It’s been almost a year since we sold our first home, and I can’t believe we are back on the hunt for another. Yes, you read that right, we are a couple of crazies looking for a home during a time where homes all over the U.S. are being sold for more than 30 percent of what they would have been sold for a year ago. I’m here to tell you it’s a seller’s market indeed, and when you see some of the homes we’ve been looking at buying and the prices they’re going for, you’ll absolutely be gasping for air (I’m still trying to catch my breath throughout this process).
I should start by reminding you all that we live in California, and are looking for homes in Los Angeles county (to be closer to all of our family members). With a 7-month-old, it gets a little tough driving back and forth to grandma and grandpa’s from Orange County. We are literally turning away free babysitting because we don’t want to deal with the commute to drop off our little guy. Nonetheless, the price to live in Los Angeles was nuts to begin with, now throw in the fact that banks are offering extremely low interest rates, making demand well over supply, driving up the cost of each home, and creating a seller’s market. Thus, you’ve got the perfect recipe for beyond-expensive real estate. With all of this in mind, my husband and I thought it would be best to do what we did the first time we purchased a home – look for the worst house on the best block and work on making it our dream home. We decided on a $625k budget for a fixer, and then told our realtor to “find us the worst homes Los Angeles has to offer,” and boy did he follow through with our request…
THE HOUSE WITH THE TREE-FILLED VIEW
The first place we visited was a 1,047 sq ft two-bed one-bath house up in the Pasadena hills, located right next to the Rose Bowl. I was so excited when our realtor sent over the images for this one. It looked like something right out of a fairytale, tucked away behind flowers, foliage, and trees. The sellers were listing it for $624,000 – this was a good sign! I could hardly wait to get up there to see the house. I immediately called my dad (he does contracting work) and my mom (she is good for getting good energy and vibes from a space) to come along and view it.
When we arrived, I got out, strapped Jack (our 7-month old) into his carrier, and wore him as we all made our way up the driveway. We spotted the realtor at the front door and he waved for us to come inside. I was the first one to make my way into the house, only to be met with a really bad smell, and the following words from the realtor “So, the owner died right over there in the house.” I looked at my mom, and she reached for Jack and said “we’ll wait in the car, Jack and I don’t want to stay to find out how he passed away.” I gave Jack to my mom and decided to look around.
Every time I convinced myself we could make this home work, I ran into something that suggested otherwise. We discovered severe termite damage inside and outside of the house. There were foundational problems, like the floor being unlevel, there wasn’t much room for any additions, and the ceiling was caving in and extremely low. Let’s be honest, this would be a complete gut job, but there was still a voice in my head telling me, “it’s such a steal though, and this view is to die for”… My thoughts were quickly interrupted when the realtor chimed in to say “so, the sellers want cash for the home”. It was all starting to make sense to me now – a fixer in the Pasadena hills for $624,000 – I knew it was too good to be true. The decision had been made for us, we certainly do not have $624,000 laying around to purchase this home. Fast Forward to today – this home was sold well over the asking price, a $957,000 cash offer to be exact. On to the next fixer, or so to speak…
THE START FROM SCRATCH
With the cost of homes so high in California, my husband and I have been considering other ways to obtain our next home other than purchasing an already existing structure. The idea of purchasing a lot, and building our home from scratch has always been fascinating to me. Another reason why I’ve always considered a lot of land, was for the ability to build a home with the materials, layout, and location already in cohesion.
We found a 5,891 sq ft lot in the Hollywood Hills area, being sold for $99,000. This one seemed promising, and we were thrilled about the location. We arrived at the lot via a dirt path. At about a third of the way up the dirt path, we had to access the land by foot. As the realtor, my husband, baby, and myself (me wearing our little one again) walked up the path we were already dreaming/planning of what we could do with the space. Once we arrived, we could see a huge eucalyptus plant, what appeared to be remnants of some large cement casing, and wildlife in every direction. As field mice scattered from bush to bush, hawks roamed above, and droppings from something bigger lay on the dirt path (maybe some coyotes), it reminded me of the critters from our last home, and that I should keep in mind what sorts of animals and reptiles we’d encounter on a regular basis while living in these hills. Our realtor told us we’d definitely have to be on the lookout for coyotes and snakes (this was the last thing I needed to hear – the snake-mating that took place in our last backyard was enough to send us packing). Other things we’d learned that would come with purchasing this lot were: the cost of surveyors, the threat of a fire in the hills, and coordinating an easement with the city.
To determine if the lot of land was suitable for a house, we’d have to pay anywhere between $3,000 – $5,000 (in California) for a surveyor to come out and run a report. That said, we weren’t willing to lose $3,000 – $5,000 if the results of the survey came back unfavorably, and this is something we’d want to know before purchasing the land. Building a house on this land also comes with the reality that one day there could be a fire that destroys it and all of our surroundings. California is constantly going through droughts, which leaves our terrain in constant dry and fire-prone condition (we literally have a fire season here). As appealing as living in the Hollywood Hills is, the idea of having to build a home, have it burn down, and have to start from scratch seems scary and heart-breaking. Last but not least, we’d have to coordinate with the city to get an easement (road) built to access our home. To be honest, I could barely get the city to return my phone call to confirm the street of the lot’s location. In a nutshell, we talked ourselves out of the lot.
THE HOUSE WITH THE FLORAL CURTAINS
We found a 2 bed, 2 bath 909 sq ft fixer in Long Beach going for $545,000. This home showed real promise, and our realtor said the sellers were willing to negotiate on the price. Everything was on the up and up, and then we pulled up to the home… When we first arrived, I noticed stray dogs running free, and furniture in the street, this was not our dream area. All that said, the real treat for me was waiting on the inside of the home.
When we walked in we were confronted with an odd smell, like mildew and burnt hair (it was by far the smelliest house we’d been in) and a home that I’m sure had seen better days. After viewing a few rooms, I discovered where that odor was coming from – the basement. Apparently, the previous residents were hoarding all kinds of stuff in the basement, so much so, we couldn’t get two feet beyond the door. The garage was also filled beyond entry. The realtor advised that we not lift the door… because everything would come spilling out. All of this and the owner was only willing to come down $15,000, so this house was a “no.” Nonetheless, I was never able to see my child living in this home and very quickly was able to make the determination that this one wasn’t for us. We ended the first week of our house hunt with this house, we felt a bit defeated and needed to recharge our batteries before the next batch of options.
