Buying a home is a big part of the American dream. But for many Americans, it’s just that…a dream.
Home ownership is climbing out of reach, especially in Southern California. Will it ever be affordable again?
On May 16, KNX News gathered a panel of homebuyers and housing experts to discuss SoCal’s skyrocketing housing prices. Panelists included:
Cassius Rutherford, a UC Irvine grad who works for an EV charging company. A single father who also helps care for his own father, Cassius has been looking for his first home in the Anaheim/Yorba Linda area.
Maria Rosales, a public health research assistant who spent years searching for a house in South L.A. before finally buying her first home in November with the assistance of Habitat for Humanity L.A.
Elisa de la Pena, a civil engineering and transportation professional born and raised in Southern California. A perpetual renting millennial, she’s on a journey to become a first-time homeowner.
Melinda and Scott Tamkin, a husband-and-wife realtor duo with the Tamkin Real Estate Group. They’ve sold a combined $1 billion worth of real estate over their 30-year careers.
Elizabeth Hansburg, an urban planner and founder of People for Housing Orange County. She’s led a grassroots “YIMBY” effort to build public support for more affordable housing in O.C.
Francesca DiBrito, Senior Vice President at Habitat for Humanity of Greater Los Angeles. In her 15 years with Habitat L.A., she’s secured many of the resources the organization needs for its construction, affordable lending, and home repair programs.
*This QnA has been edited for clarity*
Can you give us a sense of the frustration that you experienced in trying to find a home?
Rosales: “The frustration was more rooted in the need of finding a home, I think … I lived in transitional housing for many years, and that can be defined indifferent ways, but for me it was defined as living in a mobile home – three, to be exact – for two decades. So out of desperate need, and not only my need but also my family – I live with my parents and my younger sister – looking for a home became, that was a driving factor to look for that. And yes, it was very expensive. My goal in life was to stay in the community where I’m from, which is Willowbrook.”
Rutherford: “Orange County is definitely, it’s where I went to school and where my network is, and friends and a lot of family are … But even the outskirts of Orange County, like Yorba Linda, is completely unaffordable. So South L.A. County, the Inland Empire, is where a lot of folks my age in Orange County are going to buy a house actually.”
De la Pena: “I've never lived in a house, I've always lived in apartments. I’ve always rented. And I see friends who are maybe in better positions, they have a little bit more intergenerational wealth, that have been able to overcome a lot of the barriers, and even then, even with that support form their families, from their communities, from their well-paid careers, it’s still challenging. It’s still incredibly competitive … We’re in a place today where I’ve had to back away from applications, back away from potential homes because of the competitive nature of it, because I would absolutely be struggling to enter, to hold onto this house if I did manage to win this bid.”
Are these typical stories for hopeful homebuyers?
Melinda Tamkin: “I think they are, yes, probably typical of what you’re hearing in the market, but there are ways, and I think our job is to present creative solutions to find a home … I don’t think this is out of reach necessarily for everybody. It might take a little longer to get there. It might mean casting a wider net. You're looking at other areas now. But I think there are so many opportunities, we just have to keep working towards them.”
Even if someone were to find a home, where does the money to live and raise a family come from when you’ve got a high mortgage?
Scott Tamkin: “Part of that comes down to finding the right quote-unquote product. Not everyone can afford the three-bedroom, two-bath house with a pool. That's sort of the American dream, right? But there are other options. There are tenants in common properties, for example, where you could buy an apartment building and go in on it with four other people and you each have a unit and you have ownership in that product. There’s a duplex or fourplex or a multitude of properties that you can go into with other investors and can afford it.”
What about people who still can’t afford those options?
Scott Tamkin: “It’s gonna be out of the area, out of the state, a lot of people are moving out of the country. I mean, it sounds ridiculous, right, but those options are to find a job elsewhere, leave your community. It’s horrible to think about. And then of course, continuing to rent.”
There’s no shortage of houses in Southern California. Who’s living in them now?
Scott Tamkin: “The people that financed at 2.5-3% years ago. They’re not selling, and that’s keeping a very tight grip on the market. That will change … More properties will come on the market, but we’re not facing a situation where there’s gonna be a lot of inventory hitting the market any time soon.”
How fast are bids coming in for houses on the market?
Scott Tamkin: “It’s incredibly tied to the list price. So if the seller is wise and says, oh, you know, the property is worth X, I’m gonna list slightly under X, they get multiple offers, will sell very quickly. A lot of sellers are stuck in the mindset of several years ago where you can put any price on it and the buyers will come, and that's not necessarily the case.”
When you’re looking for a home, what are you finding?
