Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

58 responses to “Local Incomes Could Afford 2258 More Expensive Homes”

  1. Pegasus

    Are you saying that someone with a household income $54,402 a year can qualify to buy a $360,000 home that is financed? Are you using a 3, 5, 10, or 20 percent down in that figure? Seems like an awfully light income for that much of a purchase…….

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  2. S.S.

    @ Pegasus

    Tim stated using 20% down.

    Although, these are the figures I’m seeing at the $66,000 median income level with 20% down ($72k) and 32% DTI (debt to income ratio) = a $347,000 purchase price. That is based on a 3.7% mortgage rate.

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  3. mdgouda

    In the last 5 years, the Seattle home prices have corrected 30-35%. Now the data suggests 22% price jump from there should not hurt the buyer’s mortgage payments, because of median household income. Does that mean median house hold income increased 22% in the last 5 years? Or else, in Seattle area, affordability was demanded the correction of only 10-12% from late 2007 peak? It is just confusing.

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  4. Pegasus

    RE: S.S. @ 2 – I finally noticed that. Even with 20 percent down I still don’t think that is the case with taxes and insurance. Also most people have some other kind of debt be it credit cards, automobile or student loans.

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  5. Tim McB

    RE: S.S. @ 2 – S.S. Agreed I used 3.75% 30 year fixed, 20% down and got 37% of gross income. The Tim for this calculation did you leave out property taxes and homeowner’s insurance? It appears so because without them the calculation comes in almost right at 30% of gross income.

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  6. Ira Sacharoff

    I don’t know. It still strikes me that if your household income is 66,000, and you buy a 438,000 dollar home because you can “afford” to, that’s insane.
    First, that’s based on having 87,000 dollars or so lying around as a downpayment. Then, it’ll run about 2200 a month in mortgage payments.
    I guess I just like to have money for things like gasoline, restaurants, clothing, savings, etc, and even though that figure is deemed “affordable”, it’s going to be a major lifestyle adjustment for a lot of people to do that. If my household income were 66 thousand, maybe I’d buy a house that cost 275,000. But 438 would be risking too much, and not leaving enough of a cushion.

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  7. softwarengineer

    Average Incomes Do Not a Housing Market Make

    And assuming we all want to upgrade to bigger and better gets real tongue-tied when this upgrade market are 30% underwater.

    I think the data to look at is what percent of the $66K+ incomes per household don’t already own a home and are currently in the market? 2%? 5%? Those are my guesses, as measly as they seem. You think they’re all mostly wasting their money renting?

    Now the $10,000 question and the key puzzle piece….what is the average 1st time home buyer household in the Seattle area make? Perhaps dig into the escrow data “pending sales” data for the answer….but I think the answer will always be “unknown” or “undocumented”, kind of like the “Shadow Inventory” Seattle impact that can’t be proven by allegations on both sides of the coin, without legal “evidence”.

    No wonder the Seattle Times has the common sense to gut the news story on rosy home prices going up lately that the post 2006 buyers were licking their chops over on the Seattle Bubble…in fact, the Times said prices were going down, just a couple weeks ago too….good for you Seattle Times! I’m renewing my subscription.

    http://seattletimes.nwsource.com/html/businesstechnology/2018060801_caseshiller25.html

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  8. Tim McB

    RE: The Tim @ 6

    Fair enough, though even a bank would calculate those costs when determining the acceptable amount to loan someone; so its a bit misleading. Assuming those are factored in like Ira said 275k would be the magic number ($1060 payment + $250 taxes + $50 insurance= $1360 payment) This assumes 46k down and a 30 year fixed loan at a 3.75%. Much less controversial ;) Although that assumes no debt and its still 5x the annual income.

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  9. Kary L. Krismer

    RE: softwarengineer @ 8 – The NWMLS is current data. The Case-Shiller data is stale data AND a three month moving average.

    The interesting C-S report will be in August, when they will be reporting on April, May and June.