My husband and I are looking for a 1,200 sq ft home in a good school district and neighborhood. I believe our wants are reasonable. We understand that the closer we are to certain hotspots, the more expensive a home will be. When we left California a little over three years ago, houses in the same previous neighborhoods were going for $400 – $700k (we’re talking homes considered turn-key). Now, $400,000 will get you a tent on the beach (the closest to coastal living I’ll be getting if we purchase something this year). We’ll continue the search for our next home, but if anyone knows of any fixers in a nice SoCal neighborhood, please share. Also, I’m curious to know what it’s like buying homes in other states right now, and if anyone has any crazy house hunting stories.
Ugh, this sounds awful. I wish you all the luck, Ajai!
Curious European here, if the prices of homes are so different depending on the region, are salaries following that as well? For the same job, does your salary differ as much depending on where you live? I just can’t wrap my mind around it all.
Yes – salary differs by region as well, even for the same jobs at the same company. If you live in expensive areas of California or NYC you’ll be paid more. But those cost of living increases may not actually translate to more money in your pocket. Where I live, $1 million will get you a massive lakefront mansion. For $250k you can get a medium sized house with a yard. In CA, even with the pay increase I couldn’t afford a home.
I agree. A company that has multiple locations across the US will have salary bands for each position – these salary bands are region-specific.
fun answer from a fellow LA house hunter 🙂 – salaries do tend to be higher in major cities/coastal areas, but the main difference is that banks will let you take on a WAY bigger debt-to-income ratio in major cities. like, i’m approved for ~600k in LA, but i would probably only be approved for half that in a more central state. (i guess banks are like “oh, you live in LA? i’m sure you can find a way to scrounge up 3500 bucks for your monthly payment if things go south.” whereas if you live in a rural area the bank is kinda like “oh, you need to make 3500 bucks to cover your mortgage + pmi + insurance + taxes? WHERE WILL YOU BE DOING THAT?”)
That’s not necessarily true. With so many companies converting their employees to permanently WFH, as long as you have a letter from your employer saying that you can work remotely for the state you want to buy in and your salary will stay the same, our experience (moving from CA to somewhere else with a lower COL) is that we could be approved for the same amount in both places. The difference was that we didn’t need so much buying power in our new city because homes cost much less.
Caitlin you could be such a respurce for Ajai!
I work for a national company and have moved all over the US. My employer has a base salary by position and experience, then adds a cost of living adjustment (COLA) on top of your salary based on your geographic location to account for differences in living expenses. Unfortunately, it doesn’t always work out in our favor depending on where they base the COLA in that region (as one commentor mentioned, some cities are EXPENSIVE) – it will sometimes be based on a less desirable area closer to the job vs where people actually want to live when they get there.
The question about the same job in different places is an interesting one. For some types of jobs, it’s not a sensible question, though. Neither my nor my husband’s career would be possible in the mid-sized midwestern city where we might live to be near family. Houses are cheaper there, but entire job families with good compensation are absent.
eek and I though housing market in Belgium was bad! Prices “only” went up 5% compared to last year :p
We’re in middle Tennessee and have been looking. I asked our realtor and discovered that homes are going anywhere from 10% to 100% over asking right now and there are a lot of cash offers. It’s discouraging. This week my husband and I discussed just how much home renovation we’d be willing to tackle as a 50s ranch came on the market and it technically has all the things we want and is currently livable but it’s a shell of a house and needs work that would take us several years to accomplish.
Karla I’m in Nashville and have friends looking for homes as well. It is just insane right now. We own a 1968 ranch that was a true fixer upper (but that’s what we wanted when we bought five years ago). For what it’s worth, I absolutely love our home even though we have more projects to tackle. The progress has been fun to watch as we slowly make it ours. Good luck finding a home you love (or will one day!)
We purchased a 1964 fixer six years ago in Texas and I don’t regret it for a minute. Once you get the kitchen done and paint the rest of it, you’d be shocked at how it feels much more “done.” Then you can just slowly do the other projects. We’re just now tackling our master bath. Make the public areas the focus then tackle the stuff behind the scenes later.
Hi Ajai, I live in Los Angeles and we were lucky to buy a couple months before the pandemic hit (same strategy of buying a fixer on a nice street). Since we moved in, the elderly neighbors on BOTH sides of us lost their homes to flippers using predatory methods (one was a fake reverse mortgage and the other a cash4urhome scam). In trying to help them, I have learned so much about the housing market in LA and in living in a fixer, I have been targeted by cold calls from these scammers as well. I am working with my city councilman and the city attorneys office on legislative solutions, bc they break so many rules and keep the type of fixer you are looking for from ever hitting the open market. It doesn’t really help you now, but as people have these conversations lamenting cost of housing and cash buyers, etc…I hope we can become more aware that this stuff isn’t just supply and demand. There are a lot of bad actors in the market and very little oversight making it hard for families and regular people to get basic housing they need to participate in the local… Read more »
that is horrifying! what is wrong with people. uggggg. i’m glad you’re taking the time to make people aware.
Good on you, Alexis!!
I think I get calls and postcards from these people all the time. My siblings and I inherited our mom’s home in a low cost of living area and rent it out. I manage it, so my my name and address are on the property taxes, and I’m constantly getting calls asking if we are interested in selling. I’ve wondered who does this. From your experience, it sounds quite predatory. I wish there were some sort of protections in place, but I don’t think most city governments are equipped to take it on.
We’re having similar problems where I live in Tucson, AZ. Developers and flippers buying houses that become more expensive than they are worth in the neighborhood. It’s a bummer market out there, for sure, and not to mention that these companies strip houses of any historic/unique characteristics they had and make everything a gray and white box.
I think blogs and TV shows that highlight flipping houses is part of the problem. “Look at this dump and see what we transformed it into!” Housing should be more then a business decision or a fun place to decorate. Of course it can be a little of that too!
Yeah, we’re in a desirable area (“Silicon Beach” ha!), and we get cold calls all the damn time. I ignore them. But the scammers are scum and deserve all the bad things I can wish for them. Flippers are nearly as bad because they “improve” the house with superficial changes, for the most part, that aren’t always done with quality products in a quality manor. Plus, it’s environmentally irresponsible to just junk all the new work if your taste is different (like I HATE grey which is ubiquitous these days).