Rutherford: “I have some basic standards, with a family and a young child, you know, you want air conditioning for the summers. But yeah, it kind of feels like climbing a sand dune, especially over the last few years where interest rates have been changing, home prices have continued to accelerate rapidly, so you know, for some people that can outpace their ability to save. So it has been challenging to keep up with that and to, you know, continue putting money in the pot without having to dip into it for other emergencies that come up.”
What’s your advice to be competitive against other prospective buyers?
Scott Tamkin: “The important thing is to focus on where your strengths are and why you’re the buyer for that property, which is another reason why you want an experienced agent, because they'll know how to maneuver that process, how to communicate with the seller … It’s not always about the top dollar. Oftentimes, sellers want to sell to a young family because they have an emotional attachment. So how do you pull on the heartstrings of the sellers so that they understand that?”
How did you finally find a house?
Rosales: “I was able to achieve homeownership through Habitat for Humanity. The program is designed for first-time homebuyers who come from low-income families to go through this process and achieve a home. … They were building in my neighborhood, so that stood out to me. It was an empty lot, so I went in, and I was desperately looking for a better place to live in, and I saw that they were building. They had a virtual session in the community, and I attended that. They had very strict requirements with credit score, income, job, background check, you name it, and they described it as a very intense college application … I took that leap of faith and then that’s where it all started.”
Have there been near-misses where you were close to something you thought was doable but didn’t take the leap?
De la Pena: “It’s something that you want to go into with a full understanding of what the consequences might be. And I’ve been open to all of these options. I haven’t confined myself to one specific area, I haven’t confined myself to searching for single family homes. I have contacts in the construction, in the building industry, and I’ve looked for lots that could potentially hold ADUs, knowing that could potentially help me qualify for a property. With that, it’s still not enough. … There’s cash buyers that show up for these properties, especially if there’s that potential for income, for rental, as an investment property.”
“For me, a first-time homebuyer, yeah, it’s an investment in my future, but it’s fundamentally shelter. I need a place to live. I need a place to take care of my family. I do not have a son because I don't feel like I can have one. I don't feel like I can afford one. And I know a lot of people my age feel the same way. Where am I gonna raise my family? Stuffed into my one-bedroom ADU? It’s not practical. And I unfortunately have had older colleagues give me the advice of maybe look elsewhere, maybe look out of state, and that is not a solution.”
Scott Tamkin: “Cash buyers aren’t always the best buyers. Oftentimes cash buyers think because they’re cash buyers, they can offer less. So if you can offer more and afford more, there are different things you can do to change the balance of that. Unfortunately, out of state .. for a lot of people, they might have to. It’s just the nature of Southern California. And frankly, if real estate prices came down significantly in Southern California, we would fall into the ocean because the whole world would come here.”
De la Pena: “I've already seen in my case, in my family personally, and I know anecdotally around me, people are leaving because of the affordability. That’s an issue … I mean, I understand the fear that California, Southern California especially, is a very beautiful place to live, but I am part of this community and we need to be able to keep me in my community.”
Will owning a home in Southern California be affordable in our lifetimes?
Scott Tamkin: "I think that the standard product that we all know of - a home of a single-family house, a condo - is probably not gonna be affordable enough to where the majority of the people that want to get a house, can buy that house. So the product needs to change.
So my recommendation is that four [colleagues or friends] go by a fourplex together as tenants in common, and you hold that as one single assessor parcel number, you share on the taxes...
It's not a small little condo, there are no HOA fees, the four of you own that building together, and people don't think about that, but it's a great way to step into legitimate home ownership and you own 1/4 of that property."
De la Pena: "So what he's talking about is a unicorn property because those things are few and far between and also something that is going to be difficult to compete for.
That feels like a solution, but it's still not easy to find something like that."
Based on his response, Rosales posed a follow-up question to Scott Tamkin.
Rosales: "What families do you serve? Describe a family that you help get a home... like demographics of the families?"
Scott Tamkin: "All kinds of different families."
Melinda Tamkin: "I mean, surprisingly, even though our office is on the west side, a lot of our business is on referral and we've been doing it for so long that we are selling properties from Malibu to the San Gabriel Valley. We sold a house not long ago for someone in Pacoima, so it's a wide range."
I would say, as we mentioned earlier, this is your biggest investment. You want someone who has experience, who can think out of the box, who can tell you to cast a wide net. And we are maybe not experts in all of Southern California, obviously, we don't work in Orange County, but we understand the market and we can help our clients think creatively.
So I don't think we're describing a unicorn property, but what we're saying is think out of the box, think about joining efforts with someone, and maybe a duplex; duplexes may be easier to find than a fourplex, but you can find something like that. It might need work, but you might be able to combine your resources with someone else's resources.
And so maybe this family that we're describing or you or whoever, may be not the typical family we work with, but we can certainly understand the plight of what you're trying to do and, and offer you ideas."
