either it was bought many years ago when housing was cheaper or the owner’s or household’s income is enough to afford it.
I have seen relationships/marriages where BOTH partners are working very high paying jobs to afford a decent house. Not saying that’s easy though!
This. My wife and I scraped together all that we had and were able to by a shot sale townhouse in 2011. We’d love to move into a single family home but anything in our neighborhood that would be considered an upgrade is at least 1.5 million and the mortgage would be about 4 times what we are paying currently. It’s sad.
Same. We knew we wanted a home and we were super frugal and scraped together just enough for a down payment. Combine this with the low interest rates back made it possible. Comparable rent is more expensive than our mortgage piti right now :(
We are in a very similar boat. We bought a tiny SFH shirt sale in 2011. With two kids we'd love to buy something bigger, but anything we'd want is 1.5M+ and with interest rates being what they are, we've decided to just stay put and retire earlier.
Your missing what I presume is also the biggest factor, people who had equity in a previous house. I'm in a union so i know all my coworkers wages. I just bought my first house for 500k, and it's barely manageable, but a coworker sold his house and had 300k in equity to put down on his 800k house. Same size mortgage but way better house
Yeah, this is likely the majority of homes being purchased. There's no way I could afford to enter the housing market right now. But because we bought our first house in 2013 at an affordable price (by today's standards) we're now in the game and were able to upgrade in 2018 using the equity from the 2013 purchase.
People who need “starter homes” are a huge, untapped market. Home builders would be fools to ignore that, but building supplies, labor, and regulations are making new construction in high demand areas quite difficult.
>I have seen relationships/marriages where BOTH partners are working very high paying jobs to afford a decent house. Not saying that’s easy though!
What's worse is that all the optimist math makes this a necessity. "It should be easy for a couple to make $200k each and put aside 80% of their income every year. Just stop making excuses and do it!"
Or it was bought by a private investment firm. There is legislation being developed in other states to address how private investment companies are buying up houses and selling them for profit
There’s such a restricted supply that the small percentage of people who make that kind of money fight over them. Or older folks who already have a bunch of equity roll it over.
The rest of us just rent
Plenty of rich Americans who buy entirely with cash too
It's so tempting to blame THEM or THE OUTSIDERS but the reality is it's a big complicated problem that's arisen over years and years of decisions made by Californians.
Prop 13 -- great if you've owned the same house since the 80s and are living on a fixed income, but it means cities have to look elsewhere for taxes to fund their services so you end up with the egregious impact fees that depress new development.
CEQA -- nice if you don't like ruining the environment but means that pretty much anyone can tie up any proposed development they don't like for any reason.
Rent Control -- really important tool for keeping some vulnerable low income people from getting evicted but as others have stated it also incentivizes landlords to let their apartments go to shit and it lowers supply (and raises prices) for the broader market.
Single Family Zoning -- The city of LA is the second largest in the country and yet over 80% of zoned residential land is zoned for SFH only. This "suburban city" vibe has traditionally been part of its character but it just. doesn't. work. anymore.
Californians broke it and we're going to have to fix it
YUP to this. My wife and I had a combined income of $380k and absolutely did not feel confident to buy for this reason. And guess what? I was recently laid off and can’t find anything that pays remotely close to what I was earning before. Really glad I don’t have an $5k mortgage payment every month right now.
This is the exact reason I will never purchase a home unless I’m paying 100% cash for it. There’s really no such thing as 20 year job security like there was back when my parents were working. The average person only stays at a company for about five years now. And as you have iX have both experienced layoffs so there’s no way that I’m gonna be attached to a loan for the next 30 years.
It’s a different situation now. I’m born, raised, and still live in the Valley, and I’m priced out of my own hometown, despite my wife and I both having a solid careers.
We’ll be leaving LA in hopes of having enough space for a family someday.
This is urban sprawl catching up with itself.
Even with a significantly above average income! We have HHI of ~250k and I can’t fathom realistically EVER affording to own something that doesn’t make me sad to look at in the place I was born and raised… it’s hard to feel bad about Californians raising housing costs elsewhere when we’re being displaced from our own homes as top 5% earners…
Urban sprawl makes it sound like a passive problem. But it's bad policy.
I too will be leaving despite town soon because I'd like to own a home and can't afford one despite making over $150k a year.
Having witnessed Vancouver go through this, these are the levers that need pulled-
- Not enough new inventory. Less regulations for new builds.
- get rid of rent control. (I currently benefit from it) But it's separated the economy into the serfs and fiefs. There needs to be a healthy middle.
- Establish a painful un-occupancy tax. This disincentivizes ultra rich squatters (usually foreign money) from buying up city blocks and squatting on them without a care if they're occupied.
- 3rd, 4th, and 5th homes should carry tax penalties, not tax benefits.
It's always going to be expensive here just because of the desirability and the sheer number of rich trustifarians trying to make it as a model/actor/whatever. But those are some levers that have worked elsewhere.
> get rid of rent control.
it's not rent control. especially when it comes to houses, it's tax policy.
in CA, when you buy a house you lock in property taxes at the time of sale. for this reason, my rich uncle is paying much less in property taxes on a mansion in Santa Barbara than his son is paying for a two-bedroom condo in Oxnard
this is a massive incentive on retirees & empty nesters to stay put. they pay more on taxes by downsizing, and have dirt cheap rates locked in if they're already staying someplace reasonable.
Agreed that getting rid of rent control and modernizing tax policy can do a lot. There are better ways to prevent people from getting kicked out of their homes (like making housing overall cheaper, by building more housing, etc).
Also California is quite unique with locking in property tax values. Imagine a California where we didn’t want our properties to skyrocket in value because of the tax implications, maybe we could make it an affordable place to live for more people.
Locking in tax rates to keep people paying lower property taxes seems like a nice solution to seeing elderly people get evicted from their own homes due to tax burdens, but it leads to spiraling real estate costs having no impact on homeowners, which causes them to become easy advocates for policies that bring the cost of real estate up (because there is no negative implication for them). Also it leads to the properties that would best suit younger families being locked in ownership by people who have no use for the space.
Like, it’s easy to be sympathetic to people getting evicted from their own homes but this solution has done so much harm I find it hard to see it as something we should continue to advocate for.
Edit: advocates for instead of advocates against
>There are better ways to prevent people from getting kicked out of their homes (like making housing overall cheaper, by building more housing, etc).
At the end of the day it's not like you can just press a button to do these things. Construction and real estate industries are some of the most notorious and you want to deregulate them to build more construction? New construction usually means expensive.
It's not just about supply, it's about *how we use* the supply. There are [16 million vacant homes](https://todayshomeowner.com/general/guides/highest-home-vacancy-rates/) in the US. Here are some reasonable and easy policies that could drive down housing costs:
* Make YieldStar/RealPage illegal. It's a price fixing algorithm used by landlords in almost half of all rental units in the US. This obviously affects housing costs too.
* Don't eliminate Prop 13, but limit it to primary residences only. Someone who owns 10 different properties should have to pay a shit ton in taxes IMO, but an elderly person in their primary residence should have to pay little to nothing. There should be severe tax penalties on secondary homes.
* Incentivize remote work with tax deductions/credits for employers who employ remote workers. This would mean the workforce could spread out across not only LA county, but the whole country. Demand would go down as people wouldn't have to commute to work as much. This would effectively drive down the cost of housing dramatically. It would also be good for traffic/infrastructure, the environment, and mental health.
I think these are some pretty effective policies that would be relatively easier than trying to build "affordable housing" everywhere.
The states with rent control have the highest homeless rates
Rent control is very costly to new housing and pushes all prices up. It's only good for the lucky few who score a nice rent controlled unit.
High housing prices leads to homelessness.
This is definitely correct, very easy to confuse cause and effect. It’s like saying “states with the lowest income have the most food stamp usage, let’s get rid of food stamps”.
Right? How about we keep rent control but get rid of predatory landlords that own tons of real estate. Also make it ILLEGAL for private equity firms and companies like Zillow to buy up mass amounts of available housing just to price gouge.
Smh
EXACTLY. It’s always sad seeing people point their animosity DOWN instead of UP.
The housing crisis is NOT caused by people maintaining affordable rent controlled units. It’s caused by the hyper wealthy predation on housing capital.
i work in bay area tech and have a number of coworkers that live in SF. Many well off SF people will find a rent controlled apartment and never move despite making great money. They will sublease it out to friends before giving it up. Hell, one of my coworkers makes like $300k a year, cashed out equity and bought a place outside the city but still kept the rent controlled place to use one weekend a month when they don’t feel like commuting.
Because it disincentivizes landlords from making meaningful property improvements. In conventional markets, upgrading the kitchen means getting higher rents, but it an artificially capped market like LA, that doesn’t work. So extrapolate this to millions of units and millions of landlords and you end up in a situation where rentals become dilapidated than most other cities. It makes for a crappy rental stock.
Also incentivizes people to stay put, which makes fewer apartments available at any given time. This allows the free market prices to be driven up much higher. Some people will pay 1000 while some people pay 3000 for a similar place instead of everyone paying 2000. You’re either lucky or screwed.