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  10. Kary L. Krismer

    By mdgouda @ 3:

    In the last 5 years, the Seattle home prices have corrected 30-35%. Now the data suggests 22% price jump from there should not hurt the buyer’s mortgage payments, because of median household income. Does that mean median house hold income increased 22% in the last 5 years? Or else, in Seattle area, affordability was demanded the correction of only 10-12% from late 2007 peak? It is just confusing.

    Don’t forget the impact of changes in interest rates.

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  11. Greg

    Tim
    This is my first comment and I simply want to thank Tim for all of the analysis and good data that I find on this website. Great work. I am a home builder and an economist so I really enjoy the mix of data and discussion. Keep up the good work.
    Greg

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  12. bd

    By softwarengineer @ 8:

    Now the $10,000 question and the key puzzle piece….what is the average 1st time home buyer household in the Seattle area make? Perhaps dig into the escrow data “pending sales” data for the answer….but I think the answer will always be “unknown” or “undocumented”, kind of like the “Shadow Inventory” Seattle impact that can’t be proven by allegations on both sides of the coin, without legal “evidence”.

    I don’t know about first time buyers, but you can look up the census data to find the household income for homeowners in any particular census tract. I know for my own tract the household income was at least twice the King county median income.

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  13. MM

    NO, what tim did was just calculating how much somebody can afford if everybody else agrees to subsidize the interest rates at 3.8. so, if everybody makes great money and agrees that all their savings need to be shaven off every month by a certain percentage and sent those money to the real estate market so everybody can afford a home, that yes, but that is nothing but social policies for luxury items and to the bank’s profit.
    so let me explain it again. if you agree that all your savings accounts should not bring any interest because people need to be able to afford way overprice assets, than i agree with tim. lets put all our money in real estate, because that is our future, when we will be old and will need those money, we will find it in that rotted lumber and drywall.

    but if you calculate real affordability, divide 360 000 by 3, that you find 120 000. so you tell me that the average guy in king county makes 120 000 a yer and he is sure that nothing will happen over the next 30 years?
    well, exactly that kind of skewed numbers, propaganda and phony statistics created the mess in the first place.
    I know a great tjhing about statistics, the normal distribution function, or curve or the gauss bell. study it really hard because that will tell you exactly where the prices are going, regardless how hard the banks are trying to skew the numbers.

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  14. Jonness

    By The Tim @ 6:

    I think the most informative data point in this post is the orange line in the first chart: where the affordability index would be if rates were 6%. I think as long as that stays reasonably close to 100, it’s fair to say that home prices are affordable.

    These affordability numbers are outstanding! Yet, the continued train wreck in the housing market points to needing a lot more than just affordability, through record cheap money, in order to fix the mess. The very nature of a liquidity trap is, money gets absurdly cheap, yet it doesn’t fully convince the masses to borrow and spend at a rate that lifts the economy out of its doldrums.

    There are many reasons why the record fiscal and Fed stimulus have not led to another housing bubble, but it’s probably inappropriate to list them here. The main takeaway is cheap money leads to very different outcomes in a hot economy with relatively little outstanding debt than it does a very cold economy with relatively high outstanding debt.

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  15. deejayoh

    Sure is looking like I’m going to get my $100 from Sniglet

    http://seattlebubble.com/blog/2008/02/06/nwmls-stats-market-still-crumbling-sorry/comment-page-1/#comment-40115

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  16. Jonness

    By deejayoh @ 16:

    Sure is looking like I’m going to get my $100 from Sniglet

    http://seattlebubble.com/blog/2008/02/06/nwmls-stats-market-still-crumbling-sorry/comment-page-1/#comment-40115

    If you can find him!

    Did you ever collect from the other guy?

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  17. deejayoh

    By Jonness @ 15:

    The very nature of a liquidity trap is, money gets absurdly cheap, yet it doesn’t fully convince the masses to borrow and spend.

