One of the Discovery channels just showed a guy maket an 8-900 square foot house in what appears to be a poor South LA neighborhood (looked similar to the one in Boyz N the Hood, there was a street sign near in the show that said “Century Cove”) for 390 thousand- is this serious? Wouldn’t the rent be like three grand, and wouldn’t you have to make six figures to afford it? What am I missing? I understand and have seen 1990’s Bay Area housing prices, but you could get a bigger house for more many there at its peak than this.
There could be many reasons:
- The seller is an absolute moron
- Owned by someone famous
- It’s a damn fine apartment
did you watch more of the show? they had to have said something about why it was so high
I don’t live in LA but the Boston housing boom preceded much of that in LA and you can find similar things. As long ago as about 2001 when we bought our house, Boston magazine had an article on what $250K would buy in the greater metro area and there were only a few slummy houses in the slummiest parts of the worst neighborhoods that could be had for that. Today, the equivalent article would reference $350K which is the ballpark you are asking about.
Now, your basic question has long been mine as well. You do need a 6 figure income to responsibly afford such a house and people with 6 figure incomes don’t normally flock to those types of neighborhoods or they wouldn’t be that way so much any more. We have a 6 figure income and we now have a nice house but it is 35 miles out of the city and took over 5 years of total restoration including structural to make it habitable. I have no idea how people on even our income just walk in and plop down money for a house that is ready to move into. I have even less idea how the nice young couples that have, say, a 60K year income (which doesn’t sound that bad on the surface) afford anything at all and proceed with a normal life plan.
The nearest I can figure, almost everyone is making 6 figures and beyond or else the economics and logistics behind all this just don’t work in my mind.
I missed thew first two minutes, and was (am) in a slightly altered state, but think I got the basics.
The original house was a 375 sq ft rectangle with no (!) bedrooms that looked to be originally an office or something like that. They added 500 sq ft to add two bedrooms and a bath. Nice tile and carpet and cabinetry, not expensive but not cheap looking either.
Definitely South LA neighborhood, looked kind of poor with those small retro 1930 style houses you see in Chinatown or Day of the Locust, near Century Cove. He paid 189K and spent 90k or repairs and looked to make 100K profit. House did not show as selling, but the real estate agent confirmed price was good. Oh, and realtor did remark it was stupid of him to not put in CENTRAL AC, or a window unit of any kind that I could see. It was just on Discovery Home I think.
Corner lot I think, but no yard to speak of.
I thought maybe the family moving in would get housing assistance, but then I did not think a realtor would be involved setting a sale price.
Price would not shock me, even in South LA (which the politically-correct new name for South Central, IIRC).
I don’t get it either. I live in Austin, and while it’s not as bad as the East or West coast, yet, it’s still kind of insane. In the ‘bad’ part of Austin, small, falling-down crap-boxes are going on the market for a quarter million or more. No one in the neighborhood can afford the theoretical - market-price - of the houses they’re actually living in.
I don’t understand a market where you have to be rich to live in a small falling-down house in a poor part of town.
A friend of mine just bought an 800 square foot condo in a good but not great LA neighborhood for $650K. So I could see a $300K-$400K house in a cruddy neighborhood in LA.
LinusK, at one point a couple years ago I was considering chucking my glamorous LA lifestyle ( :rolleyes: ) and moving to Austin. I looked at a handful of houses there and determined that I could buy a house twice the size of my then-home for, essentially, the equity that had built up in said home over the previous three years.
Ultimately I was not lured by the siren song of Austin, but it was really tempting for a time to make such a move. Owning a home outright, without a mortgage, would mean such job freedom that it almost scared me.
You probably were looking at the slums of South LA, and yes, that is the going price for a standard piece of property there, because everything else is so damn expensive.
Just checked on Homeseekers.com, looking for 3bed-2bath Single Family Houses in Compton. They range from $319,000 to $630,000
That’s a bit steep, but I can believe it.
Although for $389K you can get a much nicer 2BD/1BA in Richmond, CA and get shot twice as much as South Central, guaranteed*
- Guarantee not an actual guarantee. No refunds.
I am reminded why I like living in central OH. I just bought my first house, which is not huge, but is big enough for me and my wife, with room to expand when we have kids. (1330 sq.ft. with a basement that can be finished and add another 600 to it). It’s got a nice yard, is in a great neighborhood, is in fantastic condition, and in the best school district of the east side suburbs. We paid $139,000, which is about what we budgeted for.
I was watching some episodes of ‘My First Home’ and was amazed that people with the same income as me and my wife, and they were buying $450,000 houses! I don’t understand it. The only thing I can think of is that they’ll be house poor…spending over half their income on a house. I just am not willing to do that, and luckily, home prices in Ohio allow me to do a fixed rate mortgage, plus taxes, on a home that is a good size, in great shape, and in a great neighborhood and still spend just a smidge over what I pay in rent for my apartment (we move in 2 weeks).
How the hell does this market work? Are lenders coming up with mortgage products that allow someone who makes less than 20,000/month afford a million-dollar home? I was under the impression that you should expect to pay about 1% of the sale price per month on a 30 year note including insurance and taxes, so I don’t understand how anyone can go into a bank in Boston or California and qualify for a mortgage without being a millionaire. Also, Campion, I live in Austin and we HATE people like you :).
FWIW,
Rob
All the gold in California
Is in an escrow account
In Beverly Hills
In somebody else’s name.
Well, a lot of people will be losing these houses in 5-10 years because they’re getting sub-prime interest only mortgages that allow them to pay like $800 a month for 5 years on a $400,000 house. It’s too bad that won’t cover the interest, and their payment will jump to $4,000 a month when the sub-prime rate expires.
Others do 10 year interest only loans, hoping they’ll be making more money by then.
So banks do allow a person earning 30k or whatever to get a 300k loan? The first house I bought, they had to do creative finagling to get approved for a 75k house and I was making 30K.
Holy Balls!
You can buy a mansion here for that. Probably a four bath, 5 bedroom, 4,500 sq ft home with a four car garage and a finished basement on 2.5 wooded acres in an upscale subdivision about 25 minutes from downtown Milwaukee for that price.
Or, you could buy an 800 sq ft condo here for about $70,000 and spend the rest of the $580,000 flying back and forth to LA everyday for about 15 years. 
And would someone really invest in a house that expensive without central air in So California? I lived in places in the Bay Area with no air, but until a few years ago you didn’t need it except a few days a year. Is central air really an option on houses in LA?
I don’t think I’ve seen anybody earning under 60K get any kind of house loan in the area. If you earn 60K you might be able to get an interest-only 300K loan.
Absolutely. I live in Long Beach and I don’t have central air. LA is really big, and the temperature changes drastically depending on where you live. For instance, the forecast high today in Long Beach is around 67 degrees F, while the high in Pasadena will be near 80 (depending on who you listen to).
Also, as other people have said, 390k for a house (not a condo) in the LA area is not expensive at all. Crazy but true.
Gah!! I just did a search on single family homes in LA county. The cheapest one that came up was $239k for a 600sq ft, 1 bedroom/1 bath. In the entire county, there are only 8 single family homes being listed for under $300k.
By comparison, the city of Minneapolis has over 500 (all the search will show me) single family homes for under $150.