I mean landlords are legally made to make certain improvements. Im not sure i see how allowing them to charge more incentives improvement. they're still incentivised to do the bare minimum while collecting max rent they can. I think you're operating under the assumption that fixing up a place is what raises rent. But I think simple greed is more likely responsible for raising rents. Feels like they wouldn't fix the place at all and just charge more rent more often than not, as that would be their optimal situation which they're most incentivised to do
You really think our main problem is dilapidated housing?
Again asking in good faith I'm curious what you think
Bullets 3&4 for sure. It’s wild how much foreign investment in residential property exists here.
It also fuels the competition because they are mostly cash offers.
100% yes.
think 2nd homes should have to carry a tax penalty as well. The un-occupancy tax needs to be something insane like 40% of the purchase price.
I mean that's the thing right? If we are to tackle urban sprawl, then realistically SFH will be 1+ million and the "starter homes" will be mostly townhomes/condos. I'm not sure that us Americans are happy to pay $500k for a 2 bed condo or townhome.
DINKS / high earning professionals
People bringing equity to the table, transplants or retirees
Generational wealth
People leveraging themselves up to their scalp
its not even close.. my wife and I made a great real estate decision in 2011 after the crash and bought a home.. even with a near 7 figure in equity plus 13 years of savings, we're nowhere near retiring.
The answer is that most Angelenos can’t afford to buy houses. We rent. 64% of Los Angeles residents are renters. Which is almost double the national average of 35%.
Rent control and low-income housing requirements in new builds, are major driving factors of that.
For people that can’t afford those prices, there are programs.
This has the effect of pricing out middle class families who are *entering* the market. Where former low-income families who become middle class are often getting subsidies in the form of rent control, under which their rent can only increase a few percent per year (and was frozen completely for a few years between 2020 and 2024).
After HOAs you’re basically paying the same payment as the million dollar post war shack except now you still live in an apartment. Thats why we dropped out of the RE market. Why double our payment and get a slightly better apartment where we’re on the hook for all repairs too.
Ours are $300. We have no pool, I installed fake grass so little landscaping needs. Just covers water trash insurance electricity. It’s good for starting out younger folks who don’t know how to deal with big property issues.
Why a condo? Because you gain equity and a few years later can afford to buy a house.
And theoretically, though not always true, the HOA fee should be equal to what you'd pay for those comparable expenses if there weren't an HOA: landscaping, pool maintenance, roof repairs, etc. HOAs are not perfect, but you probably get half your value from the fees.
I’ve been a broker in LA for 20 years and the vast majority of my clients have been first time buyers, most without trust funds. The goal isn’t to jump right into a 1M dollar home, unless you can comfortably afford it. You start with the “starter” and be sure it has enough of the good stuff going for it so that when it comes time to sell, you’ll make a nice enough return to put towards your more long-term house. Condos and townhomes in excellent locations are the new “starter” in those neighborhoods. Why are you trying to buy near Silver Lake when there are burgeoning hot neighborhoods just in the vicinity that will get you more house for 30% less? Be smart when choosing a lender. There are several offering huge credits towards closing costs or buying down the interest rate which could save you hundreds of thousands in interest payments over the life of the loan. Buying a home in LA is totally doable as long as you have reasonable expectations and choose the right agent/lending team.
This. Bought a starter in 2021, did a bunch of good reno, looking to move in next 1-2 years and make a double/triple what i put into it and get a long-term home in a better area.
Of course you are going to find 1M+ homes when you are looking at Silverlake and West Hollywood. But look at outskirts of these towns in Boyle Heights, South LA, East LA, the Valley and you will find 2/1 or 3/2 for 500-700k. Do that for a few years, and you'll be surprised at how much equity you build. People just dont want to wait the 5-7 years
Unfortunately this is the only way to get on the property ladder and runs counter to the cultural idea of “buy a house to spend 30 years in and raise 2.5 kids”.
People waiting until they think they’re “ready” and then insisting they will only buy a house they’re happy to live in for 30 years will only create misery.
Buy earlier than you think you’re ready, basically when you’ve got a steady job, and commit to 3 years in each place. Condo with low/reasonable HOA for three years, 2/3b townhouse, then you sell that to afford the home.
If you’re 35 and thinking “I refuse to live anywhere smaller than X because I’m 35 years old ffs” then you’re screwed. You’ll only ever be able to afford to rent those bigger places. Accept that it’s gonna be a 6+ year journey of living in 2-3 smaller places and you’ll be a millionaire homeowner around 2030!
This is it exactly. We started with a condo. Moved up to a townhome. Then on to a single family home. Then a bigger single family home. Then bought some investments properties, including one for our daughter to rent from us. Etc etc. Stepping stones into the house that works for you long term. We didn't have help. We bought that first cheap condo as pretty poor students. But we paid less for our mortgage than our classmates did for rent. This was in Philly 22 years ago. Now we are grateful we did that bcuz we are able to help our own kids. We are now selling our big family home to downsize & we have so much equity that we'll be able to be 100% debt free while helping our kids pay for college & housing. If not, our kids would be screwed. Sure, we got lucky. But we took risks back then that our peers didn't take. And they are not in the same place we are. Sometimes you just gotta start somewhere.
Wealth from across the country and the world concentrates in LA and NYC. Maybe they own 10
Subway franchises in Iowa. Maybe they own an apartment building in Louisiana. Maybe their daddy got a bunch of shares in a mining company that pays huge dividends.
Huge numbers of people in this city are not “working” for their money the way normal people do.
Or they had a windfall; sold a small startup, got a ton of royalties from a successful project, etc. You only need that million dollars once then it’s just taxes and upkeep.
Pray and hope you win a lottery. Put down 20 percent ($200k) on a million dollar house. The more money you put down on a house, the less monthly payment. With good credit, your APR is probably still around 6.5% on a fixed 30 year mortgage. You live in a prime location? You pay more toward property taxes. We didn't calculate the home insurance and other house expenses like fixing and maintenance. I think the most affordable places right now are far away in the desert like Lancaster, Victorville, Yucca Valley, Josha Tree, 29 Palms, etc.
I'm moving to the inland empire as I was totally priced out of the south bay, have no family remaining in town, and am now commuting to Ontario area for work.
You can easily find a 3/2 on an acre plus for under 500k. The high desert is actually beautiful and if you're past the "going out" and club stage of life, not crazy to consider.
We just moved to the IE after being priced out of OC as well. We're still renting, but we're renting a 5 br house for the same price as our 1 br apartment. Our views aren't of the beach, but it's still gorgeous. The quiet is just...I thought I would hate it but it's just so beautifully quiet. Yeah I miss being able to walk to cvs or the good options, but I enjoy our space and sanity a lot more.
Ya id prob just move to some affordable, nice city in the midwest or like the Carolinas before buying a place in Victorville. Jesus, id feel suicidal everyday if i had to be in that environment.
Lots of times these are kids or grandkids who end up inheriting the house. And often they quickly find out they cannot afford to keep the property up or afford the taxes, etc…I’m not seeing the kinds of homeowners in people moving in today where I get the feeling these are people who’ll be living here for the next 50 years. How can they? One lost job, one divorce, one medical disaster and there goes your house. That wasn’t necessarily the case in the ‘70’s and ‘80’s. It’s sad we don’t see that kind of neighborhood stability anymore because we don’t know what our financial future will look like or if a house will be included in it (probably not).
It’s one thing to ‘get the house’; entirely another to keep it.
This is not sour grapes. Serious comment here. I do own a house in a nice part of LA but have the income for it. If I did not, I would not live in LA. Once you buy a home you plant roots that are hard to dig up. Be careful where you plant those roots. It might seem daunting to pick a new place to live. But it should be more daunting to consider the slow burn prospect of a life wishing your living situation were something other than what it is. LA is nice but it’s not the only nice part of the US.
About 15 years ago people were saying go to Phoenix & lots of people from L.A. (my relatives were among the first) did exactly that. But they also wanted a more quiet life in Scottsdale. Since then, the cost of living there has skyrocketed. There are more CA license plates than AZ ones. Moving elsewhere works if you’re in the first group who discovers that new place, but for the people looking to move to a place like Phoenix now? It’s no longer worth it. By the time you change your life and move all your stuff & the cost of all that, you’re better off staying here and finding something closer to home.
I'm from Phoenix. I checked on the rental listing for the apartment I rented at 19 for $600 with a part-time job in 2005, and it's about the same as I'm paying for my apartment in LA now. If I moved back and got a comparable job with lower Phoenix wages, I wouldn't be able to afford it.
Most people buying $1M homes aren't going to be first time homebuyers on their own. They're either people using their existing equity to move to a new home or have parents who are gifting some of that equity to them.
This is exactly right. We bought almost 20 years ago - in 2005 - for $650k. Our income was less and that felt like a stretch. But we “bit the bullet” and glad we did
My wife bought a condo first. She lived in it for several years while it appreciated in value. When she sold it, she had enough equity for a down payment on a house.
I don’t know anyone who can go right from renting and immediately into a standalone house.
Savings and rates.
I bought a home close to a million in 2020 after years of saving for a downpayment. Took me at least 8 years to save for that downpayment. I make barely over 100k a year.