    I think that states underestimates the impact on the market that is caused by banks not being willing to lend. Many would happily borrow if they could, but with Fannie and Freddie last year writing something like 90% of the mortgages – there are lots of people that would like to buy and cannot qualify right now. That sucks the demand right out of the market.

    I have a buddy that works at BofA. He told me that the word has come down from the top that they are getting back into the mortgage lending game. Based on the history of other info he’s given me (e.g. foreclosure activity) I put a lot of credibility in what he relays to me.

    This year Wells has dived in head first and is taking share. BofA and Citi aren’t going to sit back forever.
    http://www.businessweek.com/articles/2012-05-03/wells-fargo-king-of-mortgages

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  18. deejayoh

    By Jonness @ 17:

    Did you ever collect from the other guy?

    Nope. He welched. But given that he went bankrupt on his custom homebuilding business, I’ll let it slide.

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  19. patient

    Thanks for the illustration of the FED stimulus as the cause of the current frenzy. Let’s see how long it can go on. It seems like Bernanke is trying to play both sides lately in an attempt to protect himself no matter who wins in November. It’s not only the presidency but the senate majority that is uncertain. By publicly dissing Krugman and calling more stimulus and higher inflation than 2% reckless while still pumping in the current stimulus he tries to appeal to both sides. Either way I doubt we will see QE3 before the election and without it we could see a bit higher mortgage rates.

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  20. One Eyed Man

    RE: Greg @ 12

    If you have a source (like maybe MBA or a national assoc.) for average replacement cost/sq ft foot for a given specification level excluding lot cost, I’m really curious what its running around here. I’ve got some high end builder connections thru whom I’ve on occassion received some off hand numbers, but I’ve never seen the real ledger on any of their homes. And if not do you have any comments on the current prices of existing homes vs replacement cost in the current market. To be clear, by replacement cost I’m talking about construction cost, not sale price. In part I’m interested in whether builders can compete with the specification level in the underwater homes built at the height of the bubble. I also don’t expect you to disclose anything you feel is proprietary and may hurt your bargaining position with clients. My interest is primarily intellectual. I’m not looking to buy or build unless maybe I pick up a snow bird place in a few years for winter in retirement.

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  21. Jonness
  22. Mike

    My impression anecedotaly is that the biggest activity – where things go in a weekend and presumably have multiple offers – are in the <$500k range. Maybe as these folks snap up homes it will help to dislodge the move-up market, but in terms of things over that $500k threshold (at least where we are looking, Northshore area) it doesn't seem like there is nearly the same frenzy once you cross into the higher part of the market.

    I'm sure it is a dead horse on here, but has there been an explanation of the distributions of median income and median housing cost. Not really looking at the mean vs. median issues I think (yes Gates has a lot of money and a very expensive house and mean can be skewed), but in terms of if you could plot two graphs out of the distributions, how would they look if you overlaid them? Not sure I am saying this right, but something like how many homes are within 20% of median and how many incomes are within the same range (or at least how many homes fall within 120% of median and how many incomes)? I have no basis for it but just a gut impression that it seems housing prices probably escalate away from the median faster than incomes do, even though in theory at some point most people's housing needs will be satisfied so they shouldn't linearly spend the same amount on housing all the way up the income graph. No idea if that data is available, but it would be interesting to see, particularly maybe in connection with Tim's posts on how the three market segments are moving each month.

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  23. ARDELL

    Affordability backs up when you calculate the back end total debt ratio. 30% housing payment presumes only 8% in other debt payments including car loans, credit cards, student loans, etc… You need to know the % of consumer debt to determine a reasonable housing payment %. Even if you use 40%/40% VA type ratios, if someone has 12% in debt payments, they are not at 30% for housing payment.

    With a conservative 36% to 38% total including housing payment and debt payments, not many would be able to afford 30% of gross income on housing once you subtract the total debt payments % from monthly gross income.

