Reader Comment: “Now all I seem to be able to afford are the meth houses!”

A reader going by the handle “JustSomeDude” left a comment this morning that is worth highlighting:

Came upon this website a couple months ago and find everyone’s perspectives interesting. I see a lot of wondering on what potential regular, non-speculating, non-investor sellers and buyers are thinking and doing. People who just want to live in a nice house.

I can’t speak for others, but I can share my thoughts / experiences recently as well as some anecdotal stories.

I find the current environment frustrating as a buyer.

We are in Pierce County and lived in unincorporated Pierce County – we sold our manufactured house and 1 acre land Spring 2017 to move to a better school district. After our experience selling (and shock at cost of houses last year) we decided to rent a year to see what the market does.

We first went on the market in Fall of 2016. I was a bit shocked when the Realtor said if there is no offer the first week we should lower by $5,000 – $10,000 each week until we sell. I didn’t want to go down in value and was not in a rush to sell – so after turning down a few lower than asking offers we took our house off market to save more on a down payment for the next house. We put our house back on market Spring 2017 – but raised the price by $5,000 assuming people would go lower again (then we could just counter at what we originally wanted). We got two offers on the first day of listing. After asking for their best offers we accepted the offer that was $25,000 more than what we were asking! We collected our winnings (er, I mean investment results) and moved to the better school district. (Sumner School District for those wondering)

During the last housing bubble I remember distinctly knowing things were off because:

  1. All the people around me who I voiced my concerns on prices and environment told me things were different this time, prices will never be lower, or told stories on so-and-so who quit their job to flip houses. You can’t lose! I finally stopped voicing my opinions as it seemed to make people mad. (Incidentally, I had the same reaction during the Dot Com bubble when I stated how dumb some of these websites were and how they had no business model, etc. I’m a tech guy – hardware and software and yet all the people around me apparently knew better than me! lol)
  2. I also took a look at the ghetto meth house prices in certain areas in the Bonney Lake area and nearly lost my lunch at the prices that were being asked for.
  3. On the radio and HGTV every other ad or show seemed to be about getting rich quick with real estate, or refinancing into the new, improved, [insert very long name for some sort of mortgage thing] so you can have lots of money to retire with, live that life, blah, blah, blah.

The above is obviously not any scientific, methodical approach to investing – but it spared me some financial heartache and hardship considering them. Sadly, all three points above seem to be repeating – except now higher than last time. Did you know Dean Cain is looking for a few good investors to learn the secrets to house flipping – no need for good credit or experience? Also – if you have that house with lots of equity you can do that reverse mortgage and if your house is more than a $million you can get the new improved jumbo reverse mortgage! And apparently, 5% down is still being allowed (and I have been told when pre-qualifying for a loan that if I have to do less than 20% down and do not qualify for 5% down – there are creative ways to get that house of my dreams!) And people seem to still get upset when even hinting that perhaps we are back in a bubble or at least getting unhinged with reality…

Long story short, last year I balked at the cost of the nice houses in our new area so decided to wait a year to save more of a down payment and hope things lowered to a realistic level. Based on how much I got approved for on a pre-qualified loan last month I could afford one of the houses I actually like – but then I couldn’t save for my kids college, go on vacations, and would need to eat bread and water. And when the correction happens I could possibly owe more than the house could sell for – possibly a lot more!

So considering the amounts I’d prefer to pay for a house – October-December there were houses in $300,000 – $325,000 range that I wouldn’t mind – 4 months later they are in the $375,000-$425,000 range! Everything rose higher and faster than I could save so now all I seem to be able to afford are the meth houses!

So we’re going to continue to rent, continue to save for a down payment, and hope reality and prices comes back down to earth. If it doesn’t – I’ll never be able to save fast enough to buy so will look to eventually move somewhere more affordable – hopefully somewhere warmer. Maybe somewhere out of state (but probably not since family is here). Maybe we’ll just end up renting for the rest of our lives – it’s cheaper and safer than buying the meth house!

