I'm truly amazed at housing prices - even rental - in the west side of LA - or any part of Southern California. If you are a first-time home buyer, it's mind boggling. What should you do if you are just starting out?
My suggestion - since the housing market has shown (for the past 65+ years) that it will continue to rise overall, buy something that you can afford, now! If you bought a home in 1990, it has probably doubled or more, in value. I bought a house in 1974 for $35,000, in Fountain Valley. What do you think it is worth today? Yes, it went up in value! I bought another house in 1992 in Cypress. Do you think it stayed the same price? NO! We bought it for about $290K, then. You can't even buy a shack for that price! I know - I just sold a shack for $400K. The house in Cypress is a 5 bedroom/3bath home. It is on a 6000 sf lot.
BUT if you bought a house 15 years ago in West Los Angeles/Mar Vista for let's say $700K, it is probably worth more than $2mil now. Wow!
So, who can afford these homes? Well, maybe you can - eventually. Here's a plan:
- Buy a condo, now, for $385K. Perhaps it is small, 3/2, in Norwalk. With mortgage rates still low, your payment could be $1832 with only $13,000 down. How much are you paying in rent these days? Remember, the down payment is really your savings account - which will certainly be worth more in the future than you can gain at the bank! If you put $50K down (from your 401K), your payments would be $1650/month. Yes, there is an HOA payment, too, but it's for insurance and grounds upkeep! You'd have to spend some money on those things for a house.
- In 4 to 5 years, let's say the condo is now worth $550K. You have paid it down only $27K, but appreciation is the name of the game and your home has gone up in value $165K plus the $27K. That's $192K! So put $150K of that down on another house, keep the condo for a rental, and you're on your way up! at 20% down, you can buy another home for $750K! Moving up!
- Yes you can! It may not even take 4 to 5 years!
- The housing market moves in cycles - there are down years, but as we have just seen, the market goes back up. Now, homes are worth a lot more than they were when the market was down. You just have to decide to DO IT!
Need a one to one with me to go over this in your situation? Give me a call! Connie, at 714-553-9146!