Ep.2 - The Second Hurdle to Homeownership in LA – Income
“Even with $800k, you still can’t find any option on the Westside.”
📸 IG handle: DollarSenseLA
It is no secret you need to make good money to afford a house in LA. In order to buy a single-family home in LA, depending your existing debt, you really need to make between $120k and $150k in pre-tax annual income. It is significantly easier if you are either #young&hitched or #hustlecouple. Look around within your friend circle, I bet, most of the homeowners amongst them are either married or in a serious relationship. And I mean a SERIOUS relationship. You understand what I am saying.
How much can you afford with $120,000? Without any debt, you are able to afford a house up to $670k. Given the housing market in LA, you won’t really find any descent properties under $600k. Thus your real price range is limited to $600k and $670k.
What I am about to discuss may invoke an undertone that's annoying to some native Angelenos - buying on the Westside(map below). I am not making any assumption that you'd want to live on the Westside. But for those individuals, who do, whether attracted by the proximity to work or the lifestyle, I do want to address how it is mission impossible for most.
Map of the Westside (Los Angeles) according to LA Times
At $670k, it is impossible to buy a home on the Westside, actually not even west of La Cienega. As a matter of fact, you actually don’t even have any options even with $800k. To illustrate this point, below are all the active listings under $800k as of 3/4/17. There are only three homes, with the average size of 855 square feet. Honestly, they are all in rough shape and will sell above the asking price. It’s simply the reality.
SOURCE: REDFIN.COM ; available listings <800k as of 3/4/2017
Where can you buy homes between $600k and $670k in the current market? Before I spill the beans, we all need to remember that Los Angeles is more than just the Westside, in fact much more! If you keep an open mind and let go of all the assumptions about the neighborhoods east of the 405, you will be amazed to discover the beauty in areas unknown to most.
Your best options are West Adams, Leimert Park, Jefferson Park, Windsor Hills, View Park, View Heights, and Morningside Park in Inglewood. Never heard of them? You are not alone. Let me give you a visual. Below are available single-family homes between $600k and $700k, all in the neighborhoods above.
source: redfin.com; available listings between $600k and $700k as of 3/7/2017
What do homes look like in these areas? Check this out. A beautiful 1,608 sq-ft Spanish style home in Leimert Park was sold for $650k in January.
SOURCE: REDFIN.COM ; HOUSE IN LEIMERT PARK
SOURCE: REDFIN.COM; HOUSE IN LEIMERT PARK
What’s Next?
In addition to a good credit score and a good income, you also need a lot of cash to buy a house. In the next post, you will find out exactly how much cash do you need to save up. It may be less, A LOT less than you think.