Some young homeowners finding the American dream in California

SAN FRANCISCO (KGO) -- A new report found the biggest groups of home buyers in the state are also among the youngest. With California's high housing prices, we wondered what people had to do to achieve the American dream.

People like Sue Zen Lim and her husband Yen Lee are typical home buyers in California.

They're members of Generation X-those between the ages of 38 and 52, and the largest group of home buyers in the state.

"You have to make adjustments to your budget," said Yen.

She and her husband have lived in a townhome in Brisbane for more than a decade.

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Now with a 9 month old and three year old, they are looking to moving to a bigger home.

The couple has cut spending on the little things, such as their Netflix subscription.

They've made smart investments to increase their wealth, and most importantly they've already been pre-approved for a mortgage.

Still their search for a new home has been long and frustrating.

Sue let out a sigh of frustration.

"It's been pretty rough," she said. "We've been searching over a year already."

Leanna Haakons is author of Young, Fun and Financially Free and founder of Black Hawk Financial.

RELATED: Lower income families priced out of California housing market

She says before you buy a home, you need to wipe your financial slate clean.

"If you have bad debts like credit card debt, you have to pay that stuff first," said Haakons. "You have to get an emergency savings account first and have a little cushion, then you can start investing."

For investments, Haakons suggests Exchange Traded Funds or ETFs which can have lower fees than most mutual funds.

Sue and Yen say they started investing at an early age.

"Yeah, we put in more to save for a new home," said Yen.

40 percent of home buyers last year in California were Generation X.

The annual survey from the California Association of Realtors found the second largest group buying homes was Gen Y, or those between 20 and 37.

RELATED: Survey reveals 40 percent of Bay Area residents are thinking of leaving

Grace McAuliffe is a realtor based on the Peninsula

"Millennial home buyers are very straight to the point," she said. "They know the numbers. They know what they want."

Before you begin your search, consult a good mortgage broker to find out what you'll need for a down payment-even if you can't qualify today.

"We want to build that relationship and want to guide them," said Grace Home a mortgage broker and owner of Better Homes & Gardens Real Estate - The Masiello Group.

To save for a down payment, Haakons suggests putting aside anywhere from 10 to 20 percent of your monthly income each month.

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Written and produced by Randall Yip