I was told there would be cake- i mean- affordable housing (Sacramento: for sale, real estate)

[andrew61987]

I'm 29M, single, no family, making $75k and have a tiny bit saved up. New to Sac but have always heard it's a bargain by California standards. Figured things would be pretty decent for me and have dreams of owning a house, but I was shocked when a crappy little 2/1 on a busy street a couple blocks down went on sale for over $400k. That's beyond out of reach. Who the heck is buying these things? I'm renting a house that's the same size for $1,275, something doesn't compute! I work in Elk Grove so I'm pretty much restricted to anything south of the American River and along the 5/99 corridor. I've cruised around areas south downtown but decent areas are almost as pricey, and Elk Grove, well, lets just say bored soccer moms are nice from time to time but I'm not ready to make that a full time gig. What would you do?

[Chimérique]

Originally Posted by andrew61987

I'm 29M, single, no family, making $75k and have a tiny bit saved up. New to Sac but have always heard it's a bargain by California standards. Figured things would be pretty decent for me and have dreams of owning a house, but I was shocked when a crappy little 2/1 on a busy street a couple blocks down went on sale for over $400k. That's beyond out of reach. Who the heck is buying these things? I'm renting a house that's the same size for $1,275, something doesn't compute! I work in Elk Grove so I'm pretty much restricted to anything south of the American River and along the 5/99 corridor. I've cruised around areas south downtown but decent areas are almost as pricey, and Elk Grove, well, lets just say bored soccer moms are nice from time to time but I'm not ready to make that a full time gig. What would you do?

It's a conundrum because the reality is there are a ton of homes, just not for sale, and a lot of those homes are owned by Bay Area investors that don't a give damn about Sacramento, so there they sit. And a lot of these types of neighborhoods are mostly rentals, marginal to run down, that could easily turn into decent to nice neighborhoods if the price point were just a bit lower, and those neighborhoods would turn into mostly owner-occupied neighborhoods.

You could take your chances and buy into a "bad" neighborhood and hope it gets better. They key is finding the least of the bad neighborhoods and finding one that has elements/attributes that would help the neighborhood move into the decent to good category like if it is near an employment center. Or if it is a neighborhood right next to the neighborhood that recently went from bad to maringal, or marginal to good. The adjacent neighborhood to such a neighborhood has more chances of improving.

[RcHydro]

Originally Posted by andrew61987

I'm 29M, single, no family, making $75k and have a tiny bit saved up. New to Sac but have always heard it's a bargain by California standards. Figured things would be pretty decent for me and have dreams of owning a house, but I was shocked when a crappy little 2/1 on a busy street a couple blocks down went on sale for over $400k. That's beyond out of reach. Who the heck is buying these things? I'm renting a house that's the same size for $1,275, something doesn't compute! I work in Elk Grove so I'm pretty much restricted to anything south of the American River and along the 5/99 corridor. I've cruised around areas south downtown but decent areas are almost as pricey, and Elk Grove, well, lets just say bored soccer moms are nice from time to time but I'm not ready to make that a full time gig. What would you do?

Welcome to the world. Pick your pleasures. Its all relevant. In my area, you might make about half as much, and the housing is also about half expensive.

[xenxes]

Plenty of affordability options if you open up your criteria to outside of just Downtown/Midtown. You have to sacrifice one factor out of the three: (1) price; (2) location; (3) house condition in most urban places. Unfortunately you can't have your cake and eat it too.

Don't know your debt or savings level, but on $75k you should be able to comfortably afford the ~$300k range @ current rates.

i.e., see <$350k in Sac current listings -- https://www.redfin.com/city/16409/CA...301:-121.52506

Still a good time to get into parts of N. Oak Park and Tahoe Park, $5 Uber to bars, 20 min commute to Elk Grove (against traffic). The area around Broadway & 34th is also seeing some revitalization.

[wburg]

We're in a really sick situation where prices are absurdly cheap by Bay Area standards but horribly expensive by the standards of someone making a Sacramento area salary. Local governments don't want to do anything to scare off those Bay Area investors, no matter how much people on the low end of the income spectrum are suffering as a result. Not sure what to tell you other than wait for the next crash--we're dealing with a large-scale unregulated market that tends to eat itself once every decade or so. If you can time your purchase for the next point when people are selling to stop their bleeding, there may be deals to be had.

[Adamson865]

"andrew61987", since you have admitted to being new in town, perhaps it would be best to rent for a while (a year or more) to get a sense of your new burg before you think about buying. Besides, home ownership isn't for everyone. You're young and single - time is on your side.

[nightlysparrow]

Originally Posted by andrew61987

...a crappy little 2/1 on a busy street a couple blocks down went on sale for over $400k...I'm renting a house that's the same size for $1,275, something doesn't compute!

$1,275/mo x 12 months = $15,300/yr x 30 year mortgage = $459,000

and that's assuming no rent increases over 30 years (not reasonably possible) and no increase in housing prices

[wburg]

Total cost of a $459,000 mortgage at 4% interest, not counting PMI: $788,000. So figure you could cover a $250K mortgage for about the same as $1275/month rent, all else being equal (which it rarely is.)

[xenxes]

+ utilities (~$100/mos for water+trash) + insurance (~$100-200/mos) + property taxes (~$250/mos on a $300k), so yes add another ~$500 or so to the rental figure vs. rent.

You are however building equity in the home rather than throwing that cash away.

[Stay West]

There's a difference between affordable and cheap. Sacramento is still affordable, especially compared to cities of a similar size on the coasts. I will say that most twenty somethings I see buying into the central area are doing so with significant parental help/investment. I also see people paying rents that were previously considered crazy for the area. That said, there's plenty of ghetto in Sacramento for cheap cheap cheap. You want reward for your investment? It's going to take some risk. Cake is for the lazy, real estate not so much.