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  24. deejayoh

    By Jonness @ 22:

    If you ask me, Fannie/Freddie lending standards aren’t all that stringent except to get the best rate. Anybody with a pulse can still borrow up to $567,500 in King County at extraordinarily low rates (FHA government guarantee). So it seems to me, you are saying, either the banks are going back into heavy risk, or they are only going to support the high end market.

    I’m just reporting what I read/hear. Wells already has 30%+ share of the loan market this year. Up from probably single digits last year? It doesn’t seem logical that this all came from the high end of the market. So I would guess that yes, the banks are going to move into taking on more risk. And more risk = more qualifying buyers = more demand. It may sound like a replay of the past – but saying it’s a bad idea doesn’t mean it just goes away.

    As to anyone with a pulse getting a loan – even FHA requires minimum debt to income ratios, mortgage to income ratios, proof of employment, proof of assets, etc. and those are relatively high cost loans in terms of ongoing fee structure. I was amazed at the amount of documentation I had to provide to my lender for a conforming loan. That was my 4th mortgage and I had never been put through the ringer like that before. Even for my first mortgage when I zero down. AFAIK, It’s a long way from the heyday of easy money. You might not find them so stringent – but I think plenty of buyers do.

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  25. Henery

    Most people ‘could’ afford ‘more vehicle.’ That doesn’t mean the market will drive the price of cars up to what incomes ‘can sustain as a maximum price.’

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  26. Scotsman

    Well how weird is this? All that affordability out there, easy money coming back, super-duper spring selling season in full swing, and yet- not much is happening out there. Consumer credit outstanding is way up- people are buying cars and education, electronics sales are up the recovery rolls on, etc. except in housing?

    There must be more to this than just a two variable equation. Perhaps the bottom is going to be less exciting than many thought.

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  27. corncob

    Breaking news: Made up equation based on questionable assumptions says Seattle home prices are way undervalued!

    According to my affordability metric of 30% median yacht price / 1.2e^3 * 400 house prices in Seattle are 4.223% undervalued.

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  28. Scotsman

    Debt bombs, radiation from atomic fall-out, zombies, etc:

    http://www.youtube.com/watch?v=_Tu2uiV1lps&feature=player_detailpage#t=559s

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  29. Jonness

    RE: deejayoh @ 25 – I think the current FHA frontend/backend ratios are still about 29% and 41%. You need about a 600 FICO, and you need to put 3.5% down. You also need to have a job. The fees aren’t all that bad compared to PMI, and the mortgage rates are usually a little less than conventional loans.

    I’m not trying to pick on anyone here, but if you are having difficulty qualifying for an FHA loan, the last thing you should do is go to a private lender with lower lending standards and a higher mortgage rate and fee.

    I’d be interested in whether the banks are planning to sit on these loans or offload them to investors? If the latter, I’d think they would demand quite a premium for taking the risk for these types of loans. And this could create a barrier to consumers wanting to take on the loans.

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  30. Jonness

    By Scotsman @ 26:

    Consumer credit outstanding is way up- people are buying cars and education, electronics sales are up…

    But not all is as good as it seems in the land of Oz…

    http://www.bloomberg.com/news/2012-05-07/consumer-credit-in-u-s-rose-in-march-by-most-in-over-10-years.html

    “Most of the improvement in credit is a function of the explosion student loan debt,” said Neil Dutta, an economist at Bank of America Corp. in New York. “The reason student loan debt is exploding? Because the youth population is having difficulty finding work. Hardly a good reason for credit extension.”