One other anecdotal story – my wife’s co-worker heard we were looking to buy. She shared that their house went up a lot in value – but if they sold they couldn’t even afford a down payment on any of the other houses in their neighborhood so would have to move somewhere else. So they are not even considering selling even though they’d love to get the equity.

I’ll stop typing as I feel my negative sarcasm bubbling up and I’m trying to stay more positive these days…

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About 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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

148 comments:

  1. 1
    BudgetedHomeBuyer says:

    I am another frustrated potential buyer that is sticking with renting. My husband and I make GOOD money in our early thirties ($175k combined), we have no debt and are able to put $3500 a month in savings.

    Last year we dabbled in the idea of buying a house. We looked at a house with a foundation on peat moss… that had the most uneven foundation I have ever seen… and had NEVER been updated for $325k 2 blocks from Aurora in Edmonds (not the part of town I dream of). It ended up selling for $50k over asking and we were the only potential buyers that did the pre-inspection. Through that we found out the house needed at least $40k in fixing to be livable.

    At that point we decided we would just hunker down a year and keep up with our $3500 a month in savings knowing that house prices would go up a bit… we had no idea they would astronomically increase in that time. That shanty we looked at has doubled in price according to Redfin. It is not worth $600k.

    Instead of buying we have decided to keep renting and start a family (and keep saving). What perplexes us is how average people can afford the cost of these huge home prices with less than 20% down, and then be able to afford daycare…. and what happens if you have to replace a car or even just maintenance on their homes. I do wonder about all of my friends that rushed to buy large mortgaged homes because if/when they have kids… $1400-$2300 are the rates for newborn daycare.

  2. 2

    I really don’t get the inspection situation. Why are listing agents so afraid of inspections? Is there really some new concern that buyers will be unreasonable even though they know there are other buyers out there, or are listing agents just being lazy and not wanting to deal with them?

    And before Ardell jumps in and says it’s just different in areas I don’t deal in, Bellevue is exactly where the normal rules should be followed. People who can pay seven figures for a house can also afford to fund and pay an attorney when they discover something bad. And they also have enough money to do the most expensive thing to fix whatever it is they think it wrong. With those type of people you want to have the power over them, not let them have the power over you.

    And pre-inspections! Those aren’t good for buyers or sellers, or even the successful buyer unless they happened to be the last one through. Actually, it’s not even good for the winner. Who wants a house where 10 inspectors have disturbed the attic insulation?

    The current situation with inspections seems to be just another example of monkey see, monkey do in this market. The old ways worked well and they actually still work well. It’s just that few agents want to follow them because they saw something new and shiny.

  3. 3
    BudgetedHomeBuyer says:

    RE: Kary L. Krismer @ 2

    I agree a preinspection is no good for the buyer or the seller. However, if you choose to not go forward (like us) you are only out $600 vs buying an uneven house with a water main leak.

    What put me off was that the selling agent happened to “accidentally show up” at the end of the inspection. I know the agency in Edmonds and I am not a fan of their schemes, they seem to just be in this to get rich quick.

  4. 4
    pedaltothemetal says:

    Seattle is the new Hyderabad!

  5. 5
    Rupert D says:

    I would like to live at a beach house in Malibu or on Park Avenue in Manhattan but cant afford it. Move to Cleveland, Pittsburgh or the Chicago suburbs. Cost of living/housing is much less and salaries are on par or not much lower than Seattle. I know someone in San Francisco who has been waiting out the inevitable big decline in home prices…unfortunately they have been waiting for over 20 years now and still rent. RE: BudgetedHomeBuyer @ 1

  6. 6
    BudgetedHomeBuyer says:

    RE: Rupert D @ 5
    We well know we can leave the state. How would you know that’s not something we have explored? Have you? Where we have looked the job markets are severely depressed (Midwest, South) or the cities are going through the same explosive home price increase that Seattle is having (all of Texas).

