"Eat frankfurters and beans, tap all the sources of available credit, lower expectations from the dream location, sacrifice luxuries and somehow," urges realtor Warren Scoville, "find a foothold in the housing market.
"It's almost impossible to lose."
Scoville's recommended diet might be slightly exaggerated, but the thrust of his message to first-time home buyers is not. It is a message echoed by bankers, builders and economists throughout the emporium of high-priced housing known as southern California.
The frenzy may have faded from the market, they say, but the annual rate of price rises still is a bustling minimum of 12 percent, and there is every indication that southern California real estate will remain a solid investment for years to come.
There are no more lotteries held to choose buyers for houses in the new developments in Orange County, south of Los Angeles, but the crunch of three to five years ago has been replaced only by a more controlled scramble.
"The craziness is over for the most part," says Scoville, a Pacific Palisades office manager for Corliss Realty Register. "But I still get people in here saying, 'I have the money. Let's do it and worry about the payments later.'"
But with the median price of an existing California home reaching an all-time high of $75,519 in February, according to the California Association of Realtors, more and more first-time buyers are being squeezed out of the market.
Having recently sold a 700-square-foot, two-bedroom "shack" five blocks from the beach in Venice for $64,500, Scoville knows, as do others in the market, that the high prices are leaving many potential buyers unable to scrape together down payments or arrange mortgages.
But bankers and real estate people report that first-time buyers are taking a variety of steps that often are successful in disproving the notion that "affordable housing" is a contradiction in terms.
Those steps include:
Buying condominiums as first homes to gather equity.
Commuting longer distances in order to buy cheaper housing.
Living in smaller and older homes that may need repair.
Borrowing more "manufactured housing" (chiefly so-called mobile homes).
Securing graduated mortgage payments.
Accepting a more moderate life-style in order to pay for the real estate.
"Close-in housing still is going to cost a ton," says Paul O'Brien, senior vice president is the real estate division at Security Pacific National Bank. "But people are sacrificing more and buying gas-saving cars and driving longer distances so they can own a home.
"Costs will continue to climb for housing," he adds, "and job growth in southern California should keep the demand, and prices, high."
Economists say mortgage interest rates may go to 12 or 13 percent. Still, sources say the high cost of money-currently 10.5 percent in Los Angeles-should not deter first-time home buyers.
In Orange County, a program requiring 25 percent of all new homes to be in an affordable price ranga-based on median incomes-may crack the market open slightly for first-time buyers. How to implement the requirement still is being ironed out.
In order to ensure that the affordable housing is still affordable once a unit is purchased, the county is looking at ways to limit some sales to first-time buyers and at controlling the cost increased in resale for houses in developments built with government money.