in Dallas, Houston, Austin. San Antonio, etc.) is notorious for low home prices, but the property taxes are extremely high.
But in the the end, moving to LA is a wallet shock, especially from Texas where housing is so inexpensive in general. You have to stretch yourself, over time it eases and you get used to it.
I lived in Minnesota for 2o years/ I sold a 4 bedroom, 2,300 SF house totally remodeled and updated for $425,000. I came to LA and ended up buying a 1,500 SF fixer upper for $500,000! Those are just the realities.
I too don't understand how $250K a year can be considered rich here.
If you want to speak with a qualified loan officer about your loan needs, I can recommend Bridgette at WestCom Lending (818) 335-0283 / email@example.com
All in all, location is key in finding a home that is for you. Maybe try searching a slight further commute to work to have the luxury home you want. Any questions, feel free to contact me.
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Northridge, California 91324
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