Millennials and buying that first home: how it’s possible in SoCal

Millennials and buying that first home: how it’s possible in SoCal

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A sold sign is posted in front of a home for sale on July 30, 2013 in San Francisco, California. The report notes that people in California spend more of their income on housing than anywhere else in the country. ; Credit: Getty Images

Living in Southern California can be great…if you can afford it. Planting roots in the area is not easy without access to a ton of green.

“The house that I grew up in Philadelphia went on the market about two years ago for about $300,000,” says KPCC listener Kristen Koeblin. “That same house could easily go for $700,000 to $800,000 here.”

It can be especially difficult for Millennials to make that big step to adulthood because several SoCal cities consistently appear in the top ten lists of worst places for first-time homebuyers, and affordability is a major factor.

“It’s an exciting place to be, but it’s an expensive place to be,” says financial advisor Delia Fernandez, “and feel sorry for the people who grew up on the beach because typically they can’t grow up and afford to buy their parents’ homes.”

Fernandez joined La Habra realtor Ray Fernandez (no relation) to offer advice for everyone hoping to eventually buy a home in Southern California

It’s okay to start small now

“That’s how I was conditioned: grow up, make some money, buy a house, start a family,” says Ray Fernandez. But he suggests that people imagine that will take some time after your first home before you move into your “dream home.”

“You always want to try and get your foot in the door,” he says, “and you can find condos for $300,000 around here.”

He shares that a friend of his was able to resell his first condo after a handful of years, using the equity from that sale to put a down payment on a larger home.

Being a tech-savvy millennial is to your advantage

“As Millennials we’re very responsive,” says Ray Fernandez, who’s a Millennial on the upper-end of the age cutoff. “I love working with people our age because when I ask them to get something, it’s like, ‘I’ll send it to you from Dropbox right now.’ It’s that easy! While our parents are like, ‘That’s in a file cabinet up in an attic.‘”

Millennials can also benefit from the realty websites that aggregate information in a way that wasn’t possible to find easily generations ago. So finding a 3 bedroom with a soapstone countertops with a park within a half-mile is easy as pulling up Zillow and Google Maps.

It’s okay to take on a mortgage if you have student loan debt…to a point

“Student loans aren’t the boogie man,” says Delia Fernandez, “but a lot of people don’t manage their student loans well.”

She advises that people start to save as early as possible regardless of whether they are thinking about buying a home.

And more importantly: live within your means.

“Don’t load up right out of school saying, ‘I’ve got student loans and I’m doomed anyway, so I might as well buy a car,’” she says. “Let’s not spend all of our money on lifestyle, and make sure there’s room in your budget to save some money.”

Delia Fernandez says that there may come a point when you want to buy a home, and you should to be in the best possible position because of the years you spent being responsible: do you have enough saved up for a down payment? Do you have a good credit score?

And if a home isn’t in the cards…

A home can be a way to envision how you’ll be living out your later years, comfortable in a living room with grandkids running around.

However, it is not the nest egg that it used to be, and renting can be just as viable in Southern California.

“But that means you have to build wealth some other way,” says Delia Fernandez. “Is it going to be an Instagram account that is making you money or is it a 401k that grows?”

Regardless of the chosen path, Delia Fernandez and Ray Fernandez suggest that Millennials make their choices carefully and cautiously let the realities of the Southern California housing market temper their dreams of what living here means.