Many would-be home buyers, undaunted by skyrocketing prices and too little savings, are taking unusual steps to bridge the affordability gap and purchase their first home.
Some buyers, long on ambition but short of cash, substitute their own sweat for money by helping to build their own house or by buying fixer-uppers. Others hook up with moneyed partners and, through a simple "equity-sharing" agreement, buy a home and eventually resell for enough money to purchase a place of their own.
Others hunt for bargains in foreclosures or at auctions. And some savvy buyers with more street smarts than cash can structure deals that require little or no money down.
"Where there's a will, there's a way," says Monte Helme, spokesman for real estate giant Century 21. "You just have to want your own home bad enough."
Just ask Kathy Kenny.
Five years ago, Kenny, 46, had no house, little credit and just a few thousand dollars in savings. But later this year, she'll move into her own custom home overlooking the Santa Monica Mountains in Topanga that she built from scratch for less than $25,000.
"I was basically broke when I started," remembers Kenny. "But I wanted a place to call 'home,' and I was willing to work in order to get it."
So-called "sweat-equity" projects--where buyers swap their own labor for cash--take a variety of forms. They can be as simple as buying a run-down house and fixing it up, or as complex as designing and building a brand-new home.
The only requirement is a relatively small amount of cash--sometimes as little as a few thousand dollars--and a willingness to get hands dirty.
"Building a house or doing your own repair work isn't really that difficult," says Chuck Smith-Kim, a spokesman for Owner Builder Center, a school for do-it-yourselfers in Berkeley. "And let's face it: Most middle-income families can't afford to buy an existing house in perfect condition unless it's way out in the sticks."
Kenny's build-it-yourself project took longer than most because the home is on a difficult site and she didn't have the money to hire skilled tradesmen or a general contractor to oversee the work.
Her only knowledge about construction was gleaned from a book she read in 1981 and a monthlong Owner Builder course she took two years later that teaches people how to build their own home.
Ironically, Kenny's toughest job hasn't been the actual building of the house: It was the three years and $4,000 she spent convincing county geologists that her home wouldn't be subject to landslides.
"I finally got my building permit in May, '86," she says. "The actual construction has been fun--and not nearly as frustrating."
'I'm Not Selling'
By the time her home is completed this fall, Kenny figures she and a handful of friends and relatives will have spent about 3,700 hours on the project. Hired help has been limited to private geologists, a structural engineer and a few day workers who helped dig the foundation.
Between $20,000 and $25,000 will have been spent for the land, building material and paid workers. When the job is done, Kenny says, the house "would probably sell for $200,000. But I'm not selling--I'm staying put."
Although Kenny has spent more time on her house than most people are willing to spend, she does have one important advantage most others do not: A part-time job and modest income from sales of a book she wrote several years ago have provided enough cash to meet construction costs and maintain a spartan life style.
Many married couples can't get by on part-time pay--especially if they have children--so building their own home usually means working 40 hours during the week and spending weekends hammering nails or pouring concrete.
"Let me tell you, it's not easy," says Oscar Tovar, who lives in a Santa Ana condominium complex that he and several others built through a sweat-equity program. "The work is hard, but it's worth it to own your own home."
The program Tovar, his wife and 19 other couples participated in was organized by Santa Ana-based Civic Center Barrio Housing Corp. and is typical of housing programs run by nonprofit agencies.
Tovar and his wife, Viola, agreed to work a total of 40 hours a week building a condominium complex on Raitt Street. In exchange, the Tovars could buy one of the finished units for $62,000, with a down payment of $3,500.
If the Tovars had walked off the street and tried to buy an identical unit in the same neighborhood, it would have cost about $100,000 and required a down payment of $10,000 or $20,000.
Each family received basic instruction in carpentry from two experts hired by the nonprofit sponsor. Tasks requiring more advanced skills were performed by subcontractors.
Time on the Project