    We have no problem renting at half the cost of a mortgage and having someone else maintain our home. I am merely agreeing with the original poster that things have gotten out of control.

  7. 7
    David says:

    Even if “JustSomeDude” is correct about a housing bubble bursting, does he think it will burst and stay down forever? When the housing bubble burst in 2006/7, inflation still would have been in effect for the next 11/12 years since.

    A $100,000 house in 2006 would need to be worth $123k just to keep up with inflation since 2006. Now speculatively factor in 8+% more because the Seattle market has market appeal for various reasons. When you look at how down the housing market was for so long because of the Obama Depresssion – I just don’t see a bubble right now.

    ALL of that being said (and to argue against myself) – historically housing has an ~ZERO % return according to Case-Shiller.

    What “JustSomeDude” is really saying (to me) is he doesn’t want to get caught in a liquidity crunch. That I understand – it limits your freedom and scares the hell out of you.

  8. 8
    Suburban Mom says:

    Update on Seattle Area Appreciation
    Picking up from a 2007 blog post by Ardell on Sixty-01 townhomes
    (All 2 bedroom, 1.5 baths under 1100 sq ft almost identical for comparison)
    http://raincityguide.com/2007/02/26/seattle-area-appreciation/

    From Blog:
    2003-2005 Range $95,000-$178,950
    2006-2007 Range $205,000-308,000

    Since then according to Redfin…
    3/7/08 $257,500
    7/25/08 $269,950
    10/16/08 $251,500
    4/15/09 $215,000
    10/21/09 $204,000
    10/29/09 $243,000
    12/9/09 $202,500

    1/15/10 $165,000
    5/10/11 $150,000
    7/20/11 $119,500
    10/14/11 $94,900 *OUCH, Low Point*
    12/1/11 $116,000
    2/7/12 $113,500
    4/10/12 $110,000
    5/16/12 $135,000
    10/5/12 $149,000
    11/16/12 $130,175
    3/29/13 $170,000
    4/22/13 $171,200
    4/24/13 $175,000
    6/21/13 $210,000
    7/11/13 $125,000
    7/29/13 $179,900
    8/29/13 $145,250
    9/25/13 $137,000

    12/11/13 $203,000
    2/24/14 $216,000
    6/6/14 $235,606
    6/6/14 $234,000
    6/16/14 $215,000
    10/14/14 $225,000
    10/23/14 $228,000
    10/23/14 $222,000
    10/31/14 $241,000
    12/29/14 $220,000
    5/13/15 $255,000
    6/30/15 $270,000
    6/30/15 $265,000
    7/15/15 $205,000
    7/17/15 $298,800
    7/24/15 $270,000
    8/8/15 $240,000
    9/17/15 $253,100
    9/25/15 $240,000
    12/3/15 $279,000
    1/19/16 $245,000
    3/30/16 $340,000
    4/2/16 $266,500
    4/29/16 $300,000
    5/2/16 $333,400
    5/11/16 $252,499
    6/29/16 $335,000
    7/29/16 $290,000
    8/12/16 $339,950
    8/22/16 $336,000
    8/31/16 $353,000
    9/20/16 $260,000
    9/29/16 $300,000
    11/7/16 $230,000
    11/28/16 $335,000
    2/9/17 $401,500
    3/6/17 $381,500
    4/28/17 $377,000
    6/2/17 $375,000
    8/14/17 $413,000
    8/23/17 $425,000
    10/1/17 $408,888
    10/12/17 $395,000
    10/12/17 $460,000
    10/20/17 $380,000
    11/9/17 $468,000
    11/13/17 $386,000
    11/15/17 $348,000
    11/17/17 $449,950
    11/27/17 $380,000
    12/22/17 $400,000
    1/9/18 $463,000

    3/29/18 $537,000 *WOW!! This must have set a record high price for Sixty-01, listed for $588k on 3/5. Last sold according to KC Records on 5/17/2010 for $224k. http://www.redfin.com/WA/Redmond/6738-138th-Ave-NE-98052/unit-618/home/145076146

    **None currently listed for sale**

  9. 9
    FormerSeattleite says:

    @Budgeted HomeBuyer,

    My wife and I are in exactly the same situation as you and your husband (combined income a little north of $200k; I’m in my early-thirties, she’s in her late-twenties; not saving quite as much as you guys due to student loan repayment, but no other debt). We want to start a family, and we are having a hard time penciling out a house purchase.