When did the housing market radically change?
Scott Tamkin: "When you look at the increase in equity of homes and the value of homes over the past 20 years, in line with the amount of money people are making right now, the cost of housing has gone way higher on a percentage basis than earnings.
So I think, especially in southern California, a lot of it has to do with the influx of people from other areas, other states, other countries who come with money, who wanna buy whatever they can buy and collectively sort of keep the market buoyed.
Even just after the last earthquake in '94, properties went down for a little bit, but we forgot all about it, and properties shot right back up."
Scott and Melinda Tamkin stepped down from the stage, making way for Elizabeth Hansburg and Francesca DiBrito, two people working on solutions.
Who can benefit from Habitat For Humanity?
DiBrito: So technically, we'll say low-income - 30 to 80% of the area median income.
Homeowners could be making in a family of four maybe $95,000, which seems like a really great salary, right? But can you live on it?
Our typical homeowner might be making 85-$90,000 a year, a couple of members in the household, and so.. We require a lot from our families, it's not easy, right?
Good FICO score, down payment, consistent mortgage, 40 hours of financial literacy -- We're a HUD certified counselor, so we do provide those classes --Sweat equity, everyone's favorite.
You have to help build your home or help build someone else's right, a lot of skin in the game."
Do they know in advance what the mortgage is going to be once the home is finished?
DiBrito: "Yeah, absolutely. It's all part of it."
Are these non-profit programs a necessity in today's housing market?
Hansburg: "Yes, it is very important that we put money behind down payment assistance for families.
New Americans, people that are not necessarily coming with generational wealth, especially 1st generation American-born children of immigrants, you know, most people come here with not much to get a better life for their family, so I think providing that assistance and that scaffolding to make the new Americans, the next generation of homeowners so that the American dream works for them is really, really important.
But I just have to say I have a very different perspective than one of the realtors. I think you are totally overlooking the opportunity for new construction.
The idea that the problem is that we have too many people is I don't agree with that. The problem is that we refuse to build and the biggest people who are barriers to building new housing and increasing the supply of housing are the people who already have the homes.
I advocate for affordable housing all over Orange County, and I'm telling you, it's the single-family homeowners at the shared property line when the developer wants to build a two-story or a three-story townhome who freak out about the fact that someone might look in their backyard."
Isn't it also because, rightly or wrongly, they think it will bring down their property value, and does it?
Hansburg: "Government does not exist to preserve the home values of existing homeowners, government exists so that we can all live together in community and govern ourselves effectively so that everyone's rights are protected."
You say the government doesn't exist to protect the home values of their constituents, but in practice, that isn't always the case
Hansburg: "Exactly, which is why if you care about the future, if you care about the next generation, if you want your kids to be able to live here too, you have to elect people that are willing to allow for more housing to be built. More housing, to be built at higher densities in places where we might not have thought of."
So where do we put all of these homes?
Hansburg: "I have an email full of people asking me, hey, can you send a letter of support for my project? There are people that want to build.
I mean, the three-story townhome with tuck under parking - that's a typology that is the first-time home buyer product in Orange County.
Now, it probably will come with an HOA, so some people may not want an HOA, so we need to have other choices, too, but that is very much the first-time home buyer product in Orange County.
And the reason that the HOA's are there is because Prop 13 has starved city government of money, so when you're building and you're having to pay for all this infrastructure... we do it with townhomes or any type of multifamily homeownership, the city services up to the property line and then the HOA takes over and deals with all of the individual homeowners within the development.
It's a different model, but we in-part are doing this because cities don't have the budget for public infrastructure because of Prop 13."
Cassius, have you considered Habitat For Humanity?
Cassius: "Unfortunately, I'm one of those folks that does have an income that prevents me from qualifying for a lot of these new programs, but the reality is a lot of us that have been successful and checked all the boxes that we were told from a young age that we were supposed to and, you know, that would get us the American dream.
For people making six figures with decent savings and no debt, it's still really difficult, right? The goalpost keeps going farther and farther."
Do we need to reassess the dream?
Cassius: "Yeah, maybe we have to reassess the dream. I mean, I have a little bit of flexibility because I work remotely. But it's still like, I really appreciate Elizabeth's point and what people for housing advocates for because yeah, should people that can disrupt communities too, for people to be displaced and uprooted from their networks and families and friends?
Does that bring our communities closer together or does that bring our communities further apart?"
To what degree do young hopeful home buyers need to change their view of the American dream?
Hansburg: "I think that home ownership is such a part of the ethos of the American dream or the California dream.
I mean, that program is called Dream For All California Dream for All program, right?
It in its first incarnation, I believe was serving families up to 210% of area median income. The new numbers just dropped for Orange County - $129,000 is a median income for a family of four, so do the math on that.