I feel for you, hunting to buy is so stressful because it feels like such a permanent decision with the potential for a permanent mistake. When I was doing it, I comforted myself with the story of my uncle, who bought his house by mistake. I may well have told this story here before, but here it is again and I hope it reassures you as much as it did me: My aunt and uncle were living in what had been my grandmother’s house, which they had bought from her in a private sale. But they had a toddler and my aunt was 7 months pregnant so they wanted more room. At that time in Ireland, most houses were being bought and sold by auction but as they had bought their current house in a private sale, they had no experience at auctions. So they decided my uncle would go along to a few and practice by bidding well below the asking price, with a view to actually buying after the baby was born. This was all going fine until one day he bid low and there were no higher bidders. He watched in horror as the auctioneer called for… Read more »
i love this story! what a nice ending to a funny “mistake”. 🙂
I love to follow this young couple, who accidentally purchased a (derelict) home through auction and are in the process of restoring it. https://www.instagram.com/whathavewedunoon/
What a great story! So glad it turned out well.
Beautiful story! This reminds me of the novel The Open Gate by Kate Seredy– it’s out of print but one of my favorites! Basically a city slicker “starts the bidding” in an auction for an old farm because he’s waiting for something that will come up in the auction later on. He accidentally way overbids and the family moves to the farm, and of course it changes their lives.
Our own house story isn’t QUITE so dramatic, but we bought a gigantic old inn in a country we’d only visited on vacation, based only on online photos and the opinions of strangers who looked at the house for us. We’ve lived here two years so far and love it!
Oh, this is a heart-breaking situation. To answer Katie – NO, salaries are not keeping up with housing prices. I live in San Diego, and I am proud that our minimum wage is $14.00/hour, but that’s not enough when our median home price is $825k. A big problem in San Diego is low inventory, which when added to the situation of low interest rates (great!) and all-cash/over-asking buyers swooping in (not great) – well, it just makes for a really tough buyer’s market. It’s a real difficult situation for first time home buyers. And even my family (home owners) – I wouldn’t even consider moving right now because I’d be so worried we wouldn’t find anything (and we’d be selling high to buy high?). When we bought our house, I looked at 12 houses (i.e., had my pick), and our purchase was not cut-throat. I couldn’t imagine spending all that money to “take what I can get”. All this makes me worried for the future of our city – how can families and working people live here? And what’s a neighborhood without those two kinds of residents? And the real crazy part is I don’t know if prices will go… Read more »
Real estate prices always go up and then down and then up again, aproximately real estate cycles last, at least in Spain, for nine yaers. Same as it happens in the Stock Exchange market, at the last third of the cycle the trend tends to accelerate. As per what people are saying here, the uptrend in CA , and all US real estate, could be very well aproaching the top, but one thing that is different this time is that presumably interest rates will not go any higher in many years because there is a big bubble of liquidity, but the black swan can always happen and then all the interest rates policies wiould not be enough to stop the carnage in the real estate market. Now it is not the best time to buy a house, that is very clear. What is difficult to know is whether the next year will be even worse with higher prices much closero to the top of the up cycle or the prices will start going down. If I were 30 years old I would wait. Life is, hopefully, very long, and people in their 30´s will see for sure real estate markets… Read more »
The market is pretty crazy in Denver, CO as well. We sold our house in Denver a year ago for $40K above asking, 8 offers, in one day. It was not a fixer upper, or a crazy awesome beautiful house. Just a normal, updated, 2-story, 4 bedroom family home built in 1975. We made $250,000 in profit. It was unbelievable. We were on the right side of the market. I felt so bad for all those buyers and the long journey they were on. It has only gotten worse in the past year. We live in a town in Colorado about an hour south of Denver now. The market isn’t quite as crazy here, but I don’t think that will last. Everyone keeps saying the bubble will burst here. I disagree. If California is any indication, Colorado home values will keep going up for a long time to come.
Good luck with finding a home! I don’t envy what your going through, but certainly wish you the best.
Fellow Coloradan here. . . and I agree with you, this market isn’t going anywhere. I’m north of Denver in the Longmont area and we have been in our home for 3 years. We recently talked to a realtor because we are considering moving into the foothills and our house (just a plain old 90’s track home) has increased by 100K in value in the 3 years we’ve owned it. With so many people moving into the state (from CA!), our housing market is secure and just moving up.
Also a fellow Coloradan …. moved here about 15 years ago after living in three other states and decided to stay, as so many do! But while it’s popular to blame our growth on Californians, it’s urban legend – we have move people moving here from Texas and other states than California (I came from Florida, for example). Also, most people moving to the Denver area are actually coming from other cities in Colorado (I moved first to Colorado Springs, as an example). Not sure why people love to blame California but it was similar when I lived in Florida and Utah as well.
Another Coloradan! We moved to Denver from the Midwest in 2016 and bought a very modest home just south of the city….cut to five years later and it has increased close to $300K in value. It’s shocking. We are outgrowing the house rapidly but we are hesitant to sell because we’d have to turn around and buy in this market, which seems like pure insanity. Over the last five years, we’ve heard a few naysayers say “The bubble will burst any day” and I’m no fortune teller but … it ain’t bursting. The Front Range is growing by 100,000 people every year, and there are not enough homes to go around. Fun stats for fellow Coloradans from our realtor: a healthy Denver market has 12,000 homes for sale at any given time. During the ’08 housing crisis, there were 25K homes for sale. When we bought in 2016, there were 3,000 homes on the market. Now, there are less than 1,000. Holy. Cannoli.
