The first-time home buyer and those of us that used to be able to use our home equity to step up to a nicer or bigger home are getting screwed. We have no options. There is nothing worth buying. Because the step-up crew can’t afford to let go of their equity only to buy an overpriced home that will increase their mortgage by 1.5-2x they are staying put or renting out the home. That makes a low inventory problem worse for everyone looking for a home under $1.3 mil.
Buyers looking for homes in that range are making stupid financial decisions and buying ugly, crappy, tiny homes because they fear they will miss out. Someone just paid $1.1 mil to buy a 2/1 on a 3000sqft lot! It all sounds like monopoly money because it’s the sign of the times, but when you think about what a million dollars can do this purchase is outright asinine.
What we are left with is an ample inventory of homes over $1.5 mil. Know what it takes to qualify for a $1.5 mil home? An income of ~$400k. Think of your neighbors; out of 10 families how many are pulling in that much money? Wanna buy a $1.8 mil home? You’ll need to be making half a million dollars a year.
This week we have another McMansion for sale at $1.9 mil. This gaudy monstrosity is brought to you by Darren Pujalet. 5/4 4500 sqft priced at $420/sqft. It looks like it was new construction in 2011 when it sold for $1.25 mil. Let that sink in, this big-ass ugly house once sold for $1.25 mil. Six years later and its value has increased 50%? Get the fuck outta hear.
So despite the cabal of agents trying to make El Segundo the next Manhattan Beach think about people that make a half a mil a year and what their options are.
Don’t gamble with your life savings.