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  31. deejayoh

    By Jonness @ 32:

    By Scotsman @ 26:
    Consumer credit outstanding is way up- people are buying cars and education, electronics sales are up…

    But not all is as good as it seems in the land of Oz…

    http://www.bloomberg.com/news/2012-05-07/consumer-credit-in-u-s-rose-in-march-by-most-in-over-10-years.html

    �Most of the improvement in credit is a function of the explosion student loan debt,� said Neil Dutta, an economist at Bank of America Corp. in New York. �The reason student loan debt is exploding? Because the youth population is having difficulty finding work. Hardly a good reason for credit extension.�

    That quote seems like kind of a BS explanation for what is going on. Attributing the growth in student loans to the employment situation is misleading. Student loan growth been far outpacing consumer debt growth since 2005. An article on this was just posted (I think by Pegasus) in the open topics today.
    http://www.theatlantic.com/business/archive/2011/08/chart-of-the-day-student-loans-have-grown-511-since-1999/243821/#
    So even when there was strong job growth and low unemployment, there has been rapid student loan growth. But for the past couple years, household debt has been dropping while student loans continued their climb. This masked overall consumer debt growth, but now that consumers are back to taking on household debt – the combined growth looks much higher. I think there are many other factors at play beyond employment (mostly gov’t policy related IMHO) that probably offer a more solid explanation to the growth in student loan debt.

    I think that economist has student loans top of mind based on all the news stories about student loan balances over the last week triggered by the discussion about rate freezes on those loans.

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  32. Macro Investor

    RE: zipzippy @ 31

    Microcosm, indeed! Once folks grasp reality and stop thinking a house is a winning lottery ticket, paying high prices and taking on a mountain of debt begins to look like a poison pill. Living frugally and actually saving for retirement is the only game that makes sense… unless your job is so much fun you never want to stop doing it. (BTW, take a look at this month’s Golf Digest. Even Tiger Woods hates his job.)

    Sorry to be so blunt, but if you are considering out bidding someone for the privilege of borrowing $400k+, jump in a cold river somewhere before you permanently damage your financial future.

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  33. Kary L. Krismer

    By zipzippy @ 31:

    I think I am a microcosm of the over 50 crowd in some respects. . . .

    But, now it is the numbers do not add up for retirement projection, job security is way too elusive, and irritations like still trying to flush out the condo losses as a poor ‘investment’. Current condo unit (owned) is 40% under buying price in 2003, based on a recent sale for the first time in three years, in these cursed units. Lights are busted, special assessments are flying, HOA monthly has doubled in last couple years, common property is broken, clubhouse is closed, 20% have foreclosed, and 75% are upside down by a small fortune, and plumbers are on site for weeks due to in-wall plastic piping disasters. Add Peeping Toms and occasional burglaries. We have survived the condo crash by riding it out and balancing it with robust savings. . . .

    By studying both housing and retirement, cash flow with no pension wins as the primary concern. Have to keep saving at all costs and keep hoping the two goals converge successfully and soon.

    People here talked of the first time buyer credit as stealing future demand, but I think the condo boom did a lot more to steal future demand. You may be outside the age group I’m addressing, but a lot of younger people bought with the idea that it would be a short term step toward buying a house, and instead it became an anchor.

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  34. Kary L. Krismer

    By Macro Investor @ 34:

    (BTW, take a look at this month’s Golf Digest. Even Tiger Woods hates his job.)

    Golf clubs bring back bad memories.

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  35. wreckingbull

    RE: Kary L. Krismer @ 35 – I recall a few drive-by comments here during the bubble which basically amounted to “just buy a condo you whiners, and someday you can move up to a house, like the rest of us”. Not a good strategy. In GB, this is referred to as the ‘property ladder’. Too bad a few rungs snapped during the ascent.

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  36. David Losh

    RE: zipzippy @ 31

    Excellent comment. I’m sorry about your condo.

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  37. John Bailo

    What you don’t acknowledge is that the cost of living in the Puget Sound has risen dramatically in the last two decades and as things start to fall apart for revenue streams the rats are going at each other faster and more furious (example: continued calls to increase the already sky high sales taxes) in an attempt to hold on to their statuses.

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  38. Lily

    I don’t think a mortgage payment that’s 30% of income is affordable, but I don’t think the median single family house in a city like Seattle should be affordable. Seattle has apartments, duplexes, condos, mobile homes, townhouses, etc that are cheaper on average than SFH. I don’t think the median SFH reflects the median quality of housing in Seattle.

