April 7, 2016 by Ed Kennedy
Where to buy a first home in LA, SF, Seattle and Vancouver
Head out from Australia’s Eastern Seaboard across the Pacific Ocean and you’ll soon find yourself on the western shores of North America. Here, within the American states of California, Oregon, and Washington – and then over the border Vancouver, British Columbia, Canada – a phenomenal change is being seen in local real estate markets underpinned by tech-driven business and/or the rising purchasing power of investors from Asia.
Just as daily news in the booming Australian property markets of Melbourne and Sydney perpetually talk of the growth and competition within Australia generated by investment from wider Asia (and especially China), so too is investment across the North American West Coast bringing about some exciting changes. By contrast, it is also providing a real challenge to first-time home buyers seeking to enter the property market and acquire their first home.
Yet, within a number of the hot button real estate cities there do remain some neighbourhoods and pockets of land where a good first home can be found at a price removed from the heights depicted in the headlines. So, let’s look now a little more in-depth at the West coast market with a city by city overview of Los Angeles, San Francisco, Seattle and Vancouver.
The home of Hollywood and composed of a sizeable demographic of artists employed in the movie, music, and TV business, the Los Angeles market shall always win attention for its jewels in the crown of Beverly Hills, Bel Air, Malibu, Santa Monica and more – but they’re not the only markets in town.
Within the bustling city of 18.5 million is a vast array of opportunities for first time home owners and investors at a lower and medium price points. This is especially so with a city and state-based first home buyer schemes on offer to assist in the process. After a substantive dip during the GFC, the Granada Hills area of LA now has a median home price of $562,300 and enjoyed a solid rate of growth in recent years. Situated north of the Burbank and within the San Fernando Valley, the commute from the Hills to downtown LA is respectable at around 30 minutes, and a below-median price of between $450,000-$500,000 can yield you a 3 bed and 2 bath detached home.
Westwards to Granada Hills along the Ventura Freeway is the community of Thousand Oaks. The Oaks has a median price of $618,850 – and while a longer commute than the Hills of around 1 hour in total to Downtown LA – a 3 bed 2 path house purchased for between $500,000 and $550,000 will give you close access to many surrounding attractions like Wildwood Park, the Santa Monica Mountains, and Malibu Beach. Accordingly, with a number of 1 bed 1 bath condos also regularly listed for at or sub-$250,000, it is an area that can cater for first time home buyers seeking a family home or a smaller property for singles or a newly married couple.
Finally, on the South-East side of LA sits Orange Country. For those who love the lifestyle of the OC – or regularly work along the LA to San Diego corridor – this area can make a solid pick for a first time home buy with 1 bed 1 bath condos for around $199,000 and 3 bed 3 bath houses available around $425,000-$450,000.
Of all the cities along the West Coast of North America San Francisco has experienced the most remarkable change, so much so house prices are now the highest they’ve ever been in the Golden Gate City’s history. Largely driven by the Bay area’s renown as the leading tech city of the world and close proximity to Silicon Valley – with famed tech brands like Apple, Alphabet (AKA Google), and Facebook all situating their headquarters within the surrounding reaches of the Golden Gate city – the change brought about over the past decade to real estate prices within the San Francisco market has been astounding.
What’s more, notwithstanding yearly fluctuations or the prospect of a slight downturn in the Bay area property cycle (if the view is held the market is near peak), the propensity for future infrastructure to further drive up prices, the ongoing plans for further expansion by the giants of tech, and even the central location of businesses such as Twitter within inner city San Francisco’s Tenderloin district now set to undergo gentrification all suggest the market shall continue to rise and rise.
As a result of this incredible surge in house prices, San Francisco looms as a considerable challenge to first time homeowners. Alongside the statewide California program, the first time homeowner program offered by the City of San Francisco may not be perfect, but offers some measure of assistance to those who wish to commit to a property purchase within the city.
Yet, notwithstanding the immense growth and prospects for it to continue in future, it is also undoubted that the market is incredibly hot now, but a cautionary note should be sounded for those who feel it would continue with any no slow down as the Bay area has a history of boom bust cycles – and the current boom has been going for the better part of ten years now since 2009.
So, first time buyers may wish to look outside the city for their purchase, or buy very conservatively with a willingness to commit to a long term hold if necessary in the event of a downturn in the market. Therefore, if a must-buy time, then looking East of the San Francisco CBD to a property in Parkside is opportune.
With a median house price of $1 million, the expense and size of the commitment cannot be overlooked, but some luck can be found looking at the lower end of the median to houses in the $700,000 range if a first time home buyer has been able to ride the tech boom into a well-paying job or a married couple can pool together resources to get a first entry into the hottest market in the US right now.
Seattle was held by Forbes magazine to be within the top ten cities for real estate investment in 2016. And, situated just outside the metro bubble is Snohomish with a median house price of 435,000.
For those that don’t mind a longer drive into the city, Snohomish county further north offers even better value with a median price of just $348,100. While this is unquestionably a long term buy and hold for a new young homebuyer, with Seattle set to serve as a second base for the tech boom of San Francisco, the prospect of another major Google or Facebook HQ – or even an expanded presence from one of Seattle’s own tech giants – within the surrounding area could overtime bring a real spike in demand and home value.