    I agree that it makes no sense. Admittedly, I am bearish by nature. That being said, I don’t see it getting much better anytime soon due to basic supply/demand, as many others in these comment sections have repeatedly pointed out on every single article. To afford a median $750-850k house AND afford newborn childcare plus all of life’s other necessities, you need to be earning WELL north of $200k combined or else you are taking on a whole lot of risk (and is that necessary risk?), unless you have a major chunk of down-payment cash from family and/or equity gains (which a not insignificant number of Seattle-area millennials appear to have, to be fair).

    To your point about continuing to rent, that is what we’re doing for the time being, as well. That is the safest bet, and it’s better to have a nice savings cushion with a new family than be house-rich, cash-poor, and in a world of hurt if/when one or both of you is temporarily without a job in the midst of a downturn. For example, the worst case for you guys is things don’t improve until at least March 2021 (arbitrary future date), you have an additional $125-150k saved, and you are in a great financial position. Best case, the market turns south before that point, you both keep your jobs, and you are in solid position to purchase a house amid an increasing selling frenzy. Some of it is about financial priorities, as well. We are prioritizing retirement savings in addition to down-payment savings (as opposed to throwing a huge chunk of our income at a high mortgage payment).

    You are right that many of our millennial peers seem to be reeallly stretching themselves financially to get themselves into houses, and the math doesn’t make sense unless they’re pulling in $300k+, which some of them are (and/or they are in the large-windfall segment, referenced above). We have multiple friends who have recently taken out million-dollar mortgages (also late-twenties/early-thirties). They all have great jobs, but what about when they don’t anymore?

  10. 10
    kenmorem says:

    RE: BudgetedHomeBuyer @ 1
    i assume your $3500/mo savings excludes what you put into 401k, roth, etc. if not, then you need to become a better saver at that income level.

    my wife and i saved $120k for a downpayment in 16 months and made 10% less than you and maxed out other retirement vehicles. if there’s a will there’s a way.

  11. 11
    Anthony Cacallori says:

    Interesting comment. I liked the part about the choice between bread and water or vacations because I can relate. For me, I chose the bread and water option. It only lasted two years until promotions/raises/good luck etc made things much easier and it ended up being one of the best decisions of my life all these years later (the furnace I just had to replace notwithstanding). Was it risky? Of course, but I think as long as you believe the potential benefits are worth the risk, you’re fine with it. My sense is this poster does not believe the risk is worth it, so they’re probably better off renting.

    The other interesting thing about this comment is it is exactly the opposite to a thread on here three years ago I’ll never forget. A guy wandered into the comments and casually mentioned he bought $745K townhouse and got his own call-out thread(!) because of it. Three years later, his townhouse is worth over a $1M on Redfin. He was willing to buy for many good reasons, but was excoriated for thinking future appreciation was one of them. I bet he looks back on that thread now and chuckles.

    https://seattlebubble.com/blog/2015/04/16/warning-new-housing-bubble-ahead/

  12. 12
    BudgetedHomeBuyer says:

    RE Kenmorem ….. That excludes our maxing retirement and health savings account, we have over $100k in cash for down payment, some money. Saving is not our issue (plus it 401ks and HSAs lower your taxable income). Buying a home and not having cash flow for other major expenses is our fear, or worse, buying a home with the inability to continue to put money in savings.

