South Bay First Time Buyer’s Guide

houses on manhattan beach strandThe South Bay real estate market isn’t like any other. Consistently high buyer demand, limited tracts of land, luxury price points, and diverse micro-communities make the South Bay unique even to other communities within California.

Whether you’re planning to buy your very first home or looking for your first home in the South Bay area, this guide is for you.

Financial Preparation

Cash Offers

Cash offers are the strongest type of offer in the South Bay market because they eliminate financial contingencies, are faster to close, and give sellers confidence that a sale will go through. Cash offers are a notable competitive advantage, and purchasing a South Bay home in cash is highly recommended.

However, if you are not in the position to make a cash offer, you can still pursue home ownership with a mortgage. Many first-time home buyers purchase South Bay property using a mortgage for financing and find their real estate search successful with the proper support.

Mortgage Pre-Qualification & Pre-Approval

Pre-qualification is typically the first step a lender performs, providing home buyers with an estimate of how much you can afford based on your financial information. This quick process, often done online or over the phone, is a rough estimate and doesn’t consider the full details of your credit report.

Pre-approval is a more in-depth process in which a lender reviews your credit and financial information and your employment details. Mortgage pre-approval results in a specific loan amount you’re approved for and will help you identify your home purchase budget.

While some real estate markets are suitable for buyers who have yet to receive pre-approval, South Bay is not one of them. It is critical that you receive mortgage pre-approval early in the real estate process so you can make competitive offers without delay.

It’s important to note that you are not guaranteed a loan even with pre-approval. If your financial details change or are inaccurate, you may be denied a mortgage during purchase. Avoid significant life changes, like switching jobs or procuring new loans, after you receive your pre-approval.

Apply For Mortgage Pre-Approval 

Understanding Debt-to-Income Ratios

Lenders will use your debt-to-income (DTI) ratio to identify how much mortgage you can afford. A debt-to-income ratio uses a simple calculation:

(Monthly debt expense / Gross monthly income) x 100 = DTI%

Each lender has unique requirements and will consider both the front-end and back-end ratios.

The front-end ratio includes your housing expenses and typically consists of the information in the “Payment Information” section of our Mortgage Calculator: your mortgage principal, interest, taxes, and insurance. Most lenders require a front-end ratio between (or below) 25% to 28% of your gross income.

The back-end ratio includes housing expenses and other long-term debt, such as loans, credit card payments, child support, and alimony. Lenders typically require a back-end ratio of under 33% to 36% of your gross income.

Improving your DTI is a simple way to increase your pre-approval amount and home purchase budget. You can do this by increasing your income, paying off loans, paying down high-interest debts, and postponing major purchases.

Determining Your Home-Buying Budget

While pre-approval will tell you what the lender thinks you can afford, it’s important to do your own calculations. Consider your income, expenses, debts, credit score, and current interest rates when reviewing your budget.

A mortgage calculator can help you complete your budget by estimating monthly mortgage payments, property taxes, home insurance, and mortgage insurance.

Online Mortgage Calculator 

Once you have dialled in your core property costs, you’ll also need to consider homeowners association (HOA) fees, maintenance costs, moving expenses, and any immediate home improvements you may require.

Understanding Your Needs & Wants

oceanview houses in redondo beachThere are two important reasons you need to have an honest and thorough conversation about property wants and needs with yourself and, if applicable, your partner:

  1. It will help you focus your property search on homes and neighborhoods you might love.
  2. It will allow you to make smarter buying decisions when emotions run high.

The Perfect Must-Have List

First and foremost, identify every non-negotiable feature of your home search. Consider the following when developing your must-have list:

  • Beach City/neighbourhood
  • Price range
  • Number of bedrooms & bathrooms
  • Home style/type
  • Home & property size
  • Physical accommodations (e.g. wheel chair access)
  • Transportation requirements
  • School boundaries

Then add any other details that are incredibly important to you, such as commute times, proximity to specific services, or home features you simply can’t live without. As a rule, must-have items should not include features or amenities you can add yourself.

Must-have lists grow quickly, so keep perspective on which requirements are absolute deal breakers and which can be moved to the wish list.

Finally, rank the features on your must-have list in order of importance in case you need to make compromises later in the home search process. It’s common for home buyers to shorten their list after experiencing the competitive South Bay market firsthand.

