In the South Bay Beach Cities, a starter home might not be a house. Buyers think of a starter home as a small, older house with potential… 1000 sq ft or less.. 2 or 3 bedrooms and 1 bath.on a small lot. And of course, it will be affordable for a first-time buyer. In the Beach Cities, a starter home might be a condo or townhome east of the water. A starter home can be a small house in North Redondo or a pricey 750 sq ft Manhattan Beach walk street home. Finding a starter honme in the Beach Cities can be hard.
In the South Bay Beach Cities buyers looking at starter homes are often competing against builders with lots of cash and no contingencies. They don’t care about the house. It can be falling down or in good condition. Builders want the land. Depending on location a little 750 sq ft 2 bedroom 1 bath house could be $550,000 or $5,000,000.00. Location, location, location is more than a silly sounding phrase.
With rapid and large increases in value in the South Bay Beach Cities, a starter home might be a condo or townhome rather than a single family home. Many buyers scoff at the idea of buying condo or townhome. Trying to save for a larger “house” in a few years instead of buying a starter condo or townhome might not be the smartest move a buyer can make. Buying what you can afford now and holding for a period may be the step that will allow you to buy a larger house in the future.
Below are some things you might want to consider when making your house hunting decision:
What can you afford?
Unfortunately, most buyers can’t afford as large a loan as they want. The first step for anyone thinking about buying a home is to talk with a lender. Buyers often forget that you need money for closing costs, inspections and maybe some immediate repairs. A lender will look at your credit, verify your available cash and give you a realistic loan amount you can afford. If you don’t have a large down payment you might not be able to pay as much as you think you can. If your budget is in the mid $600,000.00 for a single family home then a Beach City might not be in your future. Mid $600,000 for a house will move you east or maybe a bit south. If a Beach house is your goal you might need a few baby steps to get there.
How long will you live in the house?
Typically in California, you should live in a house roughly 7 years to build appreciation and avoid periodic housing ups and downs. If your job includes plans for you to transfer to a new location every few years you might need to consider your options a bit differently than if you plan to be in the same area for a long period of time. If your job requires a relocation will you keep the property as a rental or sell it? Will you move back to this area or stay in the new location?
Where can you afford to live?
In Southern California, this is the jackpot question. 20 years ago you might have started with a little house/condo in North Redondo and then moved slowly westward until you got a glimpse of the water. You might want to live in Manhattan Beach, Hermosa Beach or South Redondo. However, your budget might say Long Beach, Torrance or San Pedro. In today’s market, living where you want is not necessarily the same as living where you can afford.
So where does a first-time buyer start? Be realistic. Think outside your comfort zone. Make a plan and stick to it. Buy what and where you can afford.
Have questions? Please feel free to call or e-mail me.