LOS ANGELES — It was never Meah Burstein's plan to move into her parents’ guest house.
The 26-year-old was enjoying living in downtown Los Angeles with her fiancé, 28-year-old Lenard Gorokhov, far away from the suburbs of Woodland Hills where she grew up. But then COVID-19 hit, and all the things that made living downtown enjoyable suddenly disappeared.
What You Need To Know
- Housing prices around the U.S. have increased by 15.7% in the past year
- Millennials are the fastest growing group of people entering the property market, according to Core Logic
- The average cost of a house in LA County is over $700,000
- Real estate agent Kevin Stewart says that most people he works with are putting in over 10 offers before securing a property
“We made the call in October of 2020 to move back here,” Burstein said.
They set up home into a one-bedroom guest house above the Burstein family garage.
“We’re in a very blessed position,” she said.
Living rent-free has allowed the couple to save up in order to afford a down payment on a house. But given the California housing market, it’s not that simple. Burstein and Gorokhov had been planning to buy a property at some point, but the coronavirus led to them speeding up their plans.
Gorokhov, an attorney, and Burstein, a tech recruiter, were both working full-time jobs in a downtown apartment. For the past year, they’ve been focused on saving money.
"We doubled down on our approach," Gorokhov said. "We said, 'Let’s put all our eggs in this basket and live as frugally as possible.'"
Saving and budgeting might be the best approach for aspiring home owners in LA County, where the average house costs over $700,000. Richard Green, director and chair of the USC Lusk Center for Real Estate, said prices are skyrocketing without signs of slowing down.
"House prices have gone up by an insane amount, almost 16% nationally," he said. "Here on the west coast, even more than that."
Green explained that one reason for the escalating prices is that older home owners are staying put.
"One of the things we have noticed about baby boomers is they’re not leaving their house when they get older. They’re not downsizing. They tend to stay in place. In California, we have a law that encourages that behavior. It’s proposition 13, which basically limits how much property tax can go up. The most it can go up in a year is 2%."
The result, he said, is that it’s more difficult for younger people to get a foothold in the market.
“Our supply is very limited in terms of building, and people aren’t leaving their houses,” he added.
Green anticipates housing prices in Southern California will continue to rise.
“If you look at San Francisco, we now think of it as a very expensive enclave for high-income people. It is. If you look at it 50 years ago, it wasn’t like that. It was a middle-class city…I think we will see LA look more and more like the Bay Area in years to come.”
The competition in the market means that houses aren’t available for very long. Therefore, as soon as a property in Burstein and Gorokhov’s price range becomes available, they immediately arrange a viewing. They’re working with realtor Kevin Stewart, who recently showed them a three-bedroom house on a quiet street in Encino.
“I think the market frenzy is definitely due to young millennials buying into the market,” said Stewart. “I know in California and in a lot of big markets, there are a lot of young professionals who are making good money. They are getting smarter and want to capitalize on the market and not throw money away on rent.”
Stewart noted that properties in the first-time home buyers’ range are typically selling within a week. Most of the people he’s working with have had to put in several offers before securing a house. Burstein and Gorokhov have put in 10 offers so far.
“It’s unfortunate, but what happens is, when you are a new buyer entering the market, you want to put your foot in the door," Stewart said. "You want to negotiate, and it’s not working like that. When you find a property that you love, you have to step up to the plate and just give them that godfather offer in order to make the deal happen."
Burstein and Gorokhov have already felt the sting of missing out on a house they love, but they say they’re not giving up.
“The longer we look and the more we look, the more houses we view, when we finally get one, we’ll feel like it’s been so much work, but it builds up the reward at the end.” Burstein said.
The house will be more than a purchase, she added. It will mark the start of a new chapter.
“In a few years, we want to start a family," Burstein said. "One of the things we look at in a house is: Will it be enough space for plus one? Until then, it feels like our life is sort of in a hiatus.”