Why Millennials & Gen-Z Will Never Buy a House in CA
"California prices are crazy!!"
(If you own a house and are not a millennial or Gen-Z, then considering sharing this with your kids or a friend, I promise it will help them).
The Hard Truth: Most millennials and Gen Z will never buy a house in California.
But it’s not because home prices are too high. It’s because of a lack of knowledge.
Right now home prices are actually going down in California. So what I’m about to share is more relevant than ever.
And if you’re wondering why you should listen to me... I’m 29 years old. The house I’m sitting in right now is a $2.2 million custom home and I spent $600,000 renovating it. I bought it with my own money. Not my parents’ money.
I used the strategies I’m about to give you to buy this beautiful 1930 Spanish home in one of the best neighborhoods in San Diego.
Here are five things I wish someone told me earlier.
Video version if you prefer to watch, listen, and see my new house!
1. You Can Buy a House With $0 Down
The program is called the VA Loan (Veterans Administration Loan). It lets you buy a house with 0% down if you or someone you know served in the military.
Here’s how it works. If someone in your network (a friend, roommate, spouse, whoever) is active military or has served, they can go on the loan with you. You buy a house together and start building equity as partners.
If you don’t know anyone who has served in the military, then either find one on Hinge or you can use the FHA loan to put 3.5% down on your first property that you buy.
Putting $20,000 down for a $500,000 house or condo, is much less daunting than saving up $100,000 to buy a home. I won’t go into the nitty gritty details of each loan for the sake of your time, but if you talk to any local lender in your area, they will give you the ins and outs on how to qualify for these loans.
One of the best deals I ever did in San Diego was a four plex I bought for $1.2 million. We put 0% down because my friend had VA eligibility. A year later, after we renovated it, we sold it for $1.6 million. Our profit was a little over $300,000.
We didn’t put that money into a home. We put it into more investment properties and kept building equity. Which brings me to my next point.
2. Stop Giving Your Money to Flippers
Home flippers are your enemy.
I know it’s tempting. When you’re shopping for houses, it’s easy to look at the ones with the nice finishes. Most people don’t want the house with the ugly kitchen, the ugly bathroom, the ugly shower.
But that’s where the money is made.
Flippers have literally built a business on profiting from people who are too scared to renovate. People who fall for the trap of wanting a turnkey home the day they buy the house. People who feel like they don’t have the experience. So they pay someone else for the privilege of avoiding a little discomfort.
I’ve renovated over 200 apartment units and a couple of homes. It’s not as scary as you think. Yes, you’ll deal with some stress. Yes, you have to learn budgeting and how to manage people. But you’re going to grow from the experience.
You’ll make money AND you’ll learn skills that pay you back for the rest of your life. If you do this a couple of times, by your third house you’ll be in your dream home.
Why would you give those profits to someone else when you can take them for yourself?
Look, if you have a big inheritance or a family that can buy your house for you, this advice doesn’t matter. Skip ahead. But if you are in my situation 7 years ago, you have to get your hands dirty.
Buy the ugliest house in the neighborhood and go make some money.
3. Your First House Is Never Your Forever House
The biggest mistake I see with people in their twenties and thirties? They expect their first house to be their dream home.
A $4 million, 5,000 square foot mansion up in the hills in La Jolla with an ocean view. That’s just not realistic.
What IS realistic? Buying a $500,000 condo. Fixing it up. Putting in a new kitchen, a new bathroom, some cool finishes and lighting. Spending $35,000 to $50,000 to build significant equity.
And please stop listening to the doom and gloomers online who say the market is going to crash. They’re just trying to get your attention because doom and gloom gets clicks.
It’s 2026. Interest rates shot up in 2022. If there was going to be a crash, it would have already happened. Rates went from 3% to 7% and home prices in California were STILL going up the past 4 years. Yes, prices are softening right now, but it’s nothing near a crash.
The numbers tell the story. The average home price in San Diego last year was $1,013,000. Right now it’s $989,000. That’s a small dip, not a 20% or 30% crash, and it’s not like 2008 because we haven’t built many homes in California since then. Supply and demand is the biggest driver of real estate.
They’re not making any more homes in my neighborhood. We have custom Spanish style homes that were built in the 1920s and 30s. Every time a house hits the market, there are multiple offers. Even today.