About-to-be Coloradan here! (Or, maybe technically already one, since we bought early). I’ve been planning a move from Wisconsin to Colorado Springs for the past few years, and I saw the way the market was moving, so we bought a house early last year, before we were prepared to move, and have been renting it out until we make our way out there in October. A year ago, it was a fairly normal purchase process–competitive, but not insane. In wrapping up our life here, we sold an apartment building, so we needed to turn that money into another property to defer capital gains. We opted to purchase another home in CO Springs to make management easier, and the house hunt was a totally different story this year! We were in bidding wars on fixer uppers that ended with cash offers 200k over asking (not ours, sadly). We did end up landing a fairly good deal on a home, only 30k over asking. But I agree that I don’t see this market falling anytime soon, and as Denver continues to expand, Colorado Springs will only grow exponentially faster. The market in Madison is crazy as well; we listed our 700 sq… Read more »
The Denver market is absolutely insane right now. We purchased our first house, a sweet (but modest – at 2200 square feet – including finished basement) 1949 bungalow a ten minute drive from downtown in March of 2020 for just under $600k (at asking price), right as Covid hit. I was convinced we’d bought at the very top of the market and that we’d be underwater as the stock market was tanking. The house across the street from us (less updated but same lot size and square footage) just sold for $850k ($150k over asking) last month – we couldn’t afford to buy in this neighbourhood anymore as first-time buyers. It’s absolutely insane here – we seem to be inching closer to California home prices every day. It’s such a tough time to be house-hunting, and I’m so grateful we got our house when we did.
Just started reading and wanted to point this out so you can correct (sorry, I don’t usually grammar police, but this changes the meaning of the sentence).
First paragraph: “being sold for more than 30 percent of what they would have been sold for a year ago.”
I think you meant: “being sold for more than 30 percent OVER what they would have been sold for a year ago. ”
Okay, just finished reading. I CANNOT BELIEVE the prices that those fixers are going for! That is legit insane. I’m in the suburbs of Detroit (Michigan). We just bought a slightly over 2000 sq ft 1980s house with almost an acre in a HIGHLY desirable area with amazing schools for less than these houses in LA are asking for. And I considered what we paid a lot (but then again, I’m not rich, so maybe to rich peeps its not a lot). It was not a “fixer”, but needed cosmetic updates since it hadn’t been updated by the previous old-lady owner. But she had really maintained it well.
Not to knicenock LA, but with droughts, fires, earthquakes, I just do not understand the prices. How can any non-rich person afford to own a home there? Like, are salaries there just that much higher than the rest of the country?
Also, the backyard on that first one really was gorgeous!
omg. what is “knicenock”? face-palm emoji. that was supposed to say “knock”.
Lol I thought I’d just learned a hip new term for a backhanded compliment: a niceknock! 🤣🤣🤣
ha! that would be a great new hip term! so fetch!
We left LA two years ago to move to Detroit (GPP) because we saw the writing on the wall and knew we would never be able to buy a house and have two kids in daycare (it was 24k to have one kid in full time daycare). Now when we were house hunting we couldn’t find a dump for less than 1.2 million in a one hour radius from UCLA (where I worked). I make the same salary in Detroit (at WSU) but the academic job market is odd even w COLA. We miss Los Feliz our old neighborhood but our quality of life has improved so much. Kids change everything!
1 POINT 2 MILLION?!?!?!?! What the actual F. that’s insane. Hi over there in GPP! also, 24 K?! good grief. well, welcome to the great lake state! no droughts! and yes, kids 10000000% change everything. i always dreamed of living in LA and would always tell people i was moving there (pre-kids california dreaming), but now being married with kids, i cannot imagine it. and i certainly couldn’t afford it.
i think most people in LA don’t understand the prices. 🙁 and the salaries are not that much higher. as an LA resident, home ownership feels like a very distant dream. its depressing.
yeah. i can’t imagine ever spending that much. it would be a very distant dream for me at those prices. pre- marriage and kids, in my 20s, i completely wanted to move to LA and become a famous actress (even though i have stage fright and can’t act and don’t want lots of people looking at me – so, i guess that wouldn’t have made much sense) and at that time totally pictured myself living in an apt, living what i imagined was a total LA life. but definitely not now. now i can’t imagine no house and yard. that stinks that it’s so hard to be able to buy there. 🙁 but probably because everyone in the world would want to buy there if it was affordable.
I wouldn’t. Sorrynotsorry. #livinglikesardines
Hey, I’m just fine here in Iowa, you’d have to drag me out of my home state kicking and screaming! 😉
I help people get their houses ready to sell and thr market is bonkers here too. Prices are not in line with value and I think desperate buyers are over paying. My heart was sad looking at the condition of places you toured and the crazy asking prices. Fingers crossed that the right situation finds you. I’m guessing it will come through an unexpected route rather than the way you’ve been trying
Ugh I hope it works out smoothly for y’all, this is all so stressful! I am here for the adorable Jack in that stylish carrier!! Is that a Sakura bloom I spy? If so, which one! Would love details, if you’d like to share!
I moved to a little town in NW Montana right as covid was hitting (my husband had gotten a job there at the end of 2019). We did a little house hunting before we moved, made a couple conservative offers and missed out on a couple houses that were already creeping up in price because we weren’t here yet and didn’t want to commit without knowingwhat everything was like. And then covid hit and the masses/money flooded in and the inventory went to zero and the houses prices almost *doubled*. In like 9 months. Now we’re planning to build because nothing has enough bedrooms for us and everything is insanely expensive. We got super lucky we bought a lot as a backup plan pre-covid because they’re all 2-3x as expensive as before.
It’s not so-cal crazy but it feels extra absurd because we watched it happen so fast.
Fellow Montanan here, chiming in to say: YEP. Houses in Missoula, where we live, are going for 100-400K over asking, with dozens of offers. I’m grateful that we have a home, but dismayed because salaries have not risen anywhere near what they’d need to be for those prices.
It’s rough, we’re up in Whitefish, which was already trending upward and now it’s just nuts. No inventory and folks are losing rentals right and left because the landlords are cashing in and then literally having to move their families out of town because there’s not even anything to rent.
Ugh! Yes, we’ve been watching Whitefish–the prices are at least twice what they were a year ago. I worry that we’re trending toward Bozeman territory–and those prices have never come down. But good for you for purchasing a lot and building–that’s such gorgeous country!
We’re currently renovating a house in Missoula, with plans to move there permanently next spring. Some days I feel like part of the “California migration problem”, but we’re fleeing the SF Bay Area for many of the same reasons that people leave LA, and we decided to go where we already had family connections and half of a house (my husband grew up in Missoula and inherited his childhood home when his mother passed). I’m grateful that we did a family buyout rather than trying to find a house in this crazy market… my architect thinks that my house (if left unrenovated!) has gone up $100k in value just in the last 6 months. Not that we plan to ever sell this house, because the location is irreplaceable.