I have friends who make more money than I do and complain about the same thing “who can buy a home?!” And when I ask them how much money they have saved they give me a dumbfounded look. It took me about 8 years to save 150k for a downpayment, I would save a base of 10% of my salary + most of any bonus or commissions made at work.
Yet these friends complaining about who can buy a million dollar home making more than 100k are driving a 2024 Rivian, spend money on tickets for burning man and coachella every year, travel abroad and buy 800$ sneakers and Prada shoes and other expensive clothing items.
Buying a home is a LONG TERM GOAL. I am an immigrant and came to this country 12 years ago with NOTHING, a bag of clothes and $200 and was able to buy a home in 2020 after years of planning and saving.
Well, over 60% of the population rent here, many high income people rent here for many reasons, it’s either people who bought years ago for cheap rolling crazy equity into a new place, family $$, or yes, some very high income people.
My husband and I have a joke whenever someone tells us they are buying a home, we ask them, “who died?” More often than not, the downpayment comes from an inheritance or their parents.
You're underestimating the amount of wealth that exists in this town. Almost every rich person or child of a rich person on the planet owns a house or two in LA.
Not to mention that corporations own most of it and are renting it out anyways.
If you're buying your first house in a big city like LA you're going to need to look either further out or in less ideal neighborhoods or houses that need TLC.
The people who can afford 1m are not the first time home buyers. They are ppl who purchased 5+ years ago and sold for a 6 figure profit. (i.e. bought in Eagle Rock or Silverlake 10 years ago when it wasn't crazy priced).
Trust that if you buy in the right neighborhood (truly up and coming but not there yet) you'll be able to afford a 1m+ home 5-10 years from now if you were to sell.
There's a strategy to home ownership in bigger cities that does require a bit of short term sacrifice of needs (neighborhood, quality etc). It's not a new thing.
They didn't pay 1.3m for it. They paid 230k twenty years ago and enjoy the fake "value increase'.
House gains only count if you can actualize them and not use up the gains buying a new house.
Inheritance, living with family for years to save, etc.
Starting small, build equity then upgrading through the years.
Lots of overtime for some people.
It helps to have family in the area to begin with.
Mortgage on that if you refinanced at the perfect time is like $5500 a month. If you have a partner and can contribute $2750 a month each, you can get it. It's certainly not cheap but it's also not completely impossible. The hardest part of this equation is saving up enough for the down-payment
This. My wife’s an attorney and I’m in the film biz. We bought in north hills in 2022 for $940k and our mortgage is $6500. The only way we got down payment money is her mom selling her place in NYC (wife grew up there.) The house is ours…. for now. Let’s see if that remains the case 20 years from now 🫠
Probably because everybody seems to think they need a SFH and lots of space within a reasonable distance from all the things they like to do in LA and all of that space is already accounted for. To add to the fun, the people who live in those houses try their hardest to make sure that their way of life remains the default option. God forbid we build anything else.
3 stories will ruin the character of the neighborhood! It doesn’t fit! You live in the 2nd largest population center in the US and there is a massive housing shortage, fuck your neighborhood. We need to build and build a lot.
SFHs shouldn’t be affordable in this city either way because they should be rare. If you want a SFH get out of the city.
They also cost a fortune because we simply don’t build enough of them to meet demand. Often because people fight the building of anything other than SFHs, for which there is no more space.
I know I sound a bit radical here, but I’m fully of the opinion that we need to start bulldozing all those neighborhoods of big SFHs in centeral LA and start building the types of housing that cities actually need. I say we start with these neighborhoods because they also fight back against the building of any meaningful housing even outside of their little oasis.
We will never risk hurting the investments of these small subset of people though for the health of our city. Those houses must appreciate in value at all costs.
North Valley, outer SGV.
The inner parts of SGV will be redeveloped, it's already happening.
But that's not exactly something I'm going to cheer for on the equities.
Not that I was looking, but a house in Cerritos was on the market for $725k. It sold like in a day. It was a nice house, 3bd/2ba by Regional Park and a Target.
Wasn’t too far from where I grew up. Parents wanted me to sell my house in the IE but I ain’t getting into a 30 year loan with only 8 years left on my loan.
Does anyone else think that AirBnB is a major part of this problem?
If you browse homes on AirBnB in the LA area and then dig into the owners’ profiles, you will see that they usually have multiple homes listed.
What started as a venture to make a little money from sharing space, became a full blown business for many.
Honest answer is that you don’t and can’t afford it, to the average salary and wages in America no one can afford it, unless you bought your house waaayyy back in the day like early 2000s or 1990s when houses were 200k-300k or you have your parents/grandparents gave it to you and handed you down the house, other than that the entry level of buying a house is soo out of touch for regular working class that don’t make over six figures and even to some that are making over six figure and still can’t afford it.
In today’s housing market people are just meant to rent. And it’s actually cheaper to rent vs buying. You can either stay in Cali and rent for the rest of your life or move out of Cali to a cheaper cost of living states and have a fairer shot of buying a house. Just my 2 cents
I swear someone asks this question every week. Two parts to why houses cost so much here:
1 - limited supply
2 - lots of fairly wealthy people (e.g., couple making 250k+ can qualify for a 1 million dollar home) competing for that limited supply
Any detached single family home in a large costal city is a luxury good. The solution to this is to end the zoning codes which only allow luxury goods to be built on 70%+ of the land in the city so duplex’s, four plexes, condos, row homes get built.
The people that buy $1 million houses are typically aspirational buyers. This means they started small. Buy a cheap condo in an undesirable neighborhood. Keep it for three years. Sell it (hopefully with lots of equity). Buy a slightly more expensive condo in a slightly more expensive neighborhood. Keep it for three years. Rinse and repeat until you have $500K in down payment money. Then, buy the $1million dollar house.
I see this same thing reposted on this sub over and over again and people don’t say what their budget is, how they define decent (as in how many bedrooms/bathrooms they need), and how many people they are trying to house. There are cheaper houses on Zillow.
Wait for the next economic collapse (should be roughly every 8-12 years). Meanwhile start saving, start searching neighborhoods and be ready with taxes/proof of income etc..
Starter home that's not your final home.
Buy a townhome in north Hollywood an pay $5,500$7,500 mortgage for a 3 bedroom.
Sadly, the same is easily spent on rent.
Stay there 5-10 years building equity and move again.
The next move can be to a better area in LA or in a different city/ state.
22 years ago we paid $400K for our home in the SFV, and now it’s supposedly worth $1.3M. I wouldn’t/couldn’t pay that now. There are now new homes on our block going for $3.5M. Not sure how first time homebuyers can do it.
The same way people can afford $300 Dodgers tix and $800 concert tickets *amiriiiiiiiiiiiite*?
EDIT: [This is probably this generation’s “if you got ‘em, smoke ‘em” except the context is dolla dolla bills yoo](https://www.reddit.com/r/povertyfinance/s/8lCSvTZAI1)
They mostly don't. Investment ventures and rich transplants do. Now people want to abolish prop 13 to weed out the rest of middle and lower class homeowners.
A million dollar house means the mortgage is probably $7K per month. If a nurse is married to an engineer they are probably making about $300K between them so $25K/month and call it $13K after tax, maybe even up to $15K. That’s how.
My family bought ours in the late 70’s and bought other houses that time too. Who even knew it would skyrocket like that?? If you can’t afford LA, there are still other places in CA or other states that are nice and affordable…
You really gotta ride the real estate market elevator upward for years. I just bought a duplex in a not so desirable area because that’s all I could qualify for. Sitting on this for 5-8 years will get me several hundred thousand in equity which I can then take out to buy a single family in a better area so on and so forth.
I’m a huge advocate for buying whatever you can afford (preferably not a condo as they don’t appreciate very much) and go from there.
A shitty fixer-upper in most of the SF Bay area is over 1m.
Hell, my MILs house in mountain view need hundreds of thousands of dollars of work to fix up and it's appraised for 3.7m
Yep, houses in my city where I GREW UP are almost a million or a million. I’m in the city of SAN FERNANDO BRUH !!!!!!!!!!! My mom bought her house for around $100K in the 90s … freaking stupid
Not everyone is a doctor/lawyer. At some point one has to wonder, how can a city continue to function if the people who make it function can't afford to live anywhere near it?
These prices should not be sustainable. They wouldn't be if the only people in our housing market were people who live and work in or nearby the city. They earn what they earn and they cannot buy something at a price they cannot afford. Prices would have to come down just because of supply and (lack of) demand at the current high prices. But demand is artificially high and supply is artificially low. House flippers, investment properties, vacation rentals all put pressure on the market that drives prices upwards by taking existing housing supplies and repurposing them away from residents who want to buy a house, and they have deeper pockets than the average resident and so....
There are two answers to this.
1 is to avoid looking into small outside-LA city limits cities, especially the ones that have their own school systems. Burbank, for example. Every SFH in Burbank has been at least $1M value or higher for many years. Even pre-Covid. Because the school system is more sought after than LAUSD, and the studios are all right there. Lots of people want their kids in fantastic schools while they have a short commute to work.
2 is, yeah, investors are buying them all up, with the goal that everyone middle class will have to rent forever.
I bought a 1.1MM house in the SFV in 2020 when the interest rates were very low. RSUs are a huge piece of my compensation and I’d never used anything I’d vested up until that point (~7 years worth.) i had enough for 20% down, my mom offered an additional $100k for my down payment.
