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Buy an Affordable First Home in California With These 3 Strategies

california coast
Nick Cunningham
california coast

You’ve got your pre-approval letter, found your rock star Realtor, and are ready to find the perfect California home to buy. You’d be having a great time if it weren’t for that pesky budget you’re trying to stick to!

Never fear. There are still affordable homes to buy in California. 

You just have to know where to look...and might need to realign your perspective. 

Remember, the term affordable is subjective and what’s affordable to one person may seem like a far-off dream to another. This article is designed to provide a few pointers and hopefully some new perspectives to help find a home that works in your budget.

first time home buyers checklist

Despite the ever increasing difficulty of buying a home in California (especially your first home), you can narrow the affordability gap to find a home in your budget if you know which areas to focus your search, and how to shop. Remember, if you’re searching for the diamond in the rough, so are a lot of other people.

Diamonds in the rough come at a premium. California has some of the most expensive real estate in the world and people from every corner of the globe shop for real estate here. Even large corporate buyers went in heavy during the housing crisis of the late 2000s. This is a reality that can make living in California extremely frustrating.


Try these 3 tactics to increase your chances of finding a great deal, and hopefully reduce the gap between what you want to buy, and what you can afford here in California.

Avoid the most expensive areas of California real estate

The most obvious way to avoid breaking the bank when you purchase a home in California is to steer clear of the high cost areas.

There are a lot of them and I’m not even sure ‘expensive’ is an adequate word to describe the cost; laughable, outrageous, ludicrous, unfathomable, are probably all better descriptions than “expensive” for the Bay Area and certain areas of Southern California.

Fortunately, there are still also a lot of affordable areas if you want to purchase a home in the sunshine state, and a change of perspective may help make those areas more attractive.

If your purchasing power relies on an income that falls near California’s median household income of $67,739 and you are hoping to find a 3 bedroom/2 bath home in San Mateo or Marin County, where earning less than six figures puts you in a low income earning bracket, it’s not going to happen. Heck, even put a 1 in front of that income and it is still going to be nearly impossible in those regions. 


Avoid one of the most common mistakes made by first time home buyers and try to remember that this is your first home. You have to start somewhere, and there may be many more homes after this one. Begin by looking elsewhere, and stop chasing an increasing curve you can’t catch.

That same pocket book would pack a better punch if you were shopping just up I-80 from San Francisco in the Sacramento Valley or outskirts of the East Bay, where homes are much more affordable. There are a lot of areas in California where you can purchase a nice home with space for growth just outside the more expensive neighborhoods.

The fastest way to realize satisfaction in your house hunt is to be realistic about your budget and ask yourself the important financial questions that will impact your first home purchase. Consider your willingness to commute or switch jobs if you find homes in your price range are not in the area you hoped they’d be.

freeway commuting

But keep in mind that wages fluctuate according to where you live. If you’re prepared to commute to a city that offers high wages, you can buy a moderately priced home on the outskirts, or telecommute if you job will allow it. Expect to make less if you’re working in a lower priced area though, and factor in the cost savings against the earning potential.

Apps that make your home search easier, like realtor.com, will be your best friend if you have to readjust your search radius.. You can move outward on the map feature from where you’d ideally love to live, and start to see pockets of less expensive areas on the map.

You can also use the realtor.com app to search schools and parks. You might be surprised to find out that a move from a more expensive area to a lower cost area might actually mean an improvement in school ratings, which can be good for the resale value of your future home later on.

Buy a less-than-perfect house in your desired neighborhood

If location is the most important aspect of your new home, you might want to revisit your needs-vs-wants list to find other places you can compromise. This might require getting nitty gritty about which features you can live without in a home.

california coast

Can you live with one bathroom and plan to add one later? Do you absolutely have to have granite countertops, or would an older tile countertop make the grade for a few years if it means you can finally get in the game and buy a house on your favorite block?

Remember, if you want to fund something in your budget and your budget is on the lower end for the area you’re going to need to compromise on a lot of other things.

Look for these types of homes in the neighborhood you would prefer to buy:

Ugly ducklings

A lot of house hunters won’t even visit a home with an ugly exterior. Homes that don’t photograph well might be perfectly sound, and require only minimum paint and landscaping to bring the aesthetic up to par with the rest of the homes on the block. Meanwhile, your foresight and creativity scored you a great house that nobody else would have taken a chance on.

Cheaper homes in older less confirming neighborhoods

Well established older neighborhoods might have grown house by house, with much variation from lot to lot, and house to house. In these areas, home values tend to vary much more than in newer subdivisions where homes and lot size are virtually indistinguishable. In a neighborhood like this, you can find a small or dilapidated home, and add to it, or spruce it up over time to close the gap between the higher value neighboring homes.

Big lots on busy streets

A home on a busy street might be less desirable, but can be reimagined to put emphasis on outdoor living areas in the back of the property. For example, you might take an underutilized area in the backyard and create an outdoor living space by adding a deck or patio and barbecue area. Solid wood fences can serve to create privacy and buffer sound, and fountains and water features can be added to reduce ambient noise from the street, creating an oasis that makes you forget you’re in the middle of town.

Dated interiors with cosmetic issues

A house that hasn’t been updated recently might be overlooked by someone with a flexible budget, but could be a diamond in the rough for an entry level home buyer trying to edge into the California real estate market. Children of the 80’s rejoice, for wall-to-wall carpeting and polished brass cabinet hardware make for a cheaper house, and are relatively easy to update once you move in.

Buy a great house in a less-than-perfect neighborhood

If the actual house is more important to you than the neighborhood it sits in, you could get a lot of value for your dollar buying a great house in a less expensive area. Neighborhood improvement projects and future developments can change the game for an adjacent area, and increase property values for everyone in the proximity. 

It is also good to have a realistic conversation about why you want to live in a specific neighborhood. If you nail down why it is you MUST live in a specific tract than you might find it easier to locate those same qualities in another area.

It’s not something many of us readily admit, but the undercurrent of pressure to keep up with the Jones’ may be influencing our perception of what we think we need.

Be brutally honest with yourself about whether you’re being influenced by this, and remember that keeping up with the Jones’ isn’t something you want to build your housing foundation on.

Which affordable home buying tactic is your best bet?

As a general rule, a home can be changed, but the location cannot. Evaluate your lifestyle and priorities before you decide if you can wait out a value increase, or if you’re more willing to put in some work to improve a home to add to its value.

If you have children, and may need to move to a bigger home in the near future to accommodate a growing family, focus on safety and concede that your perfect home at this point might not be shiny and perfect, but with some improvements will likely be a safe investment if you need to sell anytime soon.

If you care less about the location, and don’t see a need to move anytime soon you might be well served betting on an improving neighborhood. This tends to take longer than improving a home though, so be sure you’re prepared to stay where you are for a while.

Look at your priorities and be honest with yourself about what you must have in a home, and what you can live without. Remember, this is your first home. It probably won’t be your last, and making a smart move now will pay massive dividends later when you’re in a better bargaining position and have accumulated some equity to negotiate with.

Lastly, be willing to lower your expectations, accept that homeownership may come at a cost too. Maybe owning a home isn’t worth the loss of friends, loss of community or being near the beach, maybe it is; we’re not here to make that decision, we’re here to help YOU make that decision.

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