Welcome to Missoula!! We have lots of friends who came from CA in the past two years; this is an amazing city. Happy to share resources if you need any. We are in the University district.
Oh that’s pretty close to my future house (Lower Rattlesnake) — maybe I’ll run into you around town at some point, haha! I am East Asian and will certainly stand out in Missoula.
The market is beyond disheartening, I feel your pain! I live in a tiny town in the Midwest. It’s a unique place which attracts people from all over but jobs are low paying and life is easy because it’s always been affordable to live here. The average cost of a house pre-covid was about 129k and homes asking more than 225k were very difficult to sell. Homes 300+ would sit for years before finding a buyer. Now the average is like 160 but a nice home which used to be 175 is now about 250k. I own a house but started looking for something else in 2019. We don’t see a lot of houses on the market at once and options are limited because it’s a rural town of 10,000. So I knew I’d need to be patient. Then suddenly by summer 2020 people from the coast and from Texas started moving here in droves. Unfortunately this is very bad for people who live locally because to them, prices are so low they don’t care what the asking price is. They just pay whatever the list is. Then, in 2020 for the first time our town saw homes going for… Read more »
OMGosh, love the pic of your little guy! Made my day!!! As for the insane home prices, we just found out that investment companies are buying up residential properties and paying way above asking. I wouldn’t be surprised if most of the cash buyers were companies instead of individuals. Who can compete with that?
I’m so hoping that your story has a happy ending soon!!! The prices in Florida are nuts just like you are talking about. One thing happening at our beach is that people are moving from NY, California and other places where they can come here, by a million dollar home, tear it down and build new! I’m not judging at all, just really can’t believe it!! These are perfectly beautiful homes that could be renovated! Lots of gentrification going on along with builders buying everything up. Our other problem is people are building on every inch of their lot which I find sad. And finding excuses to cut down old beautiful oaks. I have my own terrible stories of real estate from the 2008 crash and I am really here to say that we are doing great now!! We ended up downsizing to a very tiny cottage, as is, but at the beach, and paid very little. This allowed me to be a SAHM and then work part time from home. We just bought another house, 80’s post modern, at the beach in our ideal neighborhood right before the craziness that happened and selling our other house now over asking… Read more »
I’m in Florida noticing all the same things. I’m north of Palm Beach (15 miles) and wow, the population feels as if it has doubled in size. The sleepy little town I loved is gone. The speculation here is that those who relocated from the north will tire of Florida (heat, lack of seasons, hurricanes) and move back, but I’m not banking on it. It feels so unfair to new buyers, young families and single professionals who just want to make a life. Even rents have almost doubled in our area. Generational wealth feels more real than ever, as we watch for the market to reset, we might look for a condo to retire to in so our daughter can eventually move into our home. She’s only 8 but who knows what the future holds for the next generation? What seemed so accessible for my parents in the seventies, choosing and buying a home, feels like a mountain to climb. We lucked out and bought during the housing crash post 2009. Luck and timing seem to be the only tools for buying a home anywhere these days! 😩
I’m in Santa Fe, NM where prices are also skyrocketing. We bought a small starter home in 2019. Since then, the median home price has risen from $398,000 to $600,000. We’re simultaneously hoping for the bubble to burst and looking at moving out of state. Santa Fe incomes really can’t support these housing prices, so unfortunately moving may be our best bet.
Housing prices are insane here as well. We are about to start an addition to our smaller older home. This has been a very very long process but we finally have the loan in hand and contractor on board.
We considered just selling when we got the appraisal and realized our dinky little house was now “worth” three times what we paid for it. But then we looked around and realized we would also have to buy in this market and decided not to.
A friend of mine just sold her house bc of the dramatic price increase and is renting an apartment instead of buying another. I think this is brilliant, but my husband won’t go along with this plan.
I am sure you’ve thought about just renting closer to your parents, are you comfortable sharing about why you want to buy right now? I remember thinking we would never be able to buy a house when prices were so high in the early 2000s and I was very grateful we hadn’t bought in when it all crashed in 2008.
OMG. This is horrifying. No wonder Californians are migrating to Texas!
Houston is a hot market, sure, but the cost of living is relatively low and salaries are relatively high here thanks to ample jobs in the oil & gas and medical industries. Just for reference, I live in a desirable neighborhood and there are 1500 sq ft, 3 bed/2 bath turnkey houses all around me in the $500s.
My husband and I are currently trying to move to a better school district, still relatively close to the city (not suburbs), and looking for a 4 bed/2.5 bath house between 2500-3000 square feet with a pool. The max we want to spend is $800K and it’s been difficult to find something that checks all these boxes. We recently bid $620K on a house listed for $590K and were not the winning bid.
I love these kinds of articles on fixer-upper house hunting, but can’t seem to focus because of how freaking adorable you and your family are!
Agree! You have a beautiful family Ajai!
We bought a house in the Seattle area a year ago, and I “friended” our realtor. She has posted some crazy stories! There were several houses in her own neighborhood that sold like within 10 minutes for $100,000 over asking. A house a few doors down from us (very similar to ours, but a bit smaller) just sold for more than $300,000 over what we paid for our house a year ago. I have a high school friend who lives in the Denver area and she has been posting wild stories about the prices of homes in her neighborhood. We have family in Colorado Springs who own a house and 3 rentals, and the just told us there’s just not enough housing in the Springs, so prices are crazy there, too. And I have a HS friend from Iowa who is a realtor who said she sold way more houses in the last year than she ever had in a year. By the way, my realtor works very hard and is a selling machine. She bought herself a McLaren last year, plus 3 more investment properties. Now- (Oahu) Hawaii properties still seem to be going down, but Zillow projects prices… Read more »
Oh, and good luck! Something will come along for you! (I hope!)
Ajai, best of luck! I hope you and your adorable family are able to find an affordable home.
Even here in very rural, heavily agricultural Ohio, our housing market is also booming. I work for the county auditor, and many recent arm’s length sales of homes are for 25-50%+ over the appraised value. Soon we will be adjusting the county auditor’s valuation of the properties in county to reflect market value as dictated by sales. The result is that property taxes will increase substantially. Again. It’s wild out there.
Also, anecdotally when we refinanced our mortgage last year we saw the appraised value of our modest 1968 ranch home increase from $225K in 2015 to $305K in 2020. No updates to our home were reflected in the new value. Sale prices of similar properties in our community drove the valuation increase.
