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If you’re a homebuyer in your late 30s or older, you’ll remember the days when $1 million yielded a dream home, or close to it. Now, in parts of Los Angeles, that figure may only get you measly square footage or a wildly dated home with a crumbling foundation dubbed a “fixer-upper.”
Being a homebuyer on a budget in and around the city isn’t for the weary. Housing stock is limited and interest rates for mortgages are rising. But for those who’ve budgeted for a $1 million ceiling, there’s still plenty to buy, and genuinely love, according to several real estate agents.
“It’s still a significant amount of money. Just be smarter with it,” says Cory Weiss, an L.A. real estate agent with Douglas Elliman.
Smarter, it turns out, means being flexible, knowing where to look and being ready for a compromise — or three. And if your search doesn’t pan out, know that it may be more economical to rent than buy right now anyhow.
Here’s where, and how, to find a home for under seven figures.
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Keep expectations in check
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Before getting into where to live, agents want buyers with a $1 million budget to remember one thing: be realistic.
“Buying a home under $1 million is not impossible. I just think buyers have to redefine what it buys them,” says Christy Jeziorski, a real estate agent with Acme Serhant.
“It could be a smaller house, it could be a fixer, a condo, a tenancy-in-common apartment, a less turnkey property, or expanding the search frame, rather than abandoning L.A. entirely,” she says.
Weiss agrees. “I think people get hung up on the idea that $1 million should buy the same thing everywhere in Los Angeles. It doesn’t.”
Buyers should also be prepared to compromise.
“You usually protect one or two things well: location, size, condition, outdoor space, parking. You probably aren’t getting it all. Figure out which two actually affect your life,” Weiss says. “At that price point, I’d rather have a buyer make two intelligent compromises than one bad purchase.”
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Expect to be priced out of the Westside — where to look instead
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Fear not: You won’t need to search as far as the desert (although plenty of people who can’t afford homes here do move there for variousreasons). But the Westside? Forget it. Expect to focus your search east, south and in parts of the San Gabriel and San Fernando valleys. In most cases, you may need to skip neighborhoods that may have been accessible just a few years ago, agents say.
Real estate agents who once suggested Highland Park, Eagle Rock, Mount Washington and Glassell Park (all of which have median listing prices above $1.1 million these days) now point to places like Cypress Park where the median listing price is $794,000; El Sereno, where it’s $825,000; Montecito Heights, where it’s $649,000; and Lincoln Heights at $699,000, according to Realtor.com, which presents homes for sale and tracks data trends.
“I do a lot of business in Eagle Rock and I do a lot of business in Silver Lake and I will tell you I’ve never seen anything remotely livable under $1 million in a single-family home,” says Carmine Sabatella, a real estate agent with the Agency. Unless it’s a fixer that needs costly upgrades. Most people who are at the $1 million mark likely can’t afford more than $30,000 in renovations, he said, which won’t cut it for those types of homes.
In San Gabriel Valley, agents suggest Alhambra, with its median listing of $798,500. In Monrovia it’s $1 million, but homes are selling under asking, with a median selling price of $940,000. In the San Fernando Valley, don’t waste your time in places like Woodland Hills or Sherman Oaks, where the median listings hover around $1.5 million. Instead, try Winnetka or Canoga Park.
As for what kind of living situation you can get for under $1 million, that depends.
In El Sereno, it might be a hillside three-bedroom home with many updates for $670,000 or a flipped three-bedroom with a large backyard and ADU for $995,000. In Cypress Park, it could be a four-bedroom modern townhouse with parking for $899,000. In Monterey Hills, a dated two-bedroom condo for $535,000. In Canoga Park, a 1,300-square-foot fixer-upper for $750,000. In Alhambra, a move-in-ready two-bedroom townhome for $735,000 with a two-car garage and reasonable HOA fees.
“The [San Fernando] Valley is a popular hunting ground for buyers seeking a little more for their money whilst remaining within sensible commuting distance of more prime locations,” says Neil Potts, a real estate agent with Keller Williams Larchmont. “However, there’s definitely a compromise when it comes to location. The 101 is sometimes a massive challenge.”
Potts’ commute warning is an important one. If you’re considering the San Fernando Valley, agents suggest being selective and paying close attention to development.
“I would absolutely be studying Metro,” Weiss says. “I want to know where transportation is going, where stations are planned, and whether an area that feels disconnected today may become significantly better connected over time.”
Still, those commuter stops likely aren’t coming anytime soon. Construction on L.A. Metro’s first light-rail line in the San Fernando Valley won’t be complete until 2031, at the earliest.
If you find a gem outside of these areas, know it’s the outlier, not the rule.