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  39. mukoh

    RE: zipzippy @ 31 – If you are making “Bank” then you can’t do IRAs roth or traditional due to gross income exclusion. Unless you mean by “Bank” $168k and under. If that is it then “Bank” is a different definition for people by far. ;)

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  40. zipzippy

    RE: mukoh @ 41
    Always funny to see people split such hairs while people are suffering the aftermaths of a Great Recession. Look up MAGI.

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  41. F

    I would be really uncomfortable spending 30% of my income on housing. I wouldn’t want to go much above 20%.

    Interestingly, it appears that the median ratio of housing costs (all housing costs, not just the rent) to income for renters is pretty much spot on 30%. On the other hand, the median ratio for people with mortgages is only 30% for very young and very old people. Overall, only 38% of mortgage holders spend 30% or more on housing.

    More data here: http://www.census.gov/hhes/www/housing/special-topics/files/who-can-afford.pdf

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  42. MichaelB

    By this definition of affordability there was never a bubble.

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  43. John

    Personally I think this is exactly the kind of bull economics that causes people to overspend on housing. Home prices are too darn high in Seattle! Not enough affordable housing in the area, and property taxes way too high as well. It’s ridiculous! and I make 140K a year and would never consider spending 30% of my income on a mortgage P and I only! that’s insane!! Car payments, kids college, 401k, all the other niceties and then throw on top of that the stupid taxes that goes to pay for all those folk who fell for this “affordable housing” crap and over extended and now are getting upwards of 150K free! I’m going to be renting until the bubble bursts in Seattle like it has everywhere else.

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  44. Azucar

    By mukoh @ 41:

    RE: zipzippy @ 31 – If you are making “Bank” then you can’t do IRAs roth or traditional due to gross income exclusion. Unless you mean by “Bank” $168k and under. If that is it then “Bank” is a different definition for people by far. ;)

    Actually, there’s no income limit on contribution to traditional IRA’s. You don’t get a deduction if your income is above the limit, but you can contribute to them. And there is currently no income limit for recharacterizing traditional IRA’s to Roth IRA’s. So regardless of someone’s income they can get money into a Roth IRA and get the benefits of the Roth IRA. It’s just a 2 step process.

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  45. Kary L. Krismer

    By John @ 45:

    .property taxes way too high as well. It’s ridiculous! .

    What are you basing that on? Our real estate taxes are significantly lower than in many other parts of the country.

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  46. StillRenting

    By Kary L. Krismer @ 47:

    By John @ 45:
    .property taxes way too high as well. It’s ridiculous! .

    What are you basing that on? Our real estate taxes are significantly lower than in many other parts of the country.

    Shhh.. don’t say that too loudly. The people in charge might interpret that to mean real estate taxes are too low.

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  47. Kary L. Krismer

    RE: StillRenting @ 48 – If you live in Seattle proper, the bigger concern would be voters assessing themselves higher taxes. There are constitutional and statutory limitations on what the politicians can do.

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  48. StillRenting

    By Kary L. Krismer @ 49:

    RE: StillRenting @ 48 – If you live in Seattle proper, the bigger concern would be voters assessing themselves higher taxes. There are constitutional and statutory limitations on what the politicians can do.

    Ah, but not everybody lives in Seattle proper, do they? Plus it was (mostly) a joke ;)

    I am well aware of those limitations here in Washington that you are talking about. We moved here from PA a year and a half ago. Our property taxes on our townhouse (assessed value less than $90k) were approximately $3000/year (county, city, and school district). The property taxes here are a lot lower, mostly because in PA local governments do not need voter approval for tax increases (e.g., school boards could raise property tax rates without having to pass a levy). Of course, voters do have the ability to elect the government officials who raise the taxes, but that’s not quite as effective, is it?

