Housing Wire recently reported that affordability falls even further as we ended the 3rd quarter of 2018. According to the article, “In Q3, only 56.4% of new and existing homes sold between the months of July and September were affordable to families earning the U.S. median income of $71,900.” Of course, some of the most expensive markets are in California, naming San Francisco, San Diego, and our home town of Los Angeles.
For the full read of the article, click here.
We are seeing a cool down in the market, but that isn’t necessarily going to equate to affordable pricing levels, and it is still nearly impossible to build affordable housing, even if builders wanted to.
So where does that put us if you are a first-time home buyer, who is just tired of paying rent? You must get creative. Here are three tips to start with:
- Consider locations you wouldn’t have thought of. Think about the lifestyle you want and investigate new neighborhoods. Like the walkability of the shops and restaurants in Studio City but out of your price point? Consider a few neighborhoods over in Tarzana where there are similar restaurants, a Whole Foods, and more.
- Do you really need a house? Consider a condo, or even a townhouse. We sold a townhouse in Sherman Oaks earlier this year with multiple offers. It had many of the features of a home, but significantly less expensive. Later, you can explore buying a house and either sell the condo or rent it out. I was able to leverage the equity in my condo to purchase our current house. By renting out the condo, it helped in keeping my expenses in line.
- Waiting for a “bubble” isn’t worth it: There are reports of slowdowns, but nothing like what happened in 2008. Therefore, hoping that prices are going to drop significantly is a pipe dream in today’s market. Consider putting less money down and plan on refinancing later if it makes sense. Of course, speak with your financial advisers to see what’s best for you.
Although difficult, it doesn’t mean it is impossible to buy in this market. It may take compromise on your end to make it worth, but it could be worth wild in the end.
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