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.

31 responses to “Cheapest Homes: September 2013 Edition”

  1. Ira Sacharoff

    If I’m reading this right, at some point in 2010 there were about 110 homes for sale in Seattle under 200,000. And right now there are 18.

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  2. David Losh

    RE: Ira Sacharoff @ 1

    It’s a huge problem.

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  3. softwarengineer

    $500-600 Mortgage Payments

    Are about right for an approx $1500 net pay per month per worker….a lion share of the Millenials, college degreed or not….counted unemployed or not.

    That would get the real estate market moving with first time home buyers in Seattle. This all real esate buyers make $100K+ has no evidence and is a knife in the “low-wage” honest truth.

    Why do you think Seattle is pressing for $15/hr minimum wages? Just because?

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  4. gxar

    In late 1995 we purchased a nice old house in Madrona for exactly 200K. It had 1900sqft of living space plus basement and a garage. Zillow says it it worth 748K now. Those where the good old days.

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  5. Erik

    RE: gxar @ 5
    That is awesome. I don’t think there will be an opportunity to quadruple our money in the next 20 years, but who knows. You got in during an good time in an awesome area.

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  6. ARDELL

    RE: softwarengineer @ 4

    In 1980 my 1 bedroom apartment rent was $550. How could that be a reasonable mortgage payment in 2013? In 1985 my house payment without taxes and insurance was $800 a month.

    If the housing market makes no sense to you unless mortgage payments are $500 to $600, I think you may need to build a time machine.

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  7. SC

    My father’s modest, 1600 sq ft Mercer Island home sold for $194,000 in 1992.

    There is a similar home nearby that is currently pending today for $748,000.

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  8. softwarengineer

    RE: ARDELL @ 7

    Or Simply Move to the Midwest

    My daughter’s already buying a home for $600/mo there….nice 3 bdrm rambler on a 1/2 acre too…central air conditioning to boot….

    But Seattle’s special and worth an entire Millenial genrations’ net income….LOL

    Not in her or my book Ardell….

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  9. David Losh

    RE: SC @ 8RE: gxar @ 5

    The problems are that prices doubled from 1998 to 2008, just as a guess.

    In emerging markets today prices have double from 2008 to today.

    Rapid appreciation in what used to be a long term investment is hard for the consumer who buys, or rents.

    I’m one of the worst offenders in the run up in prices, because back in the day that is how I made my money, but since 2008 I’m really concerned that the Real Estate market is unsustainable, and ultimately a drag on the over all economy.

    This is just a comment on a blog that shows my concern. I think the over all impact of housing on the economy would be a good blog post.

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  10. T4Man

    RE: David Losh @ 10

    Is there anything else that doubled in price or just housing?

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  11. rojo

    RE: softwarengineer @ 9

    Then why don’t you take your bigot a$$ and move to the mid-west?

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  12. Erik

    RE: rojo @ 12
    Probably not a high demand for software engineers in the mid-west.

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  13. Tom

    RE: softwarengineer @ 9
    Yes, most of us non Amazon/Microsoft developers can’t buy a house or condo here right out of college, and you may have to get a bit creative to right size your housing costs even when renting. But, the opportunities and career growth potential here can help to equalize that issue over time. There is also the additional cost/benefit to consider between Seattle neighborhoods and nearby suburbs.

    Every person has their own view of this, and some of it depends on your chosen profession and how much you really want that big back yard, but the premium I’ve paid to live here has been more than worth it to me, both of in terms of career opportunities and just general enjoyment of what the Seattle area has to offer.

    I have to admit to being a few years ahead of what Wikipedia considers the millennial generation to be, but having dealt with my own struggles to establish myself here early in my career I’m very glad I stayed and toughed it out.

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  14. David Losh

    RE: T4Man @ 11

    Good point.

    Do you mean like the price of all commodities,like oil?

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  15. redmondjp

    RE: Tom @ 14 – Good post. One has to get more creative now to buy a house if one doesn’t have a superstar tech job. Assuming one is single and can muster up the down payment, one option is to buy an older but larger home and rent out rooms to help make the payments. Of course, life happens, and if one wants to get married and kick all of the roomies out, it may be more of a financial stretch if the spouse isn’t pulling in a good income as well, or wants to stay home with the kids.

    I’m very, very fortunate that I purchased my home in Redmond for under $200K, but that was back in 1998 just before prices started skyrocketing. I could certainly not afford my house if I had to buy it today, at least not on my current income.

    I did live with my parents (and then rented a different place from them with a roommate) for five years, which did allow me to save up a substantial down payment. Financial self-control is key.

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  16. T4Man

    RE: David Losh @ 15

    I’ve not thought of housing as a commodity although the copper in the wiring is. I’m not disagreeing but thought it should be noted that the cost of housing, while volatile, is not isolated from the influences of bad government policies that have effectively driven up the prices of everything. Not to mention supply and demand. It is price increase or purchasing power decrease?

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  17. mike

    By softwarengineer @ 4:

    That would get the real estate market moving with first time home buyers in Seattle. This all real esate buyers make $100K+ has no evidence and is a knife in the “low-wage” honest truth.

    Unless you have some other explanation of how people are affording median priced homes, then I’d accept that it’s exactly what it looks like, IE: Most of the people buying median priced homes are in fact earning an income that supports the purchase and/or have substantial savings. FWIW, the couple that bought my MIL’s Sunset Hill house were first time buyers in their 30’s and paid over $500K with 10% down.

    This “all buyers” nonsense is a red herring. Some buyers, yes. Most buyers purchasing above the median, probably yes. All buyers? Not likely.