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  49. Tim McB

    RE: StillRenting @ 48

    I did an analysis on the 20 cities represented in Case Shiller housing index and by my back of the envelope analysis Seattle had the 11th highest property taxes out of 20. Dallas and Atlanta came in 1st and 2nd respectively. In Dallas you could be paying $10,000 a year in property taxes on a property here you’d be paying around $3,800-3,900 a year for. Similar stories for Atlanta, Chicago, and other “lower cost” housing areas. I’m not sure people realize at least in this area how good we have it concerning property taxes. Sales tax on the other hand….

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  50. Kary L. Krismer

    RE: Tim McB @ 51 – I wonder how many of the 10 that were lower than us had an income tax AND a sales tax?

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  51. StillRenting

    RE: Kary L. Krismer @ 52RE: Tim McB @ 51

    I moved from the Pittsburgh metro area. Very low cost housing compared to here, but much higher taxes. In the city of Pittsburgh you have 6.07% income tax (3.0% city + 3.07% state), 7% sales tax (6% state + 1% county), and 24.72 property tax millage (10.8 city + 13.92 school).

    I much prefer a 9% sales tax, no income tax, and lower property tax.

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  52. Wow

    I know that Tim is just trying to illustrate a point on affordability, but I am in this “median” income bracket of 60-70k income and I am nowhere close to being able to afford a 370,000 house. Nowhere close. I really wanted a Single Family Home, but “affordability” for me is under 270k…and guess how many of those there are listing in Bellevue (where I work)? Give up? Currently there are 4. And they are not much to look at, so you better plan on remodeling. I decided I couldn’t afford a house and still have a close commute (important to me). So condos, right? There aren’t many of THOSE either, not nice ones, and factoring in HOA dues, I had to settle for under $200k. I just bought a condo for 175K. With HOA dues and taxes, my monthly housing obligation will be a good third of my take home monthly paycheck and that is more than enough. But less than it costs to rent the equivalent space (if you can believe it).

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  53. Kary L. Krismer

    By Wow @ 54:

    So condos, right? There aren’t many of THOSE either, not nice ones, . . . .

    Especially if by “nice ones” you mean ones where the association is reasonably strong and most of your new neighbors wouldn’t have to do short sales if they wanted to sell. There are some good ones out there, but with condos the inventory is even less than what the non-distressed numbers would indicate.

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  54. Wow

    Correct. I waited through May for the listing boom to hit…but it never did…and I am paying month to month to rent and don’t want to do that all summer waiting for the perfect condo (which will probably be a bidding war). Obviously there are “nice” condos that cost as much as houses, but I can afford those less than houses. The complex I bought in has low reserves but took things over a few years ago and is now on the right track by having a reserve study done every year and assessing accordingly. Would be nice if you could look at the HOA BEFORE being a contract, though. I purposely chose to buy less than I can afford in order to afford dues…even if they go up. I want to be financially sound. I don’t like the idea of “maybe” my income increasing so that affording a house gets easier. Because maybe it won’t. People buying houses at 4 or 5 times their income, as hinted here, seem crazy to me, even if they can put down 20% and have no other debt. I guess if I intended to live in my first house forever I might want to buy “as much house as I can afford” but that is not my situation.

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  55. Kary L. Krismer

    By Wow @ 56:

    Would be nice if you could look at the HOA BEFORE being a contract, though.

    Yes, that would be nice, but it’s seldom possible. Part of what I was talking about though is possible. If the building isn’t too big, you can look to see when people bought in.

    The main thing though is you can’t be reluctant to back out once you get into contract if you see things you don’t like. And you need an agent who at a minimum isn’t going to try to convince you otherwise, and who hopefully will point out concerns.

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  56. Seattle Bubble • How Would 6% Mortage Rates Affect Affordability?

    [...] a question we have addressed on these pages before, but it has been a few months since the last update, so here’s the latest chart of the affordability index, along with an indicator of where we [...]

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