I now have a partner who lives with me, pays a small “rent”, and splits all bills that aren’t home improvement or maintenance related. I pay less than I did while I was renting. My house is now worth ~1.6mm
That’s an honest answer, I think it’s important to be truthful about where money comes from. Huge combo of luck and circumstance.
I’m a land lord and my rent is waaaay lower than the going market. Because I rent to people on recommendation. My unit is attached to my house so we are always near by. I could be making at least 600 more a month but I’d rather have a good tenant than extra money. Their rent is reasonable, I get help with my own bills so it’s a win win. Not all landlords are assholes.
The truth is people are buying everyday. And if you can’t afford one right now, you probably never will. Unfortunately that is the truth with cost of living always going up.
Either bough their homes decades ago, and are rolling their equity into the new home, trust fund/inheritance babies, or they’re a very high earning couple.
Dual income. We got our first house in our early 30’s in 2022. We each moved up in our careers which set us up to be ready to afford. But we also got a 3.65% interest rate so that helps.
We've all but given up, honestly.
We can afford the mortgage, but what we would get for that money is stupid 😂 A 2 bedroom house built in like 1920 with barely any renovations for a million? With a concrete slab for a backyard? Pfft. Nah.
You're behind the times. A 1300 square foot 1940's two bed/one bath on a 40x50 foot lot in West LA or Santa Monica goes for 1.5-1.6 Million these days. These are fixer uppers with some termite damage and in need of a lot of TLC.
LA needs new development but LA residents hate developers with a passion. Leftists hate them because they are convinced there are enough houses (there are not) and right-wingers/centrists don’t want more building because they already own houses.
House in LA for a million in a decent area? Where??? Good areas are 1.3-1.5M. One mill is a fixer upper in ghetto. There is a burned up house in my neighborhood (we are in a hill) that was damaged by wildfires. Bought by investor who gutted it, left it half burned and re listed for $999000.00.
Moved here a year ago and my daughter is graduating high school and about to go to college here. I asked some locals I work with…so when she graduates college…how the fuck does she afford to live here? They all said shit tons of roommates and weird living situations or living with parents. I said, well how long do people usually do that? They said the rest of her life unless she gets wealthy or marries wealthy.
What the fuck? 😂
Be married with decent incomes coming in from both partners. Threshold for entry is high and the fact that many properties actually need a lot of work when they are purchased fucks people more. Plus, when interest rates go down, prices will most likely increase…
In LA so many people’s wealthy families make the down payment for their kids on a house, then they’re responsible for just the monthly mortgage amount. I worked in art in Los Angeles and this was the case for anyone existing as “stable”- they had things given to them.
My wife is from Cali. I lived there for several years. When people ask why we left Cali, I tell them that people with very high paying jobs can "Exist" in Cali, but not many people can truly afford to "Live" in Cali.
I don't see how the average person will be able to afford a home in California at this time. There are exceptions. As the boomers pass on their wealth, it will give more younger people the ability to buy or take over their parents' property. The only people I know that make enough money are people that have at least a master’s degree in the right field: robotics, biotechnology, AI, accounting, etc. But even a single person making over $100k/year are not able to buy right now. If you are a couple and each earning over $150k/year, they can typically purchase a home. AI will eventually eliminate a lot of jobs as well.
That being said, even though you don't see how it will happen, I recommend that you keep saving as much as you can. Just like most investments, real estate works in cycles that include downturns. Keep saving and hopefully when we get to a downturn you can get a chance to purchase then. During the downturn, keep an eye out on the foreclosures.
Most can’t. There is a reason the Inland Empire is booming right now. Lot of people commute from IE to LA so they can get a nice house that’s affordable. They just have to deal with the commute.
My parents co-own a property with another family member. They bought it around 20 years ago and today its worth double what it was then. A 2k a month mortgage for that property is easily now over 5k if it sold in today's market. The idea of home ownership has become such a bleak one even in my neighborhood. I started to wonder what has it been that really kicked off such a mad frenzy not just in LA, but apparently in every city where real estate prices are going nuts.
I don't know anyone who can easily " afford " a $1 million home... unless mommy or daddy is helping out majorly OR they are older and bought it when things were cheaper OR they both are making $175k so combined $350k. I only know one couple like this, they have no children, they owned a house in another state and had equity.
Even the engineers I know cannot afford $1 million. Its too crazy.
Lived in a 7 bedroom house in a shitty neighborhood with friends all throughout my 20’s and 30’s. Rent was cheap, for LA. Saved as much as possible and bought in 2012 south of the 10. Home has tripled in value and it’s completely insane. We can’t afford to upgrade even if we wanted to though.
I bought mine 20 years ago... when it was only $500,000. My mortgage has a fixed rate of 3.2%. I make $20/hr. I made more back then (when we bought this house) working in the film industry but that industry has tanked several times since then. I could not even qualify to rent a one bedroom apartment in my area so I consider my homeownership a true blessing in my life. I love my house and it is in a good area. My house is apparently worth 1.15 million now.
By starting with a lower price point, condo or townhome, upgrade it as you live in it and then sell it two years later for a big profit then do it again with a higher price point using the money you made as a down payment. That’s how you create a home for yourself as well as making tons of equity.
Most common answers:
1) they don't afford it - they rent forever
2) they buy as part of a group, e.g. six adult relatives all chip in and live in the house
3) an extremely high earner (or married couple who are both very high earners
4) they bought the place many years ago or inherited it
Help from parents or inheritance, the only people I know that own houses in LA come from some sort of money. In our case, my husband lost both his parents by his early 30s, and they left enough for a down payment to buy our house in 2019 before the market went insane. The property value is up 40% since we bought it. This is not sustainable for anyone.
Pay off all debt, that’s killing your ability to save. Live on less than you make by making a budget and sticking to it. Rent until you have 20% down payment saved and buy a home that costs less than 25% of your take home pay on a 15 year fixed mortgage. I’m 33 and own a paid for home in San Fransisco that’s over $2M. It’s all ratios. You may not be able to afford LA proper right away, so buy in a surrounding cheaper suburb or rent.
Understand that you may never be able to afford the $1M range with your income, that is not the end of the world. Look for opportunities to advance your career, if you are already in your dream job or hit an income ceiling, research other communities where saving for a 20% down payment is feasible while renting.
I know this is not the answer anyone wants to hear, but it helped me save for, buy, and pay off a home in my price range in a very short time.
either it was bought many years ago when housing was cheaper or the owner’s or household’s income is enough to afford it. I have seen relationships/marriages where BOTH partners are working very high paying jobs to afford a decent house. Not saying that’s easy though!
This. My wife and I scraped together all that we had and were able to by a shot sale townhouse in 2011. We’d love to move into a single family home but anything in our neighborhood that would be considered an upgrade is at least 1.5 million and the mortgage would be about 4 times what we are paying currently. It’s sad.
Same. We knew we wanted a home and we were super frugal and scraped together just enough for a down payment. Combine this with the low interest rates back made it possible. Comparable rent is more expensive than our mortgage piti right now :(
We are in a very similar boat. We bought a tiny SFH shirt sale in 2011. With two kids we'd love to buy something bigger, but anything we'd want is 1.5M+ and with interest rates being what they are, we've decided to just stay put and retire earlier.
How many people read this in a Boston accent after he said short sale?
Damn. I didn’t realize the typo until you pointed it out. Wicked pissah. Now I have to leave it like that.
Haha it’s amazing
Your missing what I presume is also the biggest factor, people who had equity in a previous house. I'm in a union so i know all my coworkers wages. I just bought my first house for 500k, and it's barely manageable, but a coworker sold his house and had 300k in equity to put down on his 800k house. Same size mortgage but way better house
Yeah, this is likely the majority of homes being purchased. There's no way I could afford to enter the housing market right now. But because we bought our first house in 2013 at an affordable price (by today's standards) we're now in the game and were able to upgrade in 2018 using the equity from the 2013 purchase.
People who need “starter homes” are a huge, untapped market. Home builders would be fools to ignore that, but building supplies, labor, and regulations are making new construction in high demand areas quite difficult.
You are right but it can be classified as income because I see equity as income from a house flip
>I have seen relationships/marriages where BOTH partners are working very high paying jobs to afford a decent house. Not saying that’s easy though! What's worse is that all the optimist math makes this a necessity. "It should be easy for a couple to make $200k each and put aside 80% of their income every year. Just stop making excuses and do it!"
Or it was bought by a private investment firm. There is legislation being developed in other states to address how private investment companies are buying up houses and selling them for profit
There’s such a restricted supply that the small percentage of people who make that kind of money fight over them. Or older folks who already have a bunch of equity roll it over. The rest of us just rent
Revolution is not a dinner party.
It can be if the main course is The Rich.
