Since this is the year to buy a home for us, I’ve been keeping a close eye on our real estate market. It’s crazy, but the Southern California market has rebounded almost back to where it was during the peak of the housing boom. Not quite as crazy, but almost. So finding a home below $400,000 will be a challenge.
Why $400,000? Based on our income, it’s really the most we’d feel comfortable buying into. We also don’t want a condo or townhouse; we want a house with a backyard. Houses also appreciate more over time than townhomes or condos and that’s something we’re taking into consideration. Our long term plan is to buy an affordable house, live in it for 10-15 years, then sell it and move some place much cheaper, possibly out of state.
So what can $400,000 get us right now? Here are a few homes in the neighborhoods of our liking:
1. $399, 950 a house in a neighborhood that is okay (again, we’re thinking of resale, so certain cities are a better choice). The house is only 895 square feet, but the lot is a little over 8,000 square feet which means there’s plenty of room to add on. The house has been taken care of, but there are definitely some things that need to be updated, like the kitchen. Also, the block is a little run down. Lot of houses with junk in the front yard and this street has no sidewalks.
2. $399,000 a house in a slightly better neighborhood, but the city is exactly the same as the one above. Another small house, 900 square feet, but the lot is smaller at 6,000 square feet. I don’t like the fact that there is no straight on photo of this house. I did a street view on Google and the front of the house is pretty ugly. This house needs lots of updates.
3. Short sales scare me a little bit. They seem to have a bad rap for taking forever to get a sale pushed through. However, there are some pretty good prices out there for decent houses that are in short sale status. This one is selling a little above our price point, $410,000, but the house is much bigger, 1,542 square feet, which is closer to what we want.
The really great deals go quickly, so these homes will be gone come late summer, early fall, when we start seriously looking. But, it’s good to know that there are some homes that are in our price range. I can only hope that prices either hold steady, or dip a bit.
For those that live in an affordable state, I know these homes seem ridiculously priced and I think so, too. Small, run down, and terribly expensive! But it is what it is.
Did you buy an overpriced house recently?
13 Comments
I cannot imagine buying a $400K house that is less than 1000 square feet. To me, that is just crazy. I get it that is how it works out west, but still.
I bought at the height of the market in 2007 and have been underwater since. Prices in my area have rebounded, but due to various things in my development (mainly foreclosures) prices have stayed down. I’m hoping the glut of foreclosures are done and prices will begin to rise soon.
@Jon- When I search real estate listings in other states I’m in awe of what I could get for $400,000. It’s one of the reasons that moving out of state is a possibility when we near retirement. We potentially could make a nice little profit on our house (even at these prices!) and buy something very modest with cash left over. Only San Francisco, New York City, and Hawaii are just as insane as here!
Amazing. $400k out here in Michigan would allow me to get a brand new 2,500 sq. foot home with wood floors, granite counters, and stainless appliances plus probably crown moldings and other deluxe finishings. Always enjoy seeing the different costs and things available in the different parts of the country. From my perspective, I will take the Michigan winters and the lower housing prices along with it 🙂
Oh my god the prices of these homes are crazy! Homes like these would only cost around $75,000 in a suburb of St. Louis, and still be in a good school district.
@Michelle – I know, housing costs are ridiculous out here! However, I’m making twice as much teaching in Los Angeles than I would in another state. I’ve crunched some numbers and it doesn’t make much sense to move quite yet if I continue to teach, which I intend to do for a while.
And…We also can’t decide where we’d like to move to – we don’t really want much snow (Mr. LH wants NONE) and we can’t stand the super hot summers of places like Arizona and Nevada. I’ve been pushing for Colorado, but even CO gets some snow, so who knows if I’ll ever be able to persuade Mr. LH to consider it! 😉
@Money Beagle – If Mr. LH wasn’t so against snow, I’d definitely consider moving to another state. However, my teaching income would drop almost in half, so that’s another thing to consider. Which is why I’m sort of waiting until I’m eligible for retirement which is 55 (12.5 years away!) My pension plus retirement accounts plus any income we’d make off a potential home sale could put us in a sweet spot for moving someplace cheaper.
Ha! Being from San Francisco I see the opposite side of most of the commenters here. I think that getting your own house and not a condo is a great deal for the price range you are looking at. I think that 1500 sq. ft. would be a reasonable size for a family. Especially if you have a yard to go with it.
Is the only reason that you are hesitant on short sales the amount of time it might take to close a deal? I know that it’s a pain but to me it looks like it could be potentially a much better value for your money. I’ve never looked into short sales so I wouldn’t know if there is more potential for them to be in worse neighborhoods or if that truly just means 1 owner was not responsible or just hit really bad times.
@Zee – You can probably totally relate! San Francisco is a heck of a lot more expensive than where I live now (a suburb of Los Angeles). I can’t even imagine trying to survive there! I really don’t know much about short sales, I’ve only heard that they can take longer to close. But maybe I should investigate this option a little more – it would give us more to work with.
This is such an interesting post! We just moved from AZ to NC. In AZ, a house like the one above could cost anywhere from $75,000 to $300,000 depending on the area/neighborhood. In NC, prices seem to be a bit lower. We’re living in a rental home right now that’s worth $275,000 but it’s 3000 sq ft, massive kitchen with granite, beautiful moldings in all the rooms, etc. We do live on the outskirts of Charlotte, so part of that is why. But…like you mentioned, it’s all relative. In more expensive cities, you tend to make more money. Great post!! Thanks!!
@Sarah – Location, location, location – it’s definitely all about location! Moving some place cheaper is definitely on my “to-do” list, but not for a while. Good luck in NC!
That’s crazy! In my area $400K will buy you a palace. I think I might do a post on this soon because I love the idea of looking at houses I can afford in the next year.
@Fig – Housing is definitely more affordable elsewhere, outside of the bigger cities of California or New York City. It makes me wonder why I stay!
I hope I haven’t bought an overpriced home recently! It’s hard to tell where the market will go. We buy lower priced places though, so we don’t have as far to fall if the market drops out!