My fiancee is showing a $2.2 million house right now that’s 1,500 square feet with older finishes. There are going to be multiple offers on it. That’s how tight the market is.
You have to get in the game ASAP. There are condos on the market in San Diego right now for under $400,000 in decent locations, most people reading this can afford to buy that property 3-4 years into your career.
I have an attorney friend who’s 26 years old. He bought a house in a Class C neighborhood for $800,000 (not the safest area).
He renovated it and the house is already worth at least a million dollars. He’s single with no kids, he doesn’t care about the schools or having the best amenities right now. It’s his first house and je just built a lot of equity to prepare him for his future “dream home”.
And in two or three years when he sells, that house will be worth at least $1.2 million.
4. Sell Your First House ASAP
You want to sell your first house as soon as you can. But not before 2 years.
Here’s why. If you live in a house for at least two tax years, you get a $250,000 tax exemption when you sell. And if you’re married (this is why you should try to get married as soon as possible), the first $500,000 in profit is tax free.
Let me give you the simple math.
You buy a house for $700,000. You put in $100,000 worth of renovations. You’re into the house for a cost basis of $800,000. Three years later, you sell for $1.3 million. After commissions, your profit is a little under $500,000.
That entire profit is tax free.
So if you put down $100,000 to buy that house and made $500,000 in profit, you now have $600,000 to redeploy into a bigger property in a better neighborhood.
Do this twice and by the time you get to your third house, it’s probably going to be your dream home. Because after two flips, you’ll have at least a million dollars of equity to play with. You can do this in less than 5 years. That is not a long time…
In order to grow fast, you have to sell. Don’t get stuck on the interest rates. Don’t get too emotional. It’s an investment. The smartest real estate investors I’ve learned from all say the same thing: you have to capture your profits and keep reinvesting in the market.
5. Build Equity Outside Your Home
You also have to be building equity where you work.
If you’re at a job right now where they’re not giving you shares, not giving you stock options, the company’s not growing, it’s a dead end... you have to leave.
I have an acquaintance from college who started at Nvidia 5-6 years ago. He’s an average guy. Just a sales guy. Nothing crazy. But he worked for the right company. He became a multi-millionaire and can probably afford pretty much any house he wants.
He didn’t do anything different than you. He might just be at a better company.
If you’re at a company that’s not giving you stock options or shares, you’re missing out on the most tax advantageous way to build wealth in America. The IRS can’t tax you on capital gains you haven’t taken yet.
But when you get a W2 paycheck every two weeks? California and the IRS take almost half.
That’s why it feels so hard to get ahead in this state if you don’t own anything.
Look at any rich person in America. They got wealthy through owning things. Not through getting a paycheck from a boss.
And if you’re a high-earning W2 worker (an attorney, a surgeon, a nurse, an engineer) paying a ton in taxes, you have to learn how to get into investments that are tax advantaged. Real estate is one of the best ways to do that.
If all you do is collect a paycheck your whole life, you’re basically working for the government. You have to take control of your future by buying properties, buying stocks, and buying a house. Getting into things you actually own.
One Last Thing
I want to be honest with you.
I used to be a hater of buying a primary home. I bought over 40 investment properties before buying this house. I was taught to rent where you live and own as many properties as possible. I can’t tell you how much I regret following that advice.
The return on enjoyment is so much different than return on investment.
The return on pride and enjoyment of owning where you live is infinity. Having your own backyard, your personal space to raise your dog and your kids without a landlord telling you when you have to move out.
Hosting guests. Having dinner parties. Customizing your home the way you want it. It’s a totally different ball game.
That’s why I wanted to write this. I’ve gotten so much enjoyment out of this beautiful home in this amazing neighborhood, in the best state in America.
I don’t care what people say: everyone who hates on California just hates us because they don’t live here.
I was in Chicago in February and it was freezing cold. Negative wind chill weather. And February here in sunny San Diego? Every day it’s 75 degrees and sunny.
Rescue Dog of the week - Murphy:
Murphy was a senior dog that was scheduled for euthanasia. He was sick, scared, wouldn’t eat, and terrified of the shelter.
We were able to sponsor him to get treated by a vet, high quality, and now he is safe with a foster!
With a small donation of $9/month, you can help rescue more animals who don’t have a voice, and are stuck in hell.
See you next Sunday. Happy Easter!
Interesting perspective Jason. Shared something valuable with you in Dms. Would love to have your thoughts on that 🫡