SAN FRANCISCO (CBS SF) – The dilemma Natalia Melendez and John Uphoff are facing is foreign to most Americans.
In the majority of the country, a $1 million budget for a new home carries with it the promise of acres of land, dozens of rooms and a major upgrade from the white picket fence.
Not in the Bay Area.
“We need to buy a house to save money,” Uphoff said. “It’s kind of crazy like in Minnesota it’s very different.”
Melendez and Uphoff moved to the Bay Area from Minnesota to follow their dreams of success in the tech industry. Two months ago, they had their first child Jason, so now they are in the market for a 3-bedroom home.
However, the couple has lived in the Bay Area long enough to no longer be victims of sticker shock.
“You kind of get used to it like desensitized,” Melendez said. “When we first moved here we were like that is insane, how can that be? And now it’s like the reality.”
Inventory for homes for sale across the country is at a 20-year low, particularly in San Francisco. And competition is high. So is the pressure to offer more money for a less than perfect home.
Take a four-bedroom home the couple looked at in San Francisco’s Mission District. It has not really been upgraded him the 1960s with vintage bathroom fixings and original kitchen appliances.
The fixer-upper hit the market at $1,348,000. Within a week – the seller received 28 offers.
For Melendez and Uphoff even stretching their budget to $1.4 million was not enough to compete. In the end, the home went for well over $2 million — $700,000 over asking.
Currently, the couple is paying $7,000-a-month to rent a 2-bedroom at NEMA, a luxury San Francisco high rise.
John is a senior level software engineer at an “HR and benefits” startup, and Natalia is a senior account manager at a marketing company.
“We both make a decent amount of money and we’re not able to save anything,” Natalia said. “Everything goes to rent and the car and everything, so it’s insane.”
(New research shows that nearly half of millennials want to leave the Bay Area in the next few years because of sky-high housing prices and cost of living.
Data shows that among the country’s priciest cities, people in San Francisco are the most likely to leave.
For the moment, the couple is determined to stay in the Bay Area and live in San Francisco.
“We want to make it work – it’s really, really cold in Minnesota,” Melendez said.