Can you afford the American dream in California?

It seemed like a good day to look at open houses. After being back in America for six months we decided to see what it would take to achieve the American dream of owning a home. I had been reviewing the housing market, and I knew we couldn’t afford much more than a house condemned and ready for demolition. So, why would we torture ourselves and our kids by looking at open houses? I blame my childhood.

When my brothers and I were younger some Sunday afternoons my mom would take us to look at open houses. It was just a fun time for us. We would argue over which room would be ours, and annoy the Realtor who wanted to sell the house, but could tell by our greenish-yellow Ford Pinto Station Wagon parked in the front that we really weren’t in the market. It was fun to dream a bit and then we would go back to our home that my dad had kept together with large amounts of duct tape (it stayed together until my mom sold it–now it’s a day care center).

So, it was Sunday afternoon and all the little “open house” signs were beckoning us to take a peak at how the other half lives. We didn’t look at large houses–we were looking at moderate homes–1500 square feet at the biggest, small yard, decent neighborhood. We don’t want a big house–we want a small house that doesn’t cause too much damage to the environment (if you want to start learning about environmental stuff, check out the Green Times blog). However, we were just torturing ourselves.

After looking at five homes, I was ready to buy a Winnebago. I got a great laugh reading a billboard on the highway. It mentioned homes that were for sale in the low $1,000,000. How could you put the word low next to $1,000,000 and not notice the irony? There is nothing low about $1,000,000 even if you compare it to the high $1,000,000. Once you are talking about that kind of money, does it really matter anymore? We are talking about a million dollars for a place to put your stuff. It really puts things in perspective when you consider that half the world lives on less than $2 a day. Spending only a half of a million dollars on a home doesn’t seem right when you think about that fact.

I don’t know if I can go look at any more open houses. The second to the last house about did me in. I was looking at a 1300 square foot home with shag chartreuse carpet selling for the mid-$600,000. An average-size cosmetic fixer-upper for over a half a million dollars. Is it just me, or is something wrong with this? I have to pay that much money and then pay to change all of the horrible flooring, get the sparkly popcorn off of the ceiling, fix the windows, sliding glass doors, remodel the kitchen and bathrooms so that the house looks like it wasn’t stuck in the 70’s? Or maybe it would be easier to just pretend we are the Brady Bunch and say groovy and hang up beads in the doorways. I think, if the house is stuck in the 70’s then the price should be also!

In Spain, just about everyone owned their house. I think Spain has the largest number of home owners than any other country. Of course, this is changing now with the high real estate prices. But, is it always wise to buy? I have a confession, I enjoy watching the Suze Orman show. My favorite part is when people call in to ask if they can afford to buy something. Many times people ask if they can afford a house or tell a sad story about a house that has cost them too much. Honestly, it makes me feel better to hear how worse off people are because of the lies they hear, like: you should always buy rather than rent. It isn’t always wiser to buy than to rent, is it? Especially, when you are in a place like California and your husband has just started a new career. It’s hard though, because you keep hearing that voice saying,  I want the American dream, I want to buy my own house

I put our figures in one of those should-you-rent-or-buy calculators and guess what? If we bought a house and then sold it within 5 years, buying would cost us over $15,000 more than renting. So maybe the American dream can become a nightmare? Is it a wonder so many Californians are packing up and moving to Nevada, Oregon and Arizona? Does the great California weather warrant such a high price for real estate?


16 Comments (+add yours?)

  1. TSM-truth, sincerity, madness
    Apr 02, 2007 @ 20:45:58

    YOU are welcome to come up here to Oregon, but PLEASE don’t tell anyone else. We’re finally teaching the rest of the Cali-Oregonites how to drive correctly. Don’t need a fresh crop!

  2. tobeme
    Apr 03, 2007 @ 04:18:42

    It is funny how the taunt of having the “American Dream” haunts us. We feel almost obligated to buy a house and be married to a monster of a mortgage. Sounds like you are not one to be bullied into buying a house, simply because it is the thing to do!
    I agree, if I were in your situation I would probably opt to rent for a while.

  3. rjlight
    Apr 03, 2007 @ 08:51:33

    TSM -Oh, I don’t know if I can handle all the rain in Oregon!

  4. rjlight
    Apr 03, 2007 @ 08:53:11

    tobeme — thanks for visiting and commenting. It is hard when everyone around you is expecting you to buy and don’t understand why you wouldn’t! I have to remind myself of all of the many people who have so much less than I.

  5. Laura
    Apr 03, 2007 @ 13:10:41

    I empathize. We too live in California (with 2 kids) and though we do own a home–one we paid almost a half-million dollars for 6 years ago, we feel jipped by the cost of living here. Our mortgage keeps us worrying about money month to month and we envy the life-styles of our mid-western-living friends.
    All the while, we spend our Sundays at open houses too. We want a BIGGER house, one with room for guests. Afterall, what’s the point of owning a home in a beautiful place if your friends and family still have to sleep on the sofa when they visit? We’d also like a home with less of a COMMUTE. Yes, our home, which today would fetch three-quarters of a million dollars, is still far enough away to make my husband travel one-and-a-half hours each way to work. And of course, we’d like all those property taxes we pay to buy our children great–oaky even really good SCHOOLS. But no, we don’t get that either.
    Is this the American dream? Not mine. To buy that dream–where we have a four-bedroom house, a half-hour commute, and good schools, well that costs a good two million now. I laugh when I watch game shows and see people getting all giddy over winning a $500,000-$1,000,000 –that wouldn’t even by a house in my best friend’s neighborhood!
    We’d move to Oregon (where I grew up and all my family still lives) but there’s no work–plus the market has been Californiazed up there too.