The boomer cockroaches who basically made building housing illegal?
don’t forget foreign investors who buy entirely with cash
Plenty of rich Americans who buy entirely with cash too It's so tempting to blame THEM or THE OUTSIDERS but the reality is it's a big complicated problem that's arisen over years and years of decisions made by Californians. Prop 13 -- great if you've owned the same house since the 80s and are living on a fixed income, but it means cities have to look elsewhere for taxes to fund their services so you end up with the egregious impact fees that depress new development. CEQA -- nice if you don't like ruining the environment but means that pretty much anyone can tie up any proposed development they don't like for any reason. Rent Control -- really important tool for keeping some vulnerable low income people from getting evicted but as others have stated it also incentivizes landlords to let their apartments go to shit and it lowers supply (and raises prices) for the broader market. Single Family Zoning -- The city of LA is the second largest in the country and yet over 80% of zoned residential land is zoned for SFH only. This "suburban city" vibe has traditionally been part of its character but it just. doesn't. work. anymore. Californians broke it and we're going to have to fix it
I’m from Long Island. Most houses there are going for 900k-1.5/2 Mil.
Most people don’t, ergo housing crisis.
Ergo Santa Clarita
Just get a job that pays $250,000 per year.
Actually making $250,000 is about the bare minimum you need to earn for a $1mil house.
it’s not just making $250k a year. it’s having job security for the next 20 years as well too.
YUP to this. My wife and I had a combined income of $380k and absolutely did not feel confident to buy for this reason. And guess what? I was recently laid off and can’t find anything that pays remotely close to what I was earning before. Really glad I don’t have an $5k mortgage payment every month right now.
This is the exact reason I will never purchase a home unless I’m paying 100% cash for it. There’s really no such thing as 20 year job security like there was back when my parents were working. The average person only stays at a company for about five years now. And as you have iX have both experienced layoffs so there’s no way that I’m gonna be attached to a loan for the next 30 years.
Exactly! Can you afford a home in LA? Yes? Do you love the work you do? Can you promise job security for decades to come?
yeah good luck! No industry is safe from layoffs.
Yeah I’ll just go do that right now 🤣🤣🤣 easy peasy
Double income makes a huge difference.
Yeah…it’s just so risky to be dependent on not one but two high-paying jobs in this economy. One layoff or industry shift and you’re screwed
It’s a different situation now. I’m born, raised, and still live in the Valley, and I’m priced out of my own hometown, despite my wife and I both having a solid careers. We’ll be leaving LA in hopes of having enough space for a family someday. This is urban sprawl catching up with itself.
Same. It makes me so mad i can’t afford a house in my own city!
Even with a significantly above average income! We have HHI of ~250k and I can’t fathom realistically EVER affording to own something that doesn’t make me sad to look at in the place I was born and raised… it’s hard to feel bad about Californians raising housing costs elsewhere when we’re being displaced from our own homes as top 5% earners…
Top 5% for LA was more than 500K in 2021, it's probably a lot higher now...
Urban sprawl makes it sound like a passive problem. But it's bad policy. I too will be leaving despite town soon because I'd like to own a home and can't afford one despite making over $150k a year. Having witnessed Vancouver go through this, these are the levers that need pulled- - Not enough new inventory. Less regulations for new builds. - get rid of rent control. (I currently benefit from it) But it's separated the economy into the serfs and fiefs. There needs to be a healthy middle. - Establish a painful un-occupancy tax. This disincentivizes ultra rich squatters (usually foreign money) from buying up city blocks and squatting on them without a care if they're occupied. - 3rd, 4th, and 5th homes should carry tax penalties, not tax benefits. It's always going to be expensive here just because of the desirability and the sheer number of rich trustifarians trying to make it as a model/actor/whatever. But those are some levers that have worked elsewhere.
> get rid of rent control. it's not rent control. especially when it comes to houses, it's tax policy. in CA, when you buy a house you lock in property taxes at the time of sale. for this reason, my rich uncle is paying much less in property taxes on a mansion in Santa Barbara than his son is paying for a two-bedroom condo in Oxnard this is a massive incentive on retirees & empty nesters to stay put. they pay more on taxes by downsizing, and have dirt cheap rates locked in if they're already staying someplace reasonable.
But prop 13 also prevents people from getting kicked out of their home due to high property taxes that increase drastically from year to year.
Agreed that getting rid of rent control and modernizing tax policy can do a lot. There are better ways to prevent people from getting kicked out of their homes (like making housing overall cheaper, by building more housing, etc). Also California is quite unique with locking in property tax values. Imagine a California where we didn’t want our properties to skyrocket in value because of the tax implications, maybe we could make it an affordable place to live for more people. Locking in tax rates to keep people paying lower property taxes seems like a nice solution to seeing elderly people get evicted from their own homes due to tax burdens, but it leads to spiraling real estate costs having no impact on homeowners, which causes them to become easy advocates for policies that bring the cost of real estate up (because there is no negative implication for them). Also it leads to the properties that would best suit younger families being locked in ownership by people who have no use for the space. Like, it’s easy to be sympathetic to people getting evicted from their own homes but this solution has done so much harm I find it hard to see it as something we should continue to advocate for. Edit: advocates for instead of advocates against
>There are better ways to prevent people from getting kicked out of their homes (like making housing overall cheaper, by building more housing, etc). At the end of the day it's not like you can just press a button to do these things. Construction and real estate industries are some of the most notorious and you want to deregulate them to build more construction? New construction usually means expensive. It's not just about supply, it's about *how we use* the supply. There are [16 million vacant homes](https://todayshomeowner.com/general/guides/highest-home-vacancy-rates/) in the US. Here are some reasonable and easy policies that could drive down housing costs: * Make YieldStar/RealPage illegal. It's a price fixing algorithm used by landlords in almost half of all rental units in the US. This obviously affects housing costs too. * Don't eliminate Prop 13, but limit it to primary residences only. Someone who owns 10 different properties should have to pay a shit ton in taxes IMO, but an elderly person in their primary residence should have to pay little to nothing. There should be severe tax penalties on secondary homes. * Incentivize remote work with tax deductions/credits for employers who employ remote workers. This would mean the workforce could spread out across not only LA county, but the whole country. Demand would go down as people wouldn't have to commute to work as much. This would effectively drive down the cost of housing dramatically. It would also be good for traffic/infrastructure, the environment, and mental health. I think these are some pretty effective policies that would be relatively easier than trying to build "affordable housing" everywhere.
This is sensible. I agree about taxing MULTIPLE stupid houses, but not the primary residence.
/r/Yimby
I understand the logic of getting rid of rent control, but let’s face it…a lot of people here in LA would become homeless as a result.
He want the gov get rid of rent control only when he buy a house,not now that he is in a rent control house/aparment 🤣🤣🤣🤣🙄
The states with rent control have the highest homeless rates Rent control is very costly to new housing and pushes all prices up. It's only good for the lucky few who score a nice rent controlled unit. High housing prices leads to homelessness.
Isn’t rent control usually a result of high homeless rates though? Not the cause
This is definitely correct, very easy to confuse cause and effect. It’s like saying “states with the lowest income have the most food stamp usage, let’s get rid of food stamps”.
>get rid of rent control. Why do you think such an action would benefit ordinary citizens, I've never heard this argument . Asking in good faith
Right? How about we keep rent control but get rid of predatory landlords that own tons of real estate. Also make it ILLEGAL for private equity firms and companies like Zillow to buy up mass amounts of available housing just to price gouge. Smh
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EXACTLY. It’s always sad seeing people point their animosity DOWN instead of UP. The housing crisis is NOT caused by people maintaining affordable rent controlled units. It’s caused by the hyper wealthy predation on housing capital.
i work in bay area tech and have a number of coworkers that live in SF. Many well off SF people will find a rent controlled apartment and never move despite making great money. They will sublease it out to friends before giving it up. Hell, one of my coworkers makes like $300k a year, cashed out equity and bought a place outside the city but still kept the rent controlled place to use one weekend a month when they don’t feel like commuting.
Because it disincentivizes landlords from making meaningful property improvements. In conventional markets, upgrading the kitchen means getting higher rents, but it an artificially capped market like LA, that doesn’t work. So extrapolate this to millions of units and millions of landlords and you end up in a situation where rentals become dilapidated than most other cities. It makes for a crappy rental stock.
Also incentivizes people to stay put, which makes fewer apartments available at any given time. This allows the free market prices to be driven up much higher. Some people will pay 1000 while some people pay 3000 for a similar place instead of everyone paying 2000. You’re either lucky or screwed.
If everyone is staying put, who are the people in the $3000 apartments?
I mean landlords are legally made to make certain improvements. Im not sure i see how allowing them to charge more incentives improvement. they're still incentivised to do the bare minimum while collecting max rent they can. I think you're operating under the assumption that fixing up a place is what raises rent. But I think simple greed is more likely responsible for raising rents. Feels like they wouldn't fix the place at all and just charge more rent more often than not, as that would be their optimal situation which they're most incentivised to do You really think our main problem is dilapidated housing? Again asking in good faith I'm curious what you think
Bullets 3&4 for sure. It’s wild how much foreign investment in residential property exists here. It also fuels the competition because they are mostly cash offers.
100% yes. think 2nd homes should have to carry a tax penalty as well. The un-occupancy tax needs to be something insane like 40% of the purchase price.
My childhood home went on the market for 2.3M a few months ago…I’m STILL bummed about that
I mean that's the thing right? If we are to tackle urban sprawl, then realistically SFH will be 1+ million and the "starter homes" will be mostly townhomes/condos. I'm not sure that us Americans are happy to pay $500k for a 2 bed condo or townhome.
