House hunt part 2: the Coastal California real estate market is even more absurd than we thought

This is a weekly series documenting a real family's quest to find a home in their beloved California coastal town, Pacifica, CA.

(This is my current favorite Pacifica property, we just need an extra million.)

So much has changed but at the same time nothing much has actually happened in the past week concerning our house hunt. The biggest shift is that we are suddenly hyper-focused on buying in Pacifica.

Early in the week I had a call with a real estate agent who specializes in land. She didn't mean to be a Debbie Downer, she said, but there's really nothing available on the coast, building is a headache, approvals and permits can take forever.

Also, it can cost up to $500,000 to make "improvements" to "raw" land. Improvements include permits, electricity, septic, water access, and clearing the land—in other words, essential work that needs to be done to make the land useful. Any land that already includes improvements will likely cost minimum $500k.

She said we're probably better off finding a teardown. But we haven't been able to find one of those either—unless we wanted to spend nearly $1 million which would not leave us enough to buy the prefab home.

These thoughts make me want to take a nap.

We also had a very depressing drive around Montara, a cute area just south of Pacifica that goes absolutely mental every Halloween. As we drove around, we lost our cell signal so we couldn't use Zillow or maps to find the lots I had earmarked. The one we did manage to locate was a steep ravine which could not accommodate a prefab home. The land needs to be flat unless you have bags of money you don't mind dumping into flattening the ground.

(The headless horseman on Halloween in Montara.)

On the way home we ran into bad traffic through the Tom Lantos tunnel and we still didn't have a signal. We realized that was not going to work for us as something we'd have to deal with frequently. So, anything south of Pacifica is now off the table—unless we make a major change and move to Southern California.

Then, on Wednesday, my husband sprang from bed and declared that we needed to buy in Pacifica ASAP because, especially with the new administration hopefully bringing some stability to the land, prices are going nowhere but up. We got excited about potentially buying a fixer at a (comparatively) low price. We could sell in a couple years, increase our down payment potential, and then find our forever home.

So we started searching in Pacifica for the millionth time, and of course were immediately attracted to a completely redone, move-in ready place because at heart we are very much not fixer-upper types and a bit lazy. Surprisingly, it was priced at under a million. It doesn't have a view like we have now, and it's much smaller, but it's pretty and we like how close it is to Linda Mar State Beach.

"Pacifica has been discovered," she declared. Such a bummer. We had been trying so hard to keep it a secret.

I got in touch with an agent I knew from yoga (Wini is the best), Eileen O'Reilly. She set up an appointment for us to see the place on Sunday. Because of Covid, we had to sign wavers and make an appointment to visit—no open houses during the pandemic.

The place was as lovely in person as it was in the photographs. Every room is updated tastefully, it feels light and airy, it has both a living room and a family room, plus a kitchen and a dining room, yet somehow it doesn't feel like a pie cut into too many pieces. And we were excited that it was in a doable price range for us.

Then came the reality check from Eileen: it will likely sell for well over asking—probably at least $1.2 million, possibly even $1.3 million.

"Pacifica has been discovered," she declared. Such a bummer. We had been trying so hard to keep it a secret.

(Own this Pacifica gem for just $1.6 million)

So now we're deciding, do we try to scrounge up a down payment big enough to make a competitive offer? Do we want a mortgage that high at this time in our lives (remember the husband wants to retire in five or so years). What if he loses his job? Will I be able to get back into the job market (I've been a part time freelance writer for the past 12 years)? Would I be able to make enough as a freelancer to support us?

These thoughts make me want to take a nap. And then I started thinking about land again.

Comparable homes here are actually more expensive now than in San Francisco and that's just weird.

Back on Zillow, I found a plot that looked interesting, with an ocean view, and it might even be flat enough to plop down a prefab. One little problem: the price is more than a million, which would leave literally no money for the actual house. Still, I can't stop thinking about it. The location is great, too. Maybe a money fairy will dump some gold bars down our chimney?

Upon concluding week two of our house hunt chronicles, the options have changed only slightly. We have taken renting in the Bay Area off the table. We've also given up hope that the market will soften any time soon, especially in Pacifica. Comparable homes here are actually more expensive now than in San Francisco and that's just weird.

So here is where we stand with our options after this past week:

• Max out our finances and buy in Pacifica.
• Move in with my husband’s mom in Orange County temporarily and save like crazy.
• Find land to buy now and build later.
• Find a teardown to buy now and build later.
• If we find land, build a prefab home (we’re still obsessed with Connect-Homes)
• Buy in a cheaper area (we came this close to buying this midcentury modern gem near Spokane. We also came close in Santa Rosa, CA but I’m skittish about the fires).

See you next week! Wish us luck, and please follow along on our house-hunt journey.