Just Purchased a Foreclosure: Any Comments?

[SoCalXplant]

Hi, everyone!

My wife and I are about to close escrow on a SFR in Manchester neighborhood of Pt. Orchard. Here's some details:

We were looking for a water view property for under 450K. We were waiting for signs that the market was about to bottom out; signs were pointing to this happening late summer of '09 at the earliest.

We were following several listings that interested us, and were open to purchasing at anytime if we felt a property was sufficiently undervalued, or at least valued at where it would have been had there been no bubble.

Anyway, these conditions did occur on one of the properties we were following, which was a bank foreclosure. The stats are:

2300 sq ft
3 bdrms
2/1 baths
large kitchen
separate lvg and fam rooms
sep den/ofc downstairs
3 car attached garage
HUGE wrap-around deck w/sunken hot tub
incredible views of downtown Seattle skyline, Space Needle, puget sound and ferries from deck and several rooms in house

House originally listed @ $450K, dropped twice to 430, then 405K 6 weeks ago. I had calculated non-bubble value of property (4% YOY appreciation from previous pre-bubble purchase price) to be ~ $416K, which made the second price redux @ 11K BELOW realistic non-bubble value. We agreed we liked the property enough to make an offer, and wound up buying the house.

We believe there's a fair chance the house could still lose some equity before bottoming out, but has so much going for it that it could be worth as much as $1M in the next 10-15 years as we invest in further upgrades.

So, what say you? Are we crazy to have purchased now? Or crazy genius to jump on a real bargain?

[deejayoh]

I'm still trying to figure out how there are views of seattle from Port Orchard

http://maps.google.com/maps?q=port+orch ... 1&ct=title

[The Tim]

[EconE]

What is the "pre-bubble" purchase year. If it was 4% from a previous peak (90-91) then potentially not as good of a deal as if it were 4% from 96-97 purchase price.

There are homes in Los Angeles that are listed for double their purchase price in 1990-91 yet don't represent a good value. That's less than a 4% return. There are also houses that are listed for 4X what the purchaser paid in 1997 that represent better values.

They are still both overpriced in both examples above.

[jon]

Going from $405K to $1M over 15 years is a little over 6% per year. That seems very doable, especially if he is putting work into it.

Only problem is that in 15 years $1M won't be what it used to be.

[TJ_98370]

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I can attest to the fact that there are views of Seattle from the Manchester area.
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SoCalXplant - If your time-frame really is 10 to 15 years before wanting to sell and you really like the place, you are doing the right thing and you will do okay. You are aware of the fact that you might take a hit of depreciation for the short term and you are okay with that. The only down side about Manchester is that most people I know consider it to be a bit isolated and as Tim implies with his comment above, expecting premium appreciated resale prices may be unrealistic.
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The last time I was in Manchester, condos were being built near the center of town. Have those condos been completed and are they selling?
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[SoCalXplant]

[Nell Plotts]

"I'm also hoping for either increased (and cheaper) ferries, and/or a new bridge or tunnel across the sound joining West Seattle to Vashon and Southworth. But I know that's currently just a pipe dream, and LOTS would have to change for such a project to come about."

I don't expect that to happen in your or my lifetime. The state of WA hasn't demonstrated any skill for long term transportation planning.

Since you have made your purchase, enjoy your home and devote your energy to creating the community you desire.

[deejayoh]

[Hector]

Speaking as someone who grew up in Port Orchard, I have heard since birth about increased ferry service and some type of bridge/tunnel only to watch the state quash the new ferries and slow down existing Seattle/Bremerton routes as a result of cost and complaints from waterfront property owners in Port Orchard/Manchester...

The state instead invested in a new bridge. Vashon has been supplied with minimal Passenger Only service to downtown (how old and small is that boa?), and refuses to upgrade the auto ferries running from Southworth to Fauntleroy. Even with it's high volume, other runs will see upgrades long before that run. Don't forget the fees, they only go up every year.

Manchester wants to grow, and has tried for years, but probably will never have the infrastructure to support any real growth.

I hate to be a downer, and I honeslty wish your luck with your purchase, but I believe you are being a bit unrealistic in your hopes.

[Bob_Funk]