And last year that is around who could be assisted by this down payment assistance program.
It's wacky when we're subsidizing people making 210% of every media income. I'm not saying I don't wanna do that, I do, because I want Elisa de la Pena to live where she wants to live, which is Orange County, right?
and Cassius and Maria to live where they wanna live in their communities.
So I'm not gonna ask them to change their mind or to give up the dream.
I think part of the problem we've had is that for so long, southern California only wanted to build single-family homes, and currently, a lot of the older whiter wealthier - I call them Harry and Harriet homeowners -they're usually nimbys, the only housing that's acceptable to them that can be built on the adjacent property is a single-family home.
So I think we have to expand the dream, but I don't think anybody should give it up because it's what made America work."
Has anything you've heard tonight been helpful?
Elisa: "None of this is new information to me.
I've had the pleasure of putting in some sweat equity, not for my own home, but just to help somebody else achieve their dream.
I think everybody on this couch is optimistic, we still believe in that California dream, that American dream because I have friends and colleagues that have given up, they have decided to relocate, they have decided that they'll be renting forever.
But I'm here because I think that there is opportunity that still exists in California.
I live in an ADU and that's something that can fit on a single-family home lot.
I wouldn't be able to live in the neighborhood that I live in were it not for that ADU, I love it, I love that community, I feel like a part of it, and I could not afford any of those homes.
So I think that yes, it's important that we continue to look for creative solutions.
I just want to empower people my age. I want to find something that we can do at our level because I feel like I'm at the whims of the market, which I don't have any control over, the local government policies, which as a renter, I don't have a lot of political sway.
Builders, I understand their hands are tied because they need, return on their investment for each of these properties, but let's start thinking outside of the box, let's start thinking outside of the market and that's what Habitat for Humanity does because those homes don't go back into the market."
Do you think people in older generations get what you're going through?
Elisa: "I think the vast majority of current homeowners don't really understand or they've been outside of this so long that they don't really understand the realities as they exist today.
So I think the people that do get it, the homeowners that understand the plight, are the ones that are realizing that their kids can't stay here, their kids are going to have the same exact struggles as me, and they're realizing, you know, that something needs to happen."
So what can younger people do?
Hansburg: "There's all kinds of models that we can talk about, we can talk about community land trusts... a lot of the universities that have a model of for faculty housing where the land is held by the non-profit and then the people by the structure... there are models that can be looked at.
DiBrito: There's a great website called down payment resource dot com,
that's very simple.
You can just plug in your salary and where you're trying to look, it could be as vague as a county could be as distinct as a street. It's not a Habitat-affiliated site, but it is helpful as a resource to look at what you might qualify for.
Habitat has a great down payment assistance program, and these are things that are just not Habitat-specific. We get money that emanates from the feds and comes down through HCD.
We now have a program for families up to $100,000 in down payment assistance.
So I would say like, let's look at other resources - between looking at the down payment assistance, things that you can do immediately, looking at these resources, other loans that are available and taking advantage of some of these homeownership classes to try to work the system in our closing minutes."
What do you think the future has in store for people looking for a home?
Rosales: "So, at least for me, I'm learning this process, and I'm very excited for what's to come. If it weren't for Habitat, I wouldn't have been able to achieve this, and I am very, very, very blessed to have been able to have such an opportunity come my way.
I think for people my age, I think it's definitely just being hopeful and also being advocates for fighting for this, right? I think that we all deserve to have a very decent home, and I think just partnering with nonprofits like Habitat or People for Housing.
Working with people who will have a better understanding of your condition and not really putting the blame on you... because that's what Habitat did for me."
de la Pena: "I'm not worried about my generation, honestly. People in my income bracket can still afford rent even when they hike it up, and I was still able to stay in my place.
I'm more worried about people that aren't in my income bracket and we're more worried about people that are older, the 'silver tsunami' that's coming.
I'm worried about people that are getting priced out. It's not a secret that we have a homelessness crisis, and I'm from here, I've seen it get worse and worse and worse.
So that's really where my concern is."
Rutherford: "I definitely agree with what my fellow panelists have said.
I think especially in a place like Orange County or Los Angeles, there's a really tough reality for young people that sets in like in my case, you know, renting a nice, larger, two bedroom unit over 1000 square feet, It's actually more affordable to rent a nice product at that size than it is to buy something.
I do fundamentally think based on our experience and what everybody's experiencing there needs to be change in the housing market.
The status quo, what worked for people 50 years ago, was awesome, but how do we recreate that today because that's not working.
I think it's really important to also speak out. As Elizabeth said, talk to your local council members. If somebody ever asks you for your vote, ask them what they're doing about housing."
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