Then there is the North King County area with a median price of $635,200. All over, Seattle also looms as a very attractive real estate prospect, and for a number of reasons. First , its potential expansion city for a number of tech hubs within San Francisco given its already demonstrated proficiency with tech giants such as Microsoft and Amazon. Then, there is already the ongoing tech presence.Third, there is the effective policy being put forth by Seattle city planning that shall offer positive prospects for a working accord to remain in place going forward between buyers, developers, and city planners.
There is a sense of deja vu surrounding this experience. In the 1980’s Japanese investment across the Pacific and around the globe was immense. This is recognized in both the US and Canada.
Another trip up the Pacific highway and across the border into Canada shall also sees some attractive prospects within what it also a hot real estate market as of early 2016. While areas close to the Vancouver CBD in the South-east like Renview Heights bare similar prices to the more expensive property areas of Los Angeles and San Francisco – with a median price of $1.5 million CAD ($1.1 million USD), just across the Harbour and within West Vancouver are a number of areas in which good value first homes can be found.
In particular, Park Royal and Ambleside- though just a 15 minute drive from the CBD of Canada’s’ third largest city – have a number of houses with 1 bed and 1 bath priced between $250,000 to $350,000 CAD ($191,000USD to 268,000USD respectively).
For those intent on living close to the CBD East Mount Pleasant is good. Just a ten minute drive from its southernmost streets to the Vancouver Public library downtown it is not suprising the area is populat with alot of young first tome home buyers who value close proximity and the chance to commutte via bike or even walk between wokr and home.,
Finally, there is the neighbourhood of New Westminster. While a little further afield at around 26 minutes drive from the city library, it is a historic neighbourhood with gorgeous tree lined streets and sits upon the Fraser river. With a median house price of $979,000CAD ($747,000USD) the prices are not small but for those that crave a community that is both still close to the community but feels separate from it New Westminister provides a quaint village charm.
The caveat to investment in Vancouver at this current juncture is predictions of a market correction have been widely discussed for some years now. Given this correction has not yet happened a confident investor may take this as sign it will not happen; but even those who subscribe to a long term view of uninterrupted economic progress and rising house prices within Vancouver need recognise caution is always sage in this sphere. Accordingly,just as with SF, buying modestly and with a long term view is prudent for first time home buying.
Property rises in Vancouver have been driven both by the boom in Asian investment and the encouragement of investment from the Canadian government. This policy has held similarities with Australia’s efforts to encourage investment within the local economy.
While expensive off all the markets here Vancouver seems most ripe for a correction. For those who find the Vancouver market expensive the prospect of investing further afield outside the city looms as a good one. While the hour and ten minute commute from Abbotsford to the Vancouver CBD may seem sizeable to local’s minds, it must be recalled such a trip further down the American coast in Los Angeles could be seen as routine – and even good.
Another growing market: property in Portland
Portland is among the most promising West Coast markets at present. Within close access to Seattle and Northern California, the city of approximately 700,000 has a pronounced startup and tech scene of its own – that when combined with its reputation as a bustling arts and culture city that provides it a very distinctive identity as a West Coast city – brings with it the prospect of its emergence as a new hub for American business just as the Bay Area has emerged alongside Los Angeles and Seattle.
A great pick in this part of the world is just South of Raleigh Hills in the South West. Most famously know for holding the worldwide headquarters of the Nike athletic wear, just a 20 minute car trip from the Portland city centre by car – and around an hour on bike for those keen to take enjoy this cycle-friendly city – condos here go for $110,000 and 3 bed 2 baths homes from around $295,000.
For those keen on a closer proximity and urban living the Downtown area surrounding Portland State University is also a good spot with 1 bed 1 bath condos for starting at $199,000, with 2 bed 2 paths going for $399,000.
The bottom line
While demand driven by the tech boom and Asian capital investment is good news for homeowners and wide confidence in the US economy, it has given rise to the challenge of affordability within LA, San Francisco, Seattle, and Vancouver among other cities. While the tech and startup scene is not as pronounced, this experience is reminiscent of what is being seen Sydney, Melbourne and numerous other cities in Australia and New Zealand.
The growth of a city outside of a real estate boom generally takes time, and is influenced by a number of factors. Yet, just as Australia looks long to its North as an area of ample opportunity for development (which shall continue to drive growth in Brisbane and Darwin) so too shall we see increasingly growth on North America’s West Coast that has long had an association with the Asian region, but within the 21st century is set to experience a deep and ongoing relationship.
Rather that awaiting a market correction or a return the house prices of old, new investors may be best served seeking a foot in the market sooner rather than later, or by seeking to invest long term in a new area set for growth. Finding the balance between these two options is where the real chance to make the best first home purchase resides.Ed Kennedy is a journalist and web designer proudly from Melbourne, Australia. Say hi to Ed via firstname.lastname@example.org or on Twitter @Edkennedy01