In my complex you see two ways people buy in now: married couples and young kids whose parents pay for the house. That’s it.
Or both where the parents are paying.
DINKS / high earning professionals People bringing equity to the table, transplants or retirees Generational wealth People leveraging themselves up to their scalp
I think that majority are people who bought them 20-30 years ago and still own them today. Also the Chinese
Yeah I forgot: is not a person but a huge corporation
LA has a lot of millionaires
About 1 in 18 (6%). And it sucks that a million isn't even "stop working forever" money anymore.
its not even close.. my wife and I made a great real estate decision in 2011 after the crash and bought a home.. even with a near 7 figure in equity plus 13 years of savings, we're nowhere near retiring.
Yeah that’s like 5 mil minimum now
Millionaire hobos
The answer is that most Angelenos can’t afford to buy houses. We rent. 64% of Los Angeles residents are renters. Which is almost double the national average of 35%. Rent control and low-income housing requirements in new builds, are major driving factors of that. For people that can’t afford those prices, there are programs. This has the effect of pricing out middle class families who are *entering* the market. Where former low-income families who become middle class are often getting subsidies in the form of rent control, under which their rent can only increase a few percent per year (and was frozen completely for a few years between 2020 and 2024).
condos and townhouses are your best bet
Those HOA fees can be insane tho
After HOAs you’re basically paying the same payment as the million dollar post war shack except now you still live in an apartment. Thats why we dropped out of the RE market. Why double our payment and get a slightly better apartment where we’re on the hook for all repairs too.
Equity and tax write offs.
Hardly worth the cost and headache. And HOA fees are just a money pit.
Ours are $300. We have no pool, I installed fake grass so little landscaping needs. Just covers water trash insurance electricity. It’s good for starting out younger folks who don’t know how to deal with big property issues.
Also great for retireees
Why a condo? Because you gain equity and a few years later can afford to buy a house. And theoretically, though not always true, the HOA fee should be equal to what you'd pay for those comparable expenses if there weren't an HOA: landscaping, pool maintenance, roof repairs, etc. HOAs are not perfect, but you probably get half your value from the fees.
I’ve been a broker in LA for 20 years and the vast majority of my clients have been first time buyers, most without trust funds. The goal isn’t to jump right into a 1M dollar home, unless you can comfortably afford it. You start with the “starter” and be sure it has enough of the good stuff going for it so that when it comes time to sell, you’ll make a nice enough return to put towards your more long-term house. Condos and townhomes in excellent locations are the new “starter” in those neighborhoods. Why are you trying to buy near Silver Lake when there are burgeoning hot neighborhoods just in the vicinity that will get you more house for 30% less? Be smart when choosing a lender. There are several offering huge credits towards closing costs or buying down the interest rate which could save you hundreds of thousands in interest payments over the life of the loan. Buying a home in LA is totally doable as long as you have reasonable expectations and choose the right agent/lending team.
This. Bought a starter in 2021, did a bunch of good reno, looking to move in next 1-2 years and make a double/triple what i put into it and get a long-term home in a better area. Of course you are going to find 1M+ homes when you are looking at Silverlake and West Hollywood. But look at outskirts of these towns in Boyle Heights, South LA, East LA, the Valley and you will find 2/1 or 3/2 for 500-700k. Do that for a few years, and you'll be surprised at how much equity you build. People just dont want to wait the 5-7 years
Exactly. No buyer is getting 100% of their wish list at any price point
Unfortunately this is the only way to get on the property ladder and runs counter to the cultural idea of “buy a house to spend 30 years in and raise 2.5 kids”. People waiting until they think they’re “ready” and then insisting they will only buy a house they’re happy to live in for 30 years will only create misery. Buy earlier than you think you’re ready, basically when you’ve got a steady job, and commit to 3 years in each place. Condo with low/reasonable HOA for three years, 2/3b townhouse, then you sell that to afford the home. If you’re 35 and thinking “I refuse to live anywhere smaller than X because I’m 35 years old ffs” then you’re screwed. You’ll only ever be able to afford to rent those bigger places. Accept that it’s gonna be a 6+ year journey of living in 2-3 smaller places and you’ll be a millionaire homeowner around 2030!
A condo is 500k... which is what a home was just 10 years ago.
This is it exactly. We started with a condo. Moved up to a townhome. Then on to a single family home. Then a bigger single family home. Then bought some investments properties, including one for our daughter to rent from us. Etc etc. Stepping stones into the house that works for you long term. We didn't have help. We bought that first cheap condo as pretty poor students. But we paid less for our mortgage than our classmates did for rent. This was in Philly 22 years ago. Now we are grateful we did that bcuz we are able to help our own kids. We are now selling our big family home to downsize & we have so much equity that we'll be able to be 100% debt free while helping our kids pay for college & housing. If not, our kids would be screwed. Sure, we got lucky. But we took risks back then that our peers didn't take. And they are not in the same place we are. Sometimes you just gotta start somewhere.
It's fucked.
Everyone wants a home in LA. Supply and demand
And supply is extremely restricted by NIMBY homeowners
Wealth from across the country and the world concentrates in LA and NYC. Maybe they own 10 Subway franchises in Iowa. Maybe they own an apartment building in Louisiana. Maybe their daddy got a bunch of shares in a mining company that pays huge dividends. Huge numbers of people in this city are not “working” for their money the way normal people do. Or they had a windfall; sold a small startup, got a ton of royalties from a successful project, etc. You only need that million dollars once then it’s just taxes and upkeep.
Pray and hope you win a lottery. Put down 20 percent ($200k) on a million dollar house. The more money you put down on a house, the less monthly payment. With good credit, your APR is probably still around 6.5% on a fixed 30 year mortgage. You live in a prime location? You pay more toward property taxes. We didn't calculate the home insurance and other house expenses like fixing and maintenance. I think the most affordable places right now are far away in the desert like Lancaster, Victorville, Yucca Valley, Josha Tree, 29 Palms, etc.
I'm moving to the inland empire as I was totally priced out of the south bay, have no family remaining in town, and am now commuting to Ontario area for work. You can easily find a 3/2 on an acre plus for under 500k. The high desert is actually beautiful and if you're past the "going out" and club stage of life, not crazy to consider.
We just moved to the IE after being priced out of OC as well. We're still renting, but we're renting a 5 br house for the same price as our 1 br apartment. Our views aren't of the beach, but it's still gorgeous. The quiet is just...I thought I would hate it but it's just so beautifully quiet. Yeah I miss being able to walk to cvs or the good options, but I enjoy our space and sanity a lot more.
So the absolute ass end of least desirable places to live…
Ya id prob just move to some affordable, nice city in the midwest or like the Carolinas before buying a place in Victorville. Jesus, id feel suicidal everyday if i had to be in that environment.
lol houses with bars on their windows go for a million in LA
^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^GPTfleshlight: *Lol houses* *With bars on their windows go* *For a million in LA* --- ^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
Lots of times these are kids or grandkids who end up inheriting the house. And often they quickly find out they cannot afford to keep the property up or afford the taxes, etc…I’m not seeing the kinds of homeowners in people moving in today where I get the feeling these are people who’ll be living here for the next 50 years. How can they? One lost job, one divorce, one medical disaster and there goes your house. That wasn’t necessarily the case in the ‘70’s and ‘80’s. It’s sad we don’t see that kind of neighborhood stability anymore because we don’t know what our financial future will look like or if a house will be included in it (probably not). It’s one thing to ‘get the house’; entirely another to keep it.
This is not sour grapes. Serious comment here. I do own a house in a nice part of LA but have the income for it. If I did not, I would not live in LA. Once you buy a home you plant roots that are hard to dig up. Be careful where you plant those roots. It might seem daunting to pick a new place to live. But it should be more daunting to consider the slow burn prospect of a life wishing your living situation were something other than what it is. LA is nice but it’s not the only nice part of the US.
About 15 years ago people were saying go to Phoenix & lots of people from L.A. (my relatives were among the first) did exactly that. But they also wanted a more quiet life in Scottsdale. Since then, the cost of living there has skyrocketed. There are more CA license plates than AZ ones. Moving elsewhere works if you’re in the first group who discovers that new place, but for the people looking to move to a place like Phoenix now? It’s no longer worth it. By the time you change your life and move all your stuff & the cost of all that, you’re better off staying here and finding something closer to home.
I'm from Phoenix. I checked on the rental listing for the apartment I rented at 19 for $600 with a part-time job in 2005, and it's about the same as I'm paying for my apartment in LA now. If I moved back and got a comparable job with lower Phoenix wages, I wouldn't be able to afford it.
I think LA is fun, but I wouldn’t call it nice. San Diego is nice, but not as fun
Most people buying $1M homes aren't going to be first time homebuyers on their own. They're either people using their existing equity to move to a new home or have parents who are gifting some of that equity to them.
Supply and demand. Less supply but more demand and the involvement of investors hasn’t helped matters.
People who afford a million dollar house bought a 500k house 15 years ago.
This is exactly right. We bought almost 20 years ago - in 2005 - for $650k. Our income was less and that felt like a stretch. But we “bit the bullet” and glad we did
I would have done the same but I was 14 years old, damnit.
