Home Buying in Los Angeles>Question Details

Gdudjsudi, Home Buyer in ,

How can people afford $700k HOUSES in Los Angeles in 2013?

Asked by Gdudjsudi, , Mon Jan 7, 2013

My husband and I recently moved from Texas and now make in the $200 range combined with no debt. According to the media, we are rich and swimming in cash. But we can't even afford a house in Los Angeles.

We've been house hunting to immense frustration. In Los Angeles, it is impossible to find a house for less than $700k 3bd 2ba. Those we found are 1940s dumps and they have the nerve to list for 750k. Who are they kidding?

How much do the average Los Angeles HOUSE buyer make? What are their occupation? Pls no realtor BS on helping us find a house. We simply want to know how people can afford these post-meltdown 2013 house prices.

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Answers

27
Hello, I have lived in los angeles all my life. My sister moved to texas last year and bragged to me about the mansion she could get for the price of a condo in la. However I just want to set the record straight about LA prices so your not convinced by all the Realtors lying to you on here. First, they really only have shot up since the 80s. Once massive migrations of people began to come to canifornia, not just from the usa mind you, from all over the world. La became an international market in the 80s and since then you now must buy again people in asia, europe and the middle east as well. La WAS effected by the crash in 2008 (my house dropped 65%) and the crash in the early 90s and before that in the early 80s (so dont be fooled). The trick is, to buy what you can afford, to hell with expectations.
1 vote Thank Flag Link Fri Jun 7, 2013
There are no Dick and Jane Home buyers. There are only renters and in those in foreclosure. The people you see buying 700k 900 sq. foot dumpy homes from the 1920’s are Real Estate investors.

In the outlying burbs of LA, you can see the meltdown. New homes going up for 600K, and others around it for sale/foreclosure/repo’d/quick sale for 375k….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.
1 vote Thank Flag Link Sun May 26, 2013
Wow, 200K a year, I could only dream about such an income. I live in the middle of nowhere in South Carolina and my income is around 30k a year. Small houses in SC outside of a city can be bought for as little as $5k to $25k or more. No kidding. Let's revert the globalization back to localization and stop spraying those nasty chemtrails in the sky.
Flag Sun Mar 9, 2014
Wow, 200K a year, I could only dream about such an income. I live in the middle of nowhere in South Carolina and my income is around 30k a year. Small houses in SC outside of a city can be bought for as little as $5k to $25k or more. No kidding. Let's revert the globalization back to localization and stop spraying those nasty chemtrails in the sky.
Flag Sun Mar 9, 2014
Awesome. Great way to put it. I know I want to buy out there someday but I don't expect to be the average family either and it does indeed suck for those average families but that's why areas like Austin and Texas and other areas are getting an influx of new residents, and there are so many Californians there it's not even funny. If you can make it in California or New York you can make it anywhere. This girl describing her childhood and going to school in Santa Barbara, etc., was definitely spoiled and she just now is realizing how nice she had it growing up. Also, though, cities are polarizing and the best are getting better and more exclusive while the worst are turning into ghost towns. You can't make it anymore if you live in a small town and upgrading is too humble of an experience so it definitely helps to have rich parents that can provide guidance and extra funding, which it sounds like she probably has access to anyway. I sadly don't have the luxury of having her problem, yet
Flag Mon Sep 30, 2013
Lisa,
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).

Ron
1 vote Thank Flag Link Sun May 26, 2013
No, I didnt mean to come off that way. I'm really just homesick. I've been pretty lucky (or spoiled) growing up in Cerritos, going to school in Santa Barbara, then living in Belmont shore and Scripps Ranch in San Diego. I'm just looking to get home. With bonuses, he make close to 750 and its crazy that we can't afford CA.
Flag Sun May 26, 2013
Really expensive places like Los Angeles (better parts), Orange County, San Francisco, New York City, Boston and international cities like London, Hong Kong, Tokyo, etc... always have very high percentages of renters. Many upper middle class white collar workers actually rent because it is too expensive to buy. So it will always seem confusing how normal people can afford to buy in these places, because many don't buy. Or the ones that do buy, commit a much larger percentage of their monthly income towards housing then most of the rest of the U.S. Also, although the median income may not be as high as you think, there are more "super high" income earners at the top of the scale in these areas than say the Midwest, South, etc...

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.
1 vote Thank Flag Link Sun May 26, 2013
I feel your pain, and I have lived in the LA County my entire life (I’m 44). My husband and I just sold my old townhome and it’s a great market to sell right now. But we want to take this money and buy a single family residence in the 1800 to 2000 sq ft range in a nice part of the San Gabriel Valley with a sale price max of $775k (we plan to rent out our current townhouse because we can’t sell it since we’re still upside down on it). However, the homes that we are seeing right now in this price range do not meet our standards. I think we will sit on our $230k to $250k down payment for much of this year to see if things become more reasonable because these prices seem commensurate to what prices were at the height of the housing bubble a few years ago. I don’t want to get caught up in that frenzy and make another bad decision.