Oh my goodness!😳
And … Jack’s 7 months already? Whaaaat??
Gosh, those houses are hard core.
I’m sending you positive vibes and lucky house hunting energy. xx
Best of luck! Our crazy house story is ongoing. We put in a cash offer (and it was accepted) on a house at the beginning of the year and six months later we are STILL waiting to close. We were able to move in as planned, but fingers crossed the closing will happen this month and we can get to work fixing it up.
It’s so tough! I feel your pain. We live in SF so purchasing a home is completely out of reach. Even if we had $1.5m, in our neighborhood that would get us a 2 bedroom, 1k sq ft apartment, and that’s just depressing. We are looking at Portland next week, and I know Portlanders hate us Californians moving over and driving up housing costs, but at the same time, I’d like my kids to have a tiny patch of backyard in a (somewhat) diverse, interesting city, and we just can’t make that happen in California 🙁
I laughed at, “I know Portlanders hate us Californians moving over and driving up housing costs,” because I’m in Salt Lake City and everyone talks about how much they hate Californians driving up costs here, especially this past year when California families were moving here in DROVES. But my husband is from California so I guess I can’t hate on the Californians too much. ☺️ Good luck finding something!
Everyone hates us! Haha. I get it, but at the same time, what are we supposed to doooooo! Ah well, if we move I’ll just do my part to win people over, respect the existing culture and community and try represent the California ex-pats well. Thanks for the well wishes!
Most Californians came from someplace else in the first place. Just people with itchy feet. Hard to find people who are multi-generation Californians.
6th (I think?) generation Californian here (ancestors came via Oregon Trail and split south) so it’s heartbreaking to leave because so much of my family is here! I’m counting on my parents following their grandchildren wherever we go… There are many transplants into California, especially San Francisco. It’s very much part of what makes it such an interesting — if expensive — place.
Yeah, I don’t think I could move to really non-diverse place. My older sister moved to Ventura County decades ago, and it was weird being in this largely non-diverse environment. It’s a little different now. My neighborhood? There’s everything, and that’s how I like it. 😁
I am from the Bay Area, couldn’t afford to live there as a mature adult who wanted to buy, so I painfully left for a cheaper state. I don’t want to be part of the problem and am very aware I was forced to make a decision myself by being priced out of my own hometown and its surrounding areas. Wouldn’t want to do that to anyone else but I didn’t have a good choice in staying tho I tried for many years to make it work. Buying was never an option. It makes me sad when people hate on Californians because where are we supposed to go? Overall the US population is too large and the housing inventory is too small. I don’t think this problem is going to go away anytime soon. We are not in a bubble.
This is actually happening all over the first world countries!
Australian real estate is bonkers!
First home buyers are shredding the Baby Boomers for hogging real estate, yet they want a 4×2 as a first home!
Australian homes are the largest in the world … seriously, who needs a house tgat huge, with no yard?!
Who knew a pandemic would hone in on real estate and toilet paper?!?
Wot’s with that!?!?😳
I don’t think that’s entirely fair Rusty. They just want what their parents had: the opportunity to buy a home to raise a family with a bit of yard. That used to be possible on one income and without crippling debt. Gen X here who used to live in Sydney but moved north for affordability. It’s even harder for the generations younger than us.
Yep — I’m a millennial in Sydney and I’ve come to the conclusion that I probably won’t be buying a house. I have a PhD and am an academic at a university here in Sydney and still don’t / won’t earn enough to purchase here. Baby boomers not only got their first homes for almost nothing (especially in relation to their salaries), but buy investment properties that keep first-time home buyers out of the market. I don’t need a four-bedroom, two-bathroom house; I’d be happy with two/three beds and one bath, but even those are priced at over a million, and then sell for hundreds of thousands over the asking price. It’s impossible.
Baby Boomers paid 18% interest rates on their home loans and bought very modest homes to start off with.
18% interest. Think about it.
My view is the investors buying up the supply, reducing possibilities for the younger generation…hence the vast expanse of Western Sydney.
Statistically, most Baby Boomer parents had mum home for a few years, then back to work, or working part-time.
It wasn’t the dad at work only scenario of the movies.
Now those same people that saved prior to superannuation being a thing, get zero interest on their money.
Yes, and this same generation of Aussie boomers went to university FOR FREE. Even with interest rates at 18% the cost of housing was a multiplier of 2-3 years household income, not the decades it is now. It’s hard to feel sorry for Boomers who benefited from these conditions, and now benefit from terrible housing policy settings and largely make up the investor class that makes it so hard for first-time homebuyers.
Wow wow wow. I had no idea about how crazy the market was in CA. Here I was seeing your budget and thinking man you guys are loaded 🤯 But it’s been a similar case here in Atlanta, GA. Once you guys do find a home, I am eager to watch you through your fixer-upper journey since that’s what I want to do at our forever home 🙌🏽
Something I am wondering generally is why are home prices crazy everywhere? Is it people saving because of covid? New houses not being built? Student loans being deferred? A combo of that and other factors? And are home prices really going to change, especially in markets where the stock isn’t going to drastically change? I feel like home prices are just going to continue to go up unless there is some dramatic policy change. For context, we just bought a house in a wild market too—Minneapolis. Although the prices aren’t as crazy as CA, we payed $50k over asking and were against 18 other offers. I don’t think the cost over (in our case) is a totally accurate value to judge it on though because the house was really underpriced for the area and size. Something I think about a lot (I think sometimes to make me feel better for having to go so far over the listing), is that I don’t think prices in this market will go down anytime soon. The prices have been rising for years, both in Minneapolis and the surrounding suburbs. The stock isn’t increasing—there is nowhere to build new homes, and I think (especially… Read more »
I read a NYT article that the pandemic has greatly affected the number of elderly people who might typically move into assisted living or even into a smaller home – few seniors want to make that move during covid! And that’s had a significant impact on housing stock. It’s not the only factor, but it’s one of them.