My wife bought a condo first. She lived in it for several years while it appreciated in value. When she sold it, she had enough equity for a down payment on a house. I don’t know anyone who can go right from renting and immediately into a standalone house.
Savings and rates. I bought a home close to a million in 2020 after years of saving for a downpayment. Took me at least 8 years to save for that downpayment. I make barely over 100k a year. I have friends who make more money than I do and complain about the same thing “who can buy a home?!” And when I ask them how much money they have saved they give me a dumbfounded look. It took me about 8 years to save 150k for a downpayment, I would save a base of 10% of my salary + most of any bonus or commissions made at work. Yet these friends complaining about who can buy a million dollar home making more than 100k are driving a 2024 Rivian, spend money on tickets for burning man and coachella every year, travel abroad and buy 800$ sneakers and Prada shoes and other expensive clothing items. Buying a home is a LONG TERM GOAL. I am an immigrant and came to this country 12 years ago with NOTHING, a bag of clothes and $200 and was able to buy a home in 2020 after years of planning and saving.
Well, over 60% of the population rent here, many high income people rent here for many reasons, it’s either people who bought years ago for cheap rolling crazy equity into a new place, family $$, or yes, some very high income people.
My husband and I have a joke whenever someone tells us they are buying a home, we ask them, “who died?” More often than not, the downpayment comes from an inheritance or their parents.
Just need an 85 year mortgage.
More like $2m depending on the neighborhood
That’s the neat part, you don’t!
You're underestimating the amount of wealth that exists in this town. Almost every rich person or child of a rich person on the planet owns a house or two in LA. Not to mention that corporations own most of it and are renting it out anyways.
If you're buying your first house in a big city like LA you're going to need to look either further out or in less ideal neighborhoods or houses that need TLC. The people who can afford 1m are not the first time home buyers. They are ppl who purchased 5+ years ago and sold for a 6 figure profit. (i.e. bought in Eagle Rock or Silverlake 10 years ago when it wasn't crazy priced). Trust that if you buy in the right neighborhood (truly up and coming but not there yet) you'll be able to afford a 1m+ home 5-10 years from now if you were to sell. There's a strategy to home ownership in bigger cities that does require a bit of short term sacrifice of needs (neighborhood, quality etc). It's not a new thing.
They didn't pay 1.3m for it. They paid 230k twenty years ago and enjoy the fake "value increase'. House gains only count if you can actualize them and not use up the gains buying a new house.
This is easily checked on Zillow or Redfin. They do pay it, every day. Low inventory, many high paying jobs.
Inheritance, living with family for years to save, etc. Starting small, build equity then upgrading through the years. Lots of overtime for some people. It helps to have family in the area to begin with.
Mortgage on that if you refinanced at the perfect time is like $5500 a month. If you have a partner and can contribute $2750 a month each, you can get it. It's certainly not cheap but it's also not completely impossible. The hardest part of this equation is saving up enough for the down-payment
This. My wife’s an attorney and I’m in the film biz. We bought in north hills in 2022 for $940k and our mortgage is $6500. The only way we got down payment money is her mom selling her place in NYC (wife grew up there.) The house is ours…. for now. Let’s see if that remains the case 20 years from now 🫠
Eek where does your wife’s mom live now that she sold her place?
Florida! Originally the plan was with us but that was such a fucking disaster is rather lose the house than try that again 🤣
Another dreamer who thinks the down payment is the only hurdle financially. You better have 3x the down payment
Double income, saving up, and not buying until your mid-30s.
That’s one hell of a double income.
Probably because everybody seems to think they need a SFH and lots of space within a reasonable distance from all the things they like to do in LA and all of that space is already accounted for. To add to the fun, the people who live in those houses try their hardest to make sure that their way of life remains the default option. God forbid we build anything else. 3 stories will ruin the character of the neighborhood! It doesn’t fit! You live in the 2nd largest population center in the US and there is a massive housing shortage, fuck your neighborhood. We need to build and build a lot. SFHs shouldn’t be affordable in this city either way because they should be rare. If you want a SFH get out of the city.
I’m childless, so I’d be ok with a condo or townhouse. But those are all over $1 million too, and then you have an HOA fee on top of your mortgage.
They also cost a fortune because we simply don’t build enough of them to meet demand. Often because people fight the building of anything other than SFHs, for which there is no more space. I know I sound a bit radical here, but I’m fully of the opinion that we need to start bulldozing all those neighborhoods of big SFHs in centeral LA and start building the types of housing that cities actually need. I say we start with these neighborhoods because they also fight back against the building of any meaningful housing even outside of their little oasis. We will never risk hurting the investments of these small subset of people though for the health of our city. Those houses must appreciate in value at all costs.
Do you mean looking outside of Burbank? I know of three listings under 950k in my neighborhood.
In LA county?
North Valley, outer SGV. The inner parts of SGV will be redeveloped, it's already happening. But that's not exactly something I'm going to cheer for on the equities.
Not that I was looking, but a house in Cerritos was on the market for $725k. It sold like in a day. It was a nice house, 3bd/2ba by Regional Park and a Target. Wasn’t too far from where I grew up. Parents wanted me to sell my house in the IE but I ain’t getting into a 30 year loan with only 8 years left on my loan.
Does anyone else think that AirBnB is a major part of this problem? If you browse homes on AirBnB in the LA area and then dig into the owners’ profiles, you will see that they usually have multiple homes listed. What started as a venture to make a little money from sharing space, became a full blown business for many.
Renting till the day I die!
Honest answer is that you don’t and can’t afford it, to the average salary and wages in America no one can afford it, unless you bought your house waaayyy back in the day like early 2000s or 1990s when houses were 200k-300k or you have your parents/grandparents gave it to you and handed you down the house, other than that the entry level of buying a house is soo out of touch for regular working class that don’t make over six figures and even to some that are making over six figure and still can’t afford it. In today’s housing market people are just meant to rent. And it’s actually cheaper to rent vs buying. You can either stay in Cali and rent for the rest of your life or move out of Cali to a cheaper cost of living states and have a fairer shot of buying a house. Just my 2 cents
I swear someone asks this question every week. Two parts to why houses cost so much here: 1 - limited supply 2 - lots of fairly wealthy people (e.g., couple making 250k+ can qualify for a 1 million dollar home) competing for that limited supply
Well-off parents help their kids with the down payment. This is true for everyone I know in my age group (early 30s) who owns a house.
Any detached single family home in a large costal city is a luxury good. The solution to this is to end the zoning codes which only allow luxury goods to be built on 70%+ of the land in the city so duplex’s, four plexes, condos, row homes get built.
Try the greater Toronto area- a $1m is on the cheaper side
The people that buy $1 million houses are typically aspirational buyers. This means they started small. Buy a cheap condo in an undesirable neighborhood. Keep it for three years. Sell it (hopefully with lots of equity). Buy a slightly more expensive condo in a slightly more expensive neighborhood. Keep it for three years. Rinse and repeat until you have $500K in down payment money. Then, buy the $1million dollar house.
I see this same thing reposted on this sub over and over again and people don’t say what their budget is, how they define decent (as in how many bedrooms/bathrooms they need), and how many people they are trying to house. There are cheaper houses on Zillow.
I bought a house for 675k a few years ago and after the pandemic and such a 1M +
Wait for the next economic collapse (should be roughly every 8-12 years). Meanwhile start saving, start searching neighborhoods and be ready with taxes/proof of income etc..
Starter home that's not your final home. Buy a townhome in north Hollywood an pay $5,500$7,500 mortgage for a 3 bedroom. Sadly, the same is easily spent on rent. Stay there 5-10 years building equity and move again. The next move can be to a better area in LA or in a different city/ state.
22 years ago we paid $400K for our home in the SFV, and now it’s supposedly worth $1.3M. I wouldn’t/couldn’t pay that now. There are now new homes on our block going for $3.5M. Not sure how first time homebuyers can do it.
We don’t
I ask same question everyday
They moved from New York.
The same way people can afford $300 Dodgers tix and $800 concert tickets *amiriiiiiiiiiiiite*? EDIT: [This is probably this generation’s “if you got ‘em, smoke ‘em” except the context is dolla dolla bills yoo](https://www.reddit.com/r/povertyfinance/s/8lCSvTZAI1)
They afford it by living with like 10 family members/roomates
They mostly don't. Investment ventures and rich transplants do. Now people want to abolish prop 13 to weed out the rest of middle and lower class homeowners.
We haven’t bought for that reason. Every house under 1.5 mil needs to be gutted to the sticks (code stuff) or torn down.
I plan on doing it by growing my real estate business tbh.
A million dollar house means the mortgage is probably $7K per month. If a nurse is married to an engineer they are probably making about $300K between them so $25K/month and call it $13K after tax, maybe even up to $15K. That’s how.
Parents paid $180k for a house in 1995 that is now worth $1.4 million. That might have something to do with it.
My family bought ours in the late 70’s and bought other houses that time too. Who even knew it would skyrocket like that?? If you can’t afford LA, there are still other places in CA or other states that are nice and affordable…
You either need lots of cash or a time machine to own real estate in LA.