  6. Luisa
    Apr 03, 2007 @ 14:12:58

    Hey, Girl, the house across the street from me is for sale at $513,000. Cute Cape Cod the right size, new kitchen and bathrooms, inground pool–any chance I could convince you to move to the Hudson Valley?

    Seriously–I grew up in CA, and I know how insane it’s gotten there. You are wise to question. The right thing will happen!

  7. rjlight
    Apr 04, 2007 @ 07:42:51

    Laura, thanks for visiting and commenting. My sister thought about moving to Oregon, but after they checked out the job market it didn’t make any sense to move. It’s just crazy here though. Something’s got to give…

    Luisa, Hudson Valley — as in NY? As in where that white stuff falls from the sky?

  8. Marketing Mommy
    Apr 04, 2007 @ 10:04:15

    There’s a house for sale behind mine. Three bedrooms and 1300 square feet, built in 1920 but very nicely decorated. It’s going for around $300,000–enough to give my Omaha relatives a heart attack, but it’s a bargain compared with CA. Our schools, library and farmers market are top-notch, we’re on an Expressway, and the El is 2 blocks away. Oh, but we’re right outside Chicago. Where white stuff falls from the sky.

  9. Luisa
    Apr 05, 2007 @ 08:50:13

    Oh, yeah, sorry–the white stuff does fall with frequency here in NY. But all things considered, I feel like I live in the best place on earth.

  10. rjlight
    Apr 05, 2007 @ 08:57:28

    You know, you just can’t have it all. I admit the change in seasons in the north is beautiful. My husband and kids want to see the snow. I do enjoy watching the snow from a comfy seat in front of the fireplace reading a good book–me reading the good book not the fireplace. 🙂 I will only be able to visit the snow right now as I need to be near my mom at this time but maybe one day…thanks for all the housing info. and great comments!

  11. Momma Knows
    Apr 17, 2007 @ 07:34:14

    Oh my! Yes I know this situation!! I spent 13 years of my transferred-around Coast Guard kid life in (various areas of) California, back when homes were affordable. I still have a few close friends there, one of whom is looking for a house to buy. They have a realtor who emails them new listings, and she has passed some of these on to me. In the Bay Area, you can purchase a lovely 1200 sq. ft. 3 bedroom home with a moldy bathroom, a one car garage, and kitchen cabinets falling off the walls, for a tidy $550,000.

    So, then I email her homes selling around me, where you can pick up a beautiful home, less than five years old, 3-5 bedroom 3000 sqft. for $280,000, with a landscaped yard and 3 car garage. Her husband told me, “Hmmm…. I like Washington….” 🙂

    But, as TSM said, we are still teaching the existing Cali-transplants how to drive! And TSM, I’d LOVE to move to the Oregon Coast. Rain’s just fine with me!! Give me back my OCEAN!!

  12. Momma Knows
    Apr 17, 2007 @ 07:35:35

    Oh I almost forgot: We have that white stuff too. We had some the first week of April, as a matter of fact. I guess ya won’t be up my way any time soon eh? 😉

  13. rjlight
    Apr 17, 2007 @ 12:37:52

    yeah, I either have to be happy with the weather and shut up about the real estate or move don’t I? But rain? White stuff? I was wondering who this momma knows was? 🙂

  14. Sinnfeiner
    Jun 21, 2007 @ 23:36:01

    I know what you mean, when I was in San Diego – it was barely feasible to rent anything decent. And by decent, I mean something that didn’t pass as a tenament.

    Then I moved to Portland, but always years too late. The area I was in had a lot of other California residents – most of which had previously owned homes and then re-purchased in Oregon, severely inflating that market to where I couldn’t afford a home in the Portland metro either. A decent home, anyway – and by decent I define it as a place with more than 600 sqft and isn’t falling apart.

    Portland had very polite drivers, for the most part – though I’ll confess they drove slower than I was used to. But meh, not a big deal. I didn’t care for the transit system either, but I’m used to a European model. I found Portland bus drivers to be relatively rude and just plain odd. And the stations were never convenient for me nor the times, but that was just my experience – others loved it (oddly, in my opinion). You want a good laugh about that, visit the Portland craigslist, you have partisans on both sides that love it or hate it. Oh and it’s a very cycle friendly area too, at least Lake Oswego was.

    The rain wasn’t so bad, for the two years I was there, I found it didn’t rain nearly as much as people professed it would. Oh and renting in Oregon was far less insane than California too – I could get a very nice, posh, and large flat in Lake Oswego for under $800 USD. Of course, I don’t live Oregon anymore either and that was a year ago – so who knows? I feel your frustration thouh! 😀

    Abiding Sense of Tragedy

  15. rjlight
    Jun 22, 2007 @ 07:31:33

    Sinnfeiner — thanks for your comments! Obviously you know what I’m talking about!

  16. Nedra
    Oct 06, 2007 @ 10:29:51

    uh! Modesto and the central valley still affordable….no white stuff, needs rain…lots of hot weather in the summer…2 seasons summer and winter commuting necessary to, well just about everywhere….anyone interested??

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