There’s a crazy chain of supply and demand behind the current prices. In addition to extremely low interest rates, making purchasing more affordable for people who might have otherwise been sitting on the sidelines, people have been trying to get more space to accommodate work/school from home and after being stuck in the house together for such a long period of time. This all is causing increased demand. Then, add to that the fact that lumber and other material prices are up 30%-100% compared to 2019 due to transportation shortages, making new home building and major renovations to existing homes more expensive, you get lower supply than normal. One additional increase to demand that no one seems to be mentioning – with the numerous government programs that were offered to businesses (PPP1/2, ERC, NOL Carrybacks, etc.), many businesses and business owners are sitting on excess cash – after all, need was not necessarily a factor in determining who got this money, and BECAUSE there was so much excess cash, many businesses who would have seen tight times just didn’t because their customers could still pay them. Now, you have business owners who are looking for a way to invest that… Read more »
Real estate is awful everywhere. I’m in Madison, WI, and the entire metro area has been selling well over market price for over a year now. In 2020, houses were going for $5-25k over asking; now they are going for $100k over asking. It is crazy to me that someone would buy (for example) a 2BR/1BA house with no basement and no garage for $340k, or a 2BR/1.5BA house with a basement and a one car garage for $450k… but that is exactly what’s happening. We were lucky enough to buy in 2014 and the prices have made us seriously consider selling, but then you’d still have to buy something at the top of the market and … ugh. Good luck with your home search!
I’m in SoCal and purchased a 2BR/1BA with a 1 car garage for $460 back in 2011… now smaller houses on the block are going for $850. It’s truly unbelievable.
This post had me LOLing the whole time even though it’s not intended to be humorous. I am also looking for a house in LA County at the moment, and this was TOO familiar, particularly that Pasadena house for almost $1M cash…I feel your pain.
I just looked at fixer in El Sereno for $689k – looked OK in the real estate photos, charming even, but in person, the floor was sagging, the roof was buckling, and their were multiple large holes in the ancient wood siding (house is from 1908). The idea that I’d have to pay over $700k (because the asking price is just the start of negotiations) for the privilege of sinking another $150k+ into a house just feels insulting. I look at some of these listings and just wonder “what happened to this house?”. Like, how does someone’s home get THIS bad? Maybe it was abandoned for like a decade??
Anyway, just commenting to say – I’m with you, I understand, but unfortunately, I don’t have any tips. And if I find a house I can actually live in for $625k, I’m keeping it for myself! LOL
Check out La Crescenta-Montrose. Beautiful houses and views, a good school, adorable downtown Montrose strip, and close to the highway – travel times aren’t that much different than Glendale.
Kristin, we just sold our home in Glendale for 350K over list and it sold in a day. La Crescenta is more expensive then Glendale or Montrose. These areas used to be “hidden gem” areas to live in, not any longer. Prices skyrocketed due to people not able to afford Los Feliz and Silverlake. Burbank may be expensive.
Meant Burbank may be less expensive
I have a friend who lives there, and she reports a strong history of racism in that area that still tears it’s head. Her black neighbors had their garage door vandalized with hate speech. I’d look into that before considering it.
Crazy housing market here in the Seattle area as well, we are across the lake on the “Eastside” where housing prices in my neighborhood, with many of the homes built in 90s, or are new build, have gone up about 25-30% since last year at this time. Most of the buyers are young and work for Amazon, Google or Microsoft. 25 year olds buying first houses that are $1 -2 million, then spending more to update. Kinda scary for those of us that are 10ish years away from retirement, and don’t work in tech. We most likely won’t be able to afford to stay in the area once we retire, even with the massive increase in our home’s value. A 1000 square foot home near me, recently listed at $750,000, scheduled something like 70 showings within the first hour the listing went live, had over 90 showings in the 3 days between listing and reviewing offers, when they accepted one for $950,000.
Tech jobs pay very well, to be sure, but there’s no way a the average 25 year old working at Google/Amazon etc can buy a $1-2m house without their parents’ money. Tech doesn’t pay THAT well. (Coming from someone who has worked in tech for the last 10+ years and who’s husband has worked for Google for years and still doesn’t own a house lol)
I work in tech and young engineers absolutely can get in for $1+ million if they have been there at a company 4 yrs, for sure, most especially if they have a partner also in tech. Stock. I work in a non tech part of a tech co and I was able to get into a house for 800+k by myself in less than 4 yrs.
If these prices seem crazy don’t move to Toronto. I bought a tiny 650 square foot bungalow in 2014 for $550k and sold it 2 years Later for 720k. We’re talking completely unfinished and we put almost nothing in to it. Bought a larger home that has appreciated about 150k per year (10% per year) since 2017. Average home within the greater area is north of a million dollars now. It is insanity and houses are getting 20+ bids on designated offer nights.
I saw a few cute ones in North Hollywood recently. You may have to do private school, but there are some lower prices ones (and some super expensive ones) in the area.
Hi Ajai, I would look at Burbank! Excellent schools and tons of great city services!
No hope to offer you, sorry. It’s inSANE. I do live about a quarter mile from the coast, but we bought nearly 30 yrs ago. And we have a condo, not a detached house. A townhouse in our group of five townhouses just sold for $70K over asking. Like I said, insane. Sending you good vibes on your continuing search. And Jack is just about the cutest little bug!
I live in the state no one paid attention to until a few years ago, and now IDAHO is bonkers! The beautiful lake city of Coeur d’Alene is facing gridlock in traffic and housing. Lake front property is through the roof. Now people are moving to the smaller towns in Idaho and driving up the cost of housing. I am living in a gold mine, and don’t plan to leave soon. Where could we go that is still affordable?
Ajai! Come move to wrightwood! We are tucked into the mountains and are only an hour and a half away from LA. The school district is great and the area is beautiful. Homes are more affordable too.
Same in Utah, where house prices have increased by over $100,000 compared to this time last year. *sigh* My dream of homeownership has been pushed back at least a few more years. It’s so disheartening. I hope your search goes well though! Please keep us updated.
Chiming in here as someone who bought a home in the Bay Area in the summer of 2020: We had been looking long before COVID, and the timing worked out that we ended up purchasing in the height of it. We had a budget of 950k, which you’d THINK could get us SOMETHING in the Bay Area, but we couldn’t find anything for that price that didn’t need a major overhaul of several hundred thousand dollars. Instead, we did exactly as you’re looking to, Ajai, and bought a home for $550k, with the thought that we’d have $400k to invest in renovations. We worked with an architect and general contractor through the fall of 2020, and permits were approved come late winter, 2021. NOW: renovation materials and costs have come up SO much that our contractor says he can’t do the project for the quoted price, as materials alone are up 300% in some categories thanks to COVID supply chain, fires in CA, the winter storm in TX (who knew insulation was going to skyrocket?), etc. We are in a VERY fortunate position to not be in a rush on it (cheap rent in SF so we’re still in the… Read more »
no advice but lovely post and family!