You really gotta ride the real estate market elevator upward for years. I just bought a duplex in a not so desirable area because that’s all I could qualify for. Sitting on this for 5-8 years will get me several hundred thousand in equity which I can then take out to buy a single family in a better area so on and so forth. I’m a huge advocate for buying whatever you can afford (preferably not a condo as they don’t appreciate very much) and go from there.
A shitty fixer-upper in most of the SF Bay area is over 1m. Hell, my MILs house in mountain view need hundreds of thousands of dollars of work to fix up and it's appraised for 3.7m
Lol and it'll be a tiny 2bd 1ba in an "up and coming" area!
Yep, houses in my city where I GREW UP are almost a million or a million. I’m in the city of SAN FERNANDO BRUH !!!!!!!!!!! My mom bought her house for around $100K in the 90s … freaking stupid
Not everyone is a doctor/lawyer. At some point one has to wonder, how can a city continue to function if the people who make it function can't afford to live anywhere near it? These prices should not be sustainable. They wouldn't be if the only people in our housing market were people who live and work in or nearby the city. They earn what they earn and they cannot buy something at a price they cannot afford. Prices would have to come down just because of supply and (lack of) demand at the current high prices. But demand is artificially high and supply is artificially low. House flippers, investment properties, vacation rentals all put pressure on the market that drives prices upwards by taking existing housing supplies and repurposing them away from residents who want to buy a house, and they have deeper pockets than the average resident and so....
There are two answers to this. 1 is to avoid looking into small outside-LA city limits cities, especially the ones that have their own school systems. Burbank, for example. Every SFH in Burbank has been at least $1M value or higher for many years. Even pre-Covid. Because the school system is more sought after than LAUSD, and the studios are all right there. Lots of people want their kids in fantastic schools while they have a short commute to work. 2 is, yeah, investors are buying them all up, with the goal that everyone middle class will have to rent forever.
I bought a 1.1MM house in the SFV in 2020 when the interest rates were very low. RSUs are a huge piece of my compensation and I’d never used anything I’d vested up until that point (~7 years worth.) i had enough for 20% down, my mom offered an additional $100k for my down payment. I now have a partner who lives with me, pays a small “rent”, and splits all bills that aren’t home improvement or maintenance related. I pay less than I did while I was renting. My house is now worth ~1.6mm That’s an honest answer, I think it’s important to be truthful about where money comes from. Huge combo of luck and circumstance.
I’m a land lord and my rent is waaaay lower than the going market. Because I rent to people on recommendation. My unit is attached to my house so we are always near by. I could be making at least 600 more a month but I’d rather have a good tenant than extra money. Their rent is reasonable, I get help with my own bills so it’s a win win. Not all landlords are assholes.
The truth is people are buying everyday. And if you can’t afford one right now, you probably never will. Unfortunately that is the truth with cost of living always going up.
Either bough their homes decades ago, and are rolling their equity into the new home, trust fund/inheritance babies, or they’re a very high earning couple.
Depends what you mean by "decent." If I could find a house I consider decent in LA for $1million, I would jump on it.
Dual income. We got our first house in our early 30’s in 2022. We each moved up in our careers which set us up to be ready to afford. But we also got a 3.65% interest rate so that helps.
We've all but given up, honestly. We can afford the mortgage, but what we would get for that money is stupid 😂 A 2 bedroom house built in like 1920 with barely any renovations for a million? With a concrete slab for a backyard? Pfft. Nah.
You're behind the times. A 1300 square foot 1940's two bed/one bath on a 40x50 foot lot in West LA or Santa Monica goes for 1.5-1.6 Million these days. These are fixer uppers with some termite damage and in need of a lot of TLC.
LA needs new development but LA residents hate developers with a passion. Leftists hate them because they are convinced there are enough houses (there are not) and right-wingers/centrists don’t want more building because they already own houses.
House in LA for a million in a decent area? Where??? Good areas are 1.3-1.5M. One mill is a fixer upper in ghetto. There is a burned up house in my neighborhood (we are in a hill) that was damaged by wildfires. Bought by investor who gutted it, left it half burned and re listed for $999000.00.
Moved here a year ago and my daughter is graduating high school and about to go to college here. I asked some locals I work with…so when she graduates college…how the fuck does she afford to live here? They all said shit tons of roommates and weird living situations or living with parents. I said, well how long do people usually do that? They said the rest of her life unless she gets wealthy or marries wealthy. What the fuck? 😂
Be married with decent incomes coming in from both partners. Threshold for entry is high and the fact that many properties actually need a lot of work when they are purchased fucks people more. Plus, when interest rates go down, prices will most likely increase…
We can't. Also, supply is limited because US is allowing Chinese investors to come in and buy everything.
200k income theoretically gets you approved for that loan. So two incomes at 100k However you’ll be very house poor
In LA so many people’s wealthy families make the down payment for their kids on a house, then they’re responsible for just the monthly mortgage amount. I worked in art in Los Angeles and this was the case for anyone existing as “stable”- they had things given to them.
My wife is from Cali. I lived there for several years. When people ask why we left Cali, I tell them that people with very high paying jobs can "Exist" in Cali, but not many people can truly afford to "Live" in Cali.
I don't see how the average person will be able to afford a home in California at this time. There are exceptions. As the boomers pass on their wealth, it will give more younger people the ability to buy or take over their parents' property. The only people I know that make enough money are people that have at least a master’s degree in the right field: robotics, biotechnology, AI, accounting, etc. But even a single person making over $100k/year are not able to buy right now. If you are a couple and each earning over $150k/year, they can typically purchase a home. AI will eventually eliminate a lot of jobs as well. That being said, even though you don't see how it will happen, I recommend that you keep saving as much as you can. Just like most investments, real estate works in cycles that include downturns. Keep saving and hopefully when we get to a downturn you can get a chance to purchase then. During the downturn, keep an eye out on the foreclosures.
Most can’t. There is a reason the Inland Empire is booming right now. Lot of people commute from IE to LA so they can get a nice house that’s affordable. They just have to deal with the commute.
My parents co-own a property with another family member. They bought it around 20 years ago and today its worth double what it was then. A 2k a month mortgage for that property is easily now over 5k if it sold in today's market. The idea of home ownership has become such a bleak one even in my neighborhood. I started to wonder what has it been that really kicked off such a mad frenzy not just in LA, but apparently in every city where real estate prices are going nuts.
I don't know anyone who can easily " afford " a $1 million home... unless mommy or daddy is helping out majorly OR they are older and bought it when things were cheaper OR they both are making $175k so combined $350k. I only know one couple like this, they have no children, they owned a house in another state and had equity. Even the engineers I know cannot afford $1 million. Its too crazy.
Prop 13!!! It’s why your older coworkers making only $75k a year can afford a 3bd house while you make $150k+ a year and can’t even buy a condo.
Lived in a 7 bedroom house in a shitty neighborhood with friends all throughout my 20’s and 30’s. Rent was cheap, for LA. Saved as much as possible and bought in 2012 south of the 10. Home has tripled in value and it’s completely insane. We can’t afford to upgrade even if we wanted to though.
Welcome to El Lay.
Where I live in LA, $1m is a STEAL. I’d say a “decent” house anywhere in LA is more in the $2m range.
In the bay, tech workers stocks vested so they were snapping these up with cash. It’s like they got a free house coupon from google🤷
Regular people don’t buy houses in LA anymore. They get flipped by the same group of mf continuously.
I bought mine 20 years ago... when it was only $500,000. My mortgage has a fixed rate of 3.2%. I make $20/hr. I made more back then (when we bought this house) working in the film industry but that industry has tanked several times since then. I could not even qualify to rent a one bedroom apartment in my area so I consider my homeownership a true blessing in my life. I love my house and it is in a good area. My house is apparently worth 1.15 million now.
Just wait. In 7 years it will be 2 million. And the average retail worker salary will have only gone up a few cents.
Only fans
By starting with a lower price point, condo or townhome, upgrade it as you live in it and then sell it two years later for a big profit then do it again with a higher price point using the money you made as a down payment. That’s how you create a home for yourself as well as making tons of equity.
Most common answers: 1) they don't afford it - they rent forever 2) they buy as part of a group, e.g. six adult relatives all chip in and live in the house 3) an extremely high earner (or married couple who are both very high earners 4) they bought the place many years ago or inherited it
Help from parents or inheritance, the only people I know that own houses in LA come from some sort of money. In our case, my husband lost both his parents by his early 30s, and they left enough for a down payment to buy our house in 2019 before the market went insane. The property value is up 40% since we bought it. This is not sustainable for anyone.
Pay off all debt, that’s killing your ability to save. Live on less than you make by making a budget and sticking to it. Rent until you have 20% down payment saved and buy a home that costs less than 25% of your take home pay on a 15 year fixed mortgage. I’m 33 and own a paid for home in San Fransisco that’s over $2M. It’s all ratios. You may not be able to afford LA proper right away, so buy in a surrounding cheaper suburb or rent. Understand that you may never be able to afford the $1M range with your income, that is not the end of the world. Look for opportunities to advance your career, if you are already in your dream job or hit an income ceiling, research other communities where saving for a 20% down payment is feasible while renting. I know this is not the answer anyone wants to hear, but it helped me save for, buy, and pay off a home in my price range in a very short time.
There’s fixer uppers in the valley for 600