I see that the responses you got all came from realtors and I was hoping to see more feedback from real buyers. I’m afraid there wasn’t anything very useful in the feedback I saw. But don’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 I’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!
1 vote Thank Flag Link Fri Mar 1, 2013
I believe your frustration comes from comparing Texas to California in terms of standard of living. In Texas you van buy a huge and new house with $300k. In the Los Angeles area you are lucky if you find a nicer condo at that price.

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?

Ron
1 vote Thank Flag Link Sun Jan 13, 2013
Buying in Los Angeles really depends on the area. Having family who live in Texas I can understand the price shock and what you get for that price...
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!
http://www.gallatingroup.net
1 vote Thank Flag Link Tue Jan 8, 2013
I totally agree with you! Unfortunately, as California and the Los Angeles area is an overpopulated yet popular area due to proximity to jobs, closeness to Hollywood, the ocean, entertainment, and the general weather here in California, many homes go for much more than they do in other parts of the country. I am from the midwest so I understand what you are saying. I could buy a much larger home in Indiana - near the Lake, for a fraction of what would be spent out here for a smaller home.

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.
1 vote Thank Flag Link Mon Jan 7, 2013
What is your objective;
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.
1 vote Thank Flag Link Mon Jan 7, 2013
I agree with WARCH. I read Ron's profile and some of his other posts on here. Being as sharp-minded and good in one's industry, as is Ron, does not mean you're able to simply be kind. I get pleasure from simply making other people happy, even if only for any instant -- I appreciate compassion -- on both the giving and receiving ends. Ron does not seem to be into anything like this. The original poste of this thread has quite a high income so no wonder she's perplexed about having trouble affording LA. It's not Beverly Hills proper! I can see Ron has trouble walking in another's shoes. I'm 60 now, and have come across many of his kind, too many.
Flag Wed Oct 16, 2013
Your reply is a demonstration of the worst of typical male insensitivity and just a plain bad case of foot-in-mouth-itis.
What is YOUR objective here, self-proclaimed VIP? If you don't have any suggestions or recommended solutions perhaps you should at least pretend you have some basic class and courtesy and keep your obnoxiousness silent.
Gdudjsudi's, objective is clearly indicated by the question marks in the original post.
There is nothing profound or particularly helpful about telling someone, "It is what it is"--need constructive feedback on how to MANEUVER AND COPE WITH what it is.
Flag Sun Sep 8, 2013
I am a realtor in Santa Monica but no BS. Are you financing your new home purchase? If so you want to pick a few different loan brokers or bank officers to give you quotes. Shopping around for your loan is most important. You may be able to get a loan for more that 700k.
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.

Sincerely,

Leah

LeahLovesHomes.com
0 votes Thank Flag Link Thu May 29, 2014
Depending on the area , there are a lot of homes for sale , in L.A. it is all supply & demand ,many people come to L.A. from all over the world . why do people pay more money for designer cloths,supply & demand .Good Luck !
0 votes Thank Flag Link Sat Apr 5, 2014
It is very difficult to keep housing payments affordable in Southern CA and many other CA areas. Adjustable rate mortgages and large down payments help many buyers keep their monthly mortgage payment low. Some buyers opt for 40 year mortgages. People that cannot afford the high prices move to the outer areas. It is unfortunate there are not more affordable housing options in close-in areas.
0 votes Thank Flag Link Fri Apr 4, 2014
Homeowner in outer LA area.
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.
0 votes Thank Flag Link Wed Apr 2, 2014
So I moved back to Houston from LA about 2 years ago. I've asked myself the same question about people living in expensive homes in LA. We drove through this neighborhood last week while visiting and it blew my mind at how much the homes were and how many people were actually living in them. Here's something that they don't tell you when you pack up and move to TX. First we don't have an income tax... yaay. But where does that tax revenue come from? You guessed it... property tax! Let's look at a $300k home. In CA your total mortgage with taxes would be about $1775 assuming the interest rate is 4.25% and the property taxes are 1.25%. Now that same home in a MUD neighborhood outside the Houston metro area would cost about $2475 with property taxes as high as 4% (and even higher) in some areas. Now let's go apples for apples. For $2475 I could own a home in LA that cost $420000. This roughly buys $120k more for the same monthly payment. And if you are blessed enough to be employed in LA, the cost of living adjustments make purchasing a home more feasible. For instance, I took a comparable job when moving from Texas and was paid $27k more. When I moved back I was paid significantly less. Finally moving in the city has become very expensive out here. Our school district is not the best in Houston so people like moving outwards while eating the high taxes. If you are not concerned with schools and move to the inner-loop areas of Houston, expect to pay LA prices at 2.7% tax!!!
0 votes Thank Flag Link Mon Dec 30, 2013
And I have one more point to make... as your property value goes up... so do the taxes. So what do you think is happening to those people that live in the older neighborhoods and these investors start building million dollar homes. Once again, you guessed it. The older homes spike in value and people can pay the property taxes. I think in LA you are only taxed on the original value at purchase for the life of residence. Makes you think twice about LA.
Flag Mon Dec 30, 2013
Dear Gdudjsudi,

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.
0 votes Thank Flag Link Sun Jun 9, 2013
Multi Family is in the millions
Flag Tue Dec 31, 2013
Wondering how many any multi-unit properties are for sale at any one time at a rail station in nice area in the LA or San Diego area. I would need at least 3 units with zoning to allow building additional units. What is the range of rent prices for such a property?
Flag Wed Oct 16, 2013
Okay so all of those agent responses sucked. I am a native CA who has been in VA for 10 years. I desperately want to move home and realize how expensive it will be to go home. I want to ask my friends how they afford it.