Creating Your Wish List

Next, write down everything you wish your next home will have. These aren’t deal breakers but would certainly sweeten the pot and might include elements like a gourmet kitchen, hardwood floors, or a large patio.

If you’re new to the South Bay area or live out of town, we can help you prioritize your wish list and identify which requirements are most important. For example, you aren’t going to find a beachfront home with a large backyard in Manhattan Beach, but you can find one or the other.

South Bay Neighborhood & Community Considerations

aerial view of manhattan beach real estateOnce you know your budget and must-have list, it’s time to find the neighborhoods that match your vision. Manhattan Beach, Hermosa Beach, and Redondo Beach are all fantastic beach communities, and most people would be happy in any of them. But each has its quirks and vibe, and you may find you favor one over the others.

Manhattan Beach has the most upscale and polished environment of the beach cities, with a reputation for a sophisticated, higher-end lifestyle. It’s a great option for first time buyers who will settle for nothing less than the absolute best in life.

Hermosa Beach is another excellent option for first-time buyers because of its laid-back, good-times vibe. It has great nightlife and is popular with young professionals and families, although anyone looking for a slightly more energetic beach city can easily fit in.

Redondo Beach is the most diverse beach city with a family-oriented, casual atmosphere. Many first-time home buyers look to Redondo Beach for their first home because of its wider range of housing options and more varied price points. Many people live in Redondo Beach their whole lives, while others look at it as a stepping stone for building equity on their journey towards more luxurious real estate in Hermosa or Manhattan Beach.

Our neighborhood guides for Manhattan Beach, Hermosa Beach, and Redondo Beach can help you understand these communities better, but it’s always best to experience them firsthand.

We recommend working with a real estate agent at this point in the process, as an experienced agent can give you a proper introduction to each of the South Bay cities and help you find phenomenal neighborhoods you aren’t already familiar with. Contact us now if you’d like to get started! 

Finding Your South Bay Dream Home

Use Real Estate Searches & Listing Alerts

One of the best ways to find your dream home is to use our Advanced Property Search to look for homes using the criteria you’ve identified in the steps above. You can instantly see all the available property details and photos and easily save or share the listing.


You can also save your search using the “Save Search” button, and set up an alert that will automatically notify you when new properties matching your search are added to the MLS. You can be first to know when a listing hits the market, giving you a competitive edge in the South Bay market. 


If you prefer disconnecting from your devices, our team is here to help. We can personally maintain property searches on your behalf and notify you of new listings that match your criteria when you work with one of our South Bay real estate experts.

Hire An Experienced Real Estate Agent

manhattan beach real estate and pierReal estate agents are licensed professionals who represent buyers and sellers in real estate transactions from start to finish. When you work with an experienced local agent like those at DOMO Group, you have an invaluable ally to help you tackle every aspect of buying a home, including:

Market Knowledge: Our local real estate agents provide in-depth knowledge of the local South Bay real estate market, including pricing trends, fair pricing practices, neighborhood desirability, future market predictions, and more. This market knowledge ensures you always get the best deal on the right home.

Networking: The DOMO Group has an extensive network of South Bay contacts and can help connect you with potential sellers and unlisted real estate opportunities. Our network also includes a range of top-tier service providers, mortgage brokers, home inspectors, and lawyers. 

Negotiation: Once you’ve found your dream home, our experienced real estate agents will act as an intermediary between you and the seller. We will also use our skills and expertise to beat out other buyers and negotiate the best possible price on your behalf.

Paperwork: All real estate transactions require significant paperwork, which we handle on your behalf. Our team is skilled at taking care of critical documents and contracts, ensuring legal compliance, and avoiding costly mistakes.

Coordination: A real estate agent also serves as your assistant throughout the home-buying process. We’ll coordinate property showings, provide home and neighborhood tours, assist with inspection arrangements, and ensure you’re taken care of at every step in the home-buying process.

Emotional Support: Buying your first home in the South Bay can be emotional, but we’ve seen it all and will help you through it. We’re here to provide you with the guidance and professional support you need while keeping your stress as low as possible.

If you're ready to work with the best real estate team in the South Bay, contact us to get started.