We just bought a fixer in Atwater Village last month. We paid 38% over-asking. (ugh) Despite that, we likely would not have even gotten the house had we not had our amazing and well-connected realtor. Since she had a great reputation with the seller’s realtor, we got a little more winking and nodding during the bidding process than the other 30 (!) bidders. My best advice, if you have the funds, is vet your realtor like crazy and get a sense of how connected and respected they are in the neighborhoods in which you’re looking. Good luck! It’s truly the wild west out here right now…
People have lost their GD minds. Put your cash toward down payment in AAPL, AMZN, and a nice index fund. Sit back for two years renting and then thank me when there’s the massive RE correction. NONE of this house buying mania makes sense. And I say this as a RE developer by trade who has peaced out and doubled my $ while sitting out the and wars. Lord.
Land wars. Typo!
One of my favorite hobbies! Finding homes on Zillow! Here’s my pick…
$624,000 2 bd 1 ba 899 sqft
3532 Canehill Ave, Long Beach, CA 90808
Can I also add that this is not a run-down area of Long Beach. I live in neighboring Lakewood, and can attest that Lakewood and Long Beach are both very culturally diverse. In fact, I think Long Beach was listed as the most culturally diverse city of it’s size in the entire country.
Aloha from Honolulu 🙂 Where the median single family home price is about $980 K, most likely for a termite and rat infested 900 SF house on a 3500 SF lot with broken jalousie windows, and possibly with squatters that you will have to evict as part of the settlement 🙁 We moved at the start of the pandemic, closing on a 1300 SF house (4200 SF lot) for $1.2M, and I was panicking about the mortgage, but I have been so thankful every day of working from home , childcares closed, lockdowns etc. We have family help so we couldn’t have done it otherwise. Our old house is a 2bd 1 ba 800 SF wooden cottage (1924, but make it termites) and is currently valued by redfin at $1.1 M. insanity. We rent it out for $2K / month, which is considered a great deal here. One interesting thing about Honolulu is that although property prices have steadily increased in the last decade, rental prices have not really tracked at the same rate. Also, condominium prices have not increased at the same rate as single family homes. I’ve got friends who have purchased homes in other states, but continue… Read more »
I was going to say, 2k/mo seems insanely cheap for a 1.1M value! We’ve just purchased an income property for 430k, and will also be renting it for 2k. Interesting dynamic in Honolulu!
My husband and I are currently looking in Manhattan, which is an interesting situation because NYC is always an insane market BUT is actually one of the few “soft” places right now. Yes, prices are still BONKERS: for a small 2-bed in our preferred areas (I’m talking ca. 800sf, so genuinely small), we’re looking at a minimum of $700k. BUT, in normal times, apartments might go over asking, bidding wars, etc., whereas right now they are often selling *under* asking and there’s not a crazy sense of urgency unlike some of the other stories here. Our realtor said she expects this situation to continue for another 6 months or so. Sure, we’ve realized that we probably can’t afford what we want, but it’s not because of a new influx of people with suitcases full of cash — it’s par for the course in this area. Today we’re seeing a “perfect” place that A. we can barely afford and B. is a 4th-floor walk-up. ::shrug::
I heard Florida is even worse with people looking at houses day 1 and all cash offers swooping in on every listing!! How can normal people compete with all cash offers? All these flippers should be building new, affordable small homes for first-time home buyers, I think…..
We have been house Hunting on the border of Minnesota and Wisconsin and it’s nuts out here too! The prices are nothing like in California but we have lost out on at least a few cash offers. Who are all of these people with cash!? We finally got an accepted offer after 6 unsuccessful ones (lucky #7!) and almost a year of looking.
This is a fascinating issue for sure. Way back in the 90’s as a newly minuted adult I left my home state of Hawaii and my extended family who traces it’s roots back countless generations to the first people in the islands because it seemed completely impossible to think of ever purchasing my own home there given the wide disparity between income for the average Joe and housing prices at the time. Sounds familiar right? I moved to Seattle which at the time was comparatively VERY affordable. I spent the first few years in shock by how much we could afford to buy and do. We were even able to buy an actual house in our mid twenties which had been unthinkable back home. Fast forward a few decades to the conclusion of this long chapter of our story where we decided to sell our house and move back to my small rural home town in Hawaii because it was more affordable when factoring in our gains (strictly in housing costs but close on everything else). What I’m reading here and elsewhere speaks of the kind of economic exile I’ve been experiencing my whole adult life and it makes me… Read more »
Yes. I’ve experienced this type of economic heartache as I watched the real estate values rise a ton every year in my hometown, to the point that the average house is close to a million. But, on the other hand, I am lucky because I can come and stay with my parents, who added on to their home to make it more comfortable for my husband and two kids to stay. We have basically been living here for the past few months, and I know if we had to move permanently I would be happy to live with my parents. This used to be the norm but now we have this idea that everyone needs their own house. Well guess what, life is SO much easier for us with two more adults around to watch the kids, help with dinner, cleaning, laundry.
Lots of folk around here do the same. Much to be said for multi generational living, and you’re absolutely right of course, provided one has family they can and don’t mind living with! It’s tough everywhere, I’m glad you have a good loving family, absolutely enjoy that!
As a fellow Californian I feel your pain. Right before lockdown happened last year we were finally able to start looking for a larger house, but then things got crazy. While we would make a significant return on our current house the other costs associated with buying a bigger house (taxes, insurance, most still need some work too, etc), seem to have put it out of reach for us again. The mental toll is hard. You think you finally have enough that buying a house should be no problem, but then everything still feels just out of reach. We recently looked at a serious fixer that was listed for $1.2, and it ended up selling for $2.1! It took us two years of looking and offers the first time around, and we were able to get something by being able to move quickly and having a real estate agent who put in the time to make calls and build relationships. So sticking to what you can do, and not over leveraging yourself, especially with young kids is a good plan, but dealing with the feeling of worthlessness is hard.
This was fascinating. My heart aches for Ajai and her little family.