“I just sold a turnkey property in Pasadena that was about 1,020 square feet, a little Spanish bungalow, two bedrooms, one bath, very, very well appointed. And we got $945,000 for it. That was a one-off,” Sabatella says.
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Don’t fear the c-word
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Condo. There it is. A condo can allow you to live in popular neighborhoods with fewer required renovations, so long as you’re OK sharing a wall or two.
“If West Hollywood is nonnegotiable, I’m probably not showing you a detached house with a huge backyard for $950,000,” Weiss says. “I would much rather put somebody in the right condo in a location they love than convince them to buy a house 45 minutes away just to say they own a single-family home.”
Condos also open up neighborhoods that would otherwise be too expensive.
“If someone wants location and design, I’d look at condos in West Hollywood, Hollywood, Koreatown, downtown and other central neighborhoods where $1 million goes much further in finished product,” Weiss says.
However, condo development throughout California has dropped significantly since the early 2000s, limiting supply. Also, condos come with additional costs, by way of HOA or parking fees, which vary widely based on the building and neighborhood.
“In Monrovia, San Gabriel, Alhambra, all of those [condo fees] are probably going to come somewhere between $200 and $350, depending on the amenities, if there are any at all,” Sabatella says. “You can get into a condo in Pasadena for $800,000, but your HOA could be $600 per month. And then it becomes unaffordable. Even the additional parking has to be an added expense if it’s a $100 permit a month.”
Still, all that should be weighed against rising home insurance costs for single-family homes, Weiss cautions.
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Consider a TIC
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If you can’t bring yourself around to the idea of shared walls, perhaps a shared lot? That’s the premise when you buy a “tenants-in-common” (TIC) home.
Think one piece of land split between buyers who each own a home on the same lot. It’s an unconventional approach that can be a lower-cost work-around to getting into an otherwise out-of-budget area.
“Highland Park, Eagle Rock and Frogtown are three really prominent examples,” Sabatella says. They cost “somewhere between $800,000 and a million, and up to probably a 1,200 or 1,300-square-foot single-family home with a shared property with a very defined separation — a fence with your gate, separate driveways.”
They’re not common, agents say, but they’re usually turnkey. If that sounds too good to be true, well, there’s always a catch.
“It’s communal property, so it’s going to be shared expenses,” says Sabatella. “You and your neighbor have to be on the same page because you’re going to be sharing trash, gas, electricity unless you opt to put them on separate meters. But that can take up to a year or two if it hasn’t already been done for a TIC. And sometimes they [the electric companies] won’t even allow it and just say, ‘you guys have to figure this out on your own.’”
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Fixer-uppers offer value — to a point
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Many of the cheapest homes in L.A. right now have one thing in common: They need a lot of work. The payoff, some agents say, can be worth the elbow grease.
“The best value will always come from fixer-uppers,” says Potts. “With finished or near-finished homes, most of the value is already built in, so you’re buying at the ceiling price. With fixer-uppers, you have the opportunity to add the value yourself. That will usually — but not always — result in the cost of the work being lower than the total value added, especially if you hold on to the house for a number of years.”
But the definition of fixer-upper can vary. When it comes to bringing things down to the studs, most real estage agents advise caution, especially to first-time buyers.
“There’s a fixer-upper versus something that needs your touch on it,” Jeziorski says. “With a complete fixer-upper, you’ve got to know what you’re doing and have the right resources.”
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Be respectful of ‘up-and-coming areas’
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Stop trying to find the next Highland Park. Highland Park is Highland Park, just like El Sereno is El Sereno. Agents suggest working with those who respect and value each community independent of its price point.
“Affordability doesn’t necessarily mean a neighborhood is waiting to be discovered,” Jeziorski says.
The key, agents say, is to make sure the house and neighborhood work for you, as it is, at that very moment.
“I don’t advise clients to go into a neighborhood with the mindset that they’re discovering it or that it needs to become something else. These are established communities with residents, businesses, histories and identities that existed long before a particular buyer arrived,” Weiss says.
Jeziorski encourages her buyers to purchase a home in a way that respects the communities that already live there, not just chase the next undervalues.
Problems also arise, agents say, when a community’s history is disregarded.
“There was a big pushback of gentrification in Highland Park, where people were actually tagging brand new builds, and it became a little bit of a volatile trend,” says Sabatella. “Don’t go in and think you’re going to completely gut everything and make it this brand new concrete cube that’s super modern, from a Craftsman that was built in 1920.”
Before making any purchase in a new-to-you area, spend time intentionally.
“Walk it, eat there, shop locally, understand the community, and make sure you actually want to be part of it,” Weiss says. “Buying a home shouldn’t be about imposing your idea of what a neighborhood should become.”
The post Don’t have $1 million? Here’s what to know about buying a home in L.A. appeared first on Los Angeles Times.