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.
0 votes Thank Flag Link Sun May 26, 2013
Lisa, thanks for having the opinion of a rich person. It seems that the problem for the increase in wealth is the increased desire to want what you can't have, which is probably just barely out of your reach but to everyone else it is a dream come true. $500K is nothing to laugh at, especially for a single-earner income. I take it your husband owns his own business or is a high-level executive of some sort?
Flag Mon Sep 30, 2013
The answer is: They can’t. A bank can always get you into a loan. And to be honest, nothing has really changed since the housing bubble out here. We were looking for a house in Santa Clarita, an area with median home price ranges in the 500’s. In new build communities, we counted over 10 houses up for sale in the first year alone out of a 45 house track. Why? Because people got into a mess they couldn’t afford. Once the builder sells, they don’t care! And the bank can sell and resell homes all day. Would a bank do anything that wasn’t profitable?

On a home in the upper 400’s, after taxes, insurance, HOA fees, possible school bonds, etc., look at above 4K a month for a home…I don’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 investment….that is….if you can keep it!
0 votes Thank Flag Link Sun May 26, 2013
I know how you feel. I lived in Alief, Houston area, San Antonio, & Del Rio. Sticker shock as far as housing prices here in LA!

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.

Douglas Lagos
Realtor®, Certified HAFA Specialist (CHS)
DRE# 01921046
Coldwell Banker Residential
Tel. (310) 463-8088 http://www.douglaslagos.com
0 votes Thank Flag Link Mon Jan 14, 2013
Seems lIke many people are able to afford and would like to buy properties in Los Angeles area at a present prices.

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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0 votes Thank Flag Link Mon Jan 7, 2013
move an hour away from los angeles to victorville,riverside ,palmdale am sure you will find a 3500 sq feet home in any of those cities for about 250k ,call me I will email you a list of properties .

Melvin Castro
310 930 6572
0 votes Thank Flag Link Mon Jan 7, 2013
Coming from Texas, sticker shock is to be expected...In fact, I've seen this reaction whenever folks come to California from less expensive states.

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.
0 votes Thank Flag Link Mon Jan 7, 2013
The land is often at least 2/3 of the value of a property in Los Angeles proper so the closer you are to mid city areas the higher the price just for the land. Since these areas were developed first the houses are older - some have been redone but others not. It is a very competitive market right now so if you want something newer and bigger you will probably have to go out towards the suburbs a little.

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.
0 votes Thank Flag Link Mon Jan 7, 2013
If you're making $200K, then you already know it's very easy for people to earn enough to pay $700K on an entry level home. It's the breadth of opportunities that has drawn so many to California and the prices reflect that.

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.
0 votes Thank Flag Link Mon Jan 7, 2013
Median home prices are less than $700K in the city of Los Angeles. There are many wonderful neighborhoods throughout the city with character homes in your price range. You may have to go outside of your comfort zone and explore the city a little bit more. Los Angeles real estate market offers something for everyone.
0 votes Thank Flag Link Mon Jan 7, 2013
$700K is a lot of money to pay for a home in almost any market. Los Angeles, however, is a market of over $10 Million people, so the top 5-10% of LA residents are the business owners, C-Level execs, entertainers, athletes, high producing sales reps, and other wealthy individuals who can easily afford homes in the $700,000 range and up. The median home price in LA County is ~$400,000 and the median household income is around $60,000 so you are still far above average @ $200,000 per year.

Texas (even in Dallas, Houston, Austin. San Antonio, etc.) is notorious for low home prices, but the property taxes are extremely high.
0 votes Thank Flag Link Mon Jan 7, 2013
A large down payment helps to reduce your loan.
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.
0 votes Thank Flag Link Mon Jan 7, 2013
Well, it really matters what part of LA you are looking at. In the valley, in Granada Hills (what I like to call the Beverly Hills of the Valley), you can find a nice 5 bedroom house, large with a pool for around $500k. Average price of homes in the valley are well below $400k total. Most of these homes are built in the 80s and 90s, but some of the higher end homes are built after the 94 earthquake so you have more modern choices. Most people buying above $700k are putting large amounts in down payment, that's why they can afford home loans.

If you want to speak with a qualified loan officer about your loan needs, I can recommend Bridgette at WestCom Lending (818) 335-0283 / bridgette4re@yahoo.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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Sincerely,
Caroline Harabedian
Realtor
RE-Search Concept
8700 Reseda Blvd., Suite 213-B
Northridge, California 91324
(818) 967-9626 mobile
(818) 979-0226 fax
http://www.HomesByCaroline.net
0 votes Thank Flag Link Mon Jan 7, 2013
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