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  18. ARDELL

    Just a suggestion but I think this “cheapest home” series would be more interesting if they weren’t 2 bedroom homes. You exclude “value is in the land” but often a 2 bedroom home is pretty much a tear down because it is “functionally obsolete” or at least has a very limited buyer pool, including investors.

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  19. Jay

    RE: mike @ 18 – Softwarengineer does have a point! For the example that you mentioned, 10% down of the $500K house is a very small down payment! If price fluctuates down 10%, they can easily go down water! But most Real Estate agents want buyers to purchase the most expensive house possible!

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  20. David Losh

    RE: T4Man @ 17

    Assets are different from commodities so you have another good point.

    The fact is housing was supposed to be a safe haven, safe investment, with a long term return. As I said I was an offender myself by buying, and selling properties. The game changed when Real Estate in general, both housing, and commercial became so volatile.

    I had thought it ended after the disaster of a crash in 2007, but we are almost right back at it.

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  21. Erik

    RE: Jay @ 20
    A couple months ago SWE was going to buy a mcmansion in Marysville. Now he has found cheaper real estate in the midwest so he wants to move there now…. What I can tell you about SWE is that the aesthetics of his environment do not make him happy. What makes him happy is how much money he has in his bank account. I think what would make SWE happiest is a concrete building in Detroit. That way he could continue to grow his bank account and he would be happy. At one point I suggested he just get arrested so he could get free housing and food. He would still be happy because he would be saving money.

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  22. mike

    By Jay @ 20:

    RE: mike @ 18 – Softwarengineer does have a point! For the example that you mentioned, 10% down of the $500K house is a very small down payment! If price fluctuates down 10%, they can easily go down water! But most Real Estate agents want buyers to purchase the most expensive house possible!

    I agree, however the house wasn’t in all that good of shape so keeping another 10% as a repair reserve makes sense. (Whether they did that, I don’t know but it’s what I would have done in their situation) That’s the main reason we decided not to buy the house for ourselves. It needed too much work for a place we weren’t attached to. I don’t regret the decision at all, even though we could have saved a ton of money buying from a relative.

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  23. softwarengineer

    RE: Tom @ 14

    You X Generation Just Don’t Get It?

    You think go to college, make a $100K, marry one like you and walla….rich middle class [certainly not middle income].

    The Bureau of Labor Statistics isn’t on your read list, just Forbes or whatever NWO rag pats ya on your back for believeing the lies. The BLS clearly documents a stagnant total labor force in our local areathe last 5 years and you don’t believe adding more people to the Seattle makes it worse.

    You don’t believe people are grabbing up two scarce jobs per person to pay the Seattle rent. Drink your $5/cup Starbucks and proclaim it just ain’t so. If American RNs graduating from college currently have a 50% unemployment rate [they do], perhaps the other 50% that have a job washing counters at Applebees for $9/hr is cool with you.

    Shamefully call me a bigot for sticking up for the lost youth [and a lot of the rest of Seattle's workers too of all ages too] in America’s population density increase, I call that name caller rank fascists. You sure aren’t an Earthday liberal for depopulation like SWE….LOL

    I grew up in Seattle, was born here, went to the U of W. Those that illegally call me a depopulation bigot probably came from California, San Francisco perhaps? Enjoy your fascism, its not gonna last on credit.

    Real

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  24. Peter Witting

    RE: SC @ 8 – I stretched with everything I had for a 2 bedroom, 1 bath with a view of the city in View Ridge, for $164,000 in 1993.

    No thanks to an expensive divorce, I still owe on the mortgage, but only a fraction of the zillow “value” of a half-million. The best part is that it is now a rental with very nice cash flow and long-term tenants.

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  25. Erik

    RE: softwarengineer @ 24
    i definately dont think you are a bigot. I have no idea why someone would call you that. I called you a cheapskate and I still think you are. If you were a software engineer in seattle in the 90s you made tons of money and didnt spend it. You just like the money and not what yoi can buy with the money.

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  26. rojo

    RE: softwarengineer @ 24

    You are definitely a xenophobic bigot who has blamed all your and nation’s problems on immigrants and have called for increased population because of them… check your previous posts.

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  27. Tom

    RE: softwarengineer @ 24

    Whoa, not implying anything about you, just trying to give a perspective on why the Seattle area can be worth a premium. I’m also not saying that that premium doesn’t require sacrifice and struggle, hopefully which will pay off in the long term. It probably helps that I’m originally from the Detroit area, which does indeed have cheap housing but is also the home of depopulation. I am neither making $100k nor married, neither of which would be particularly important milestones for me.

    I’m a manager myself and as such have hired a few people in the past and will hire more in the future. A millennial with a relevant degree and something I can look to on their resume that shows they’ll have the leadership qualities, people skills, and worth ethic I’m looking for can absolutely get their foot in the door when I’m looking at resumes. Again, some of that is timing and patience for that opportunity to come along.

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  28. Jay

    RE: softwarengineer @ 24 – I think you sound too bitter here. Maybe you should take Erik’s advice and get a life!

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  29. Lo Ball Jones

    Anyone following the story over at SLOG about underwater homeowners in South Seattle petitioning for help.

    According to the story, one-third, or 42,000 home owners are underwater an average of $92,000.

    That’s an aggregate of $4 billion dollars in bubble !

    Something’s gotta give, I think.

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  30. ARDELL

    RE: Lo Ball Jones @ 30

    “So the city could use its eminent domain authority to seize the mortgages, paying their fair market value, and then rewrite the loans to leave homeowners with positive equity.”

    Really? A gift from the City of “positive equity”?

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