    Could we buy one of these homes, absolutely, would it cause a lot of stress at home? Yes.

  13. 13
    Jake says:

    Too bad renting is expensive af also.

  14. 14
    JustAnotherGuy says:

    RE: BudgetedHomeBuyer @ 1

    We were waiting for the last Three years to buy a house and saw the price of houses go up by more than 150k. One house would sell for x amount then next one gets listed for 15-20k more. We would say to our self who will buy it for that price tag? and then someone would offer 10-15K over asking price.

    Finally we were so much frustrated with this crazy RE market that we bough a townhouse instead of a house in Issaquah without any finance or appraisal contingencies and releasing the earnest money to the seller right away. Was it risky, maybe, we were preapproved for 200K more than what we offered for the townhouse and had enough $ in the bank to cover for a low appraisal. If I had to do it all over again, I will still do it.

    Its been a little over a month and we are happy that we don’t have to go to any more open houses or look at Redfin/Zillow first thing in the morning to see if a new house has been listed or how much did the last house we bid on sold for.

    In Issaquah, a 2000 sf townhouse was recently listed for 640K and was sold for 795K, I’m glad I was not in that bidding war.

    I can totally understand what you are going through as we were in the same boat for last three years. I wish I could say that this insanity will stop soon, but no one can say that for sure. I wish you luck!

  15. 15
    David says:

    Inflation will make the price of the house today ever more friendly after your purchase. But if you wait – the pain never stops because inflation is your enemy.

  16. 16
    Blake says:

    I moved to Seattle in late 2005 after selling a nice home in the midwest for about $250k. The RE market was nuts here (People were buying houses as fast as they bought shoes!) and my family told me I had to buy buy buy or be priced out forever!! It was crazy and I put together a few bids for homes I really didn’t like… and luckily lost out. I got discouraged and kept my money in the bank – – and started reading Seattle bubble! I watched the market crash and then did more research on neighborhoods and such. By 2011, I decided to buy and ended up in a house I truly loved and in an area that is terrific. Do a lot of research and watch… My wife and I have been buying RE (instead of stocks and bonds) and have another house in Seattle, one in AZ, and one out in Mass. We’ve been going down to Baja and doing research now :-)

    No one knows for sure, but it does feel a lot like 2006 now and I just don’t think it is sustainable. It’s a huge decision, but do not buy unless you are sure you’re going to stay in the house at least 6 years, maybe more. Renting gives you a lot of flexibility. As Tim has said many times on this blog: Home ownership is expensive and truly not a great “investment” most of the time when you run all the numbers. Some get in at the right time (I did in 2011), but if we could time markets we wouldn’t be sitting here typing on this blog! :-)

    Good luck!

  17. 17
    stewru says:

    I will not say that this time is different insofar as prices will always go up. I will say, however, that this time is different insofar as when the correction finally comes, prices will not crater like they did in 2008. The fundamentals aren’t rotted through like they were back then. It would take a truly catastrophic black swan externality to cause the kinds of declines we saw in 2008. And I think we’re still 3-5 years away from any correction at all as Amazon continues to gobble up office space and money continues to flood into the region. Meantime, prices will keep surging at 15-18% per year.

  18. 18
    N says:

    Renting is expensive but its a darn lot cheaper to rent the same house then buy it. As has been pointed out on a medium price house bought today you could easily be cash flow negative $1,000 per month if you were to rent it. Renting has become A LOT more attractive in the last 12 months as rents moderate and home prices continue to go up quickly.

    A lot more people are in the 100k and under income bracket then the $175k+ bracket the poster above mentions. Without very healthy wage growth I am not sure how large gains can be sustained from here?

    It’s an interesting perspective millennials have, having mostly been to young to have been home owners during the housing bust and likely less cautious with regards to the new run up. Remember when everyone was saying we wouldn’t see more than 5% growth again in the stock market? Boy have times changed.

  19. 19
    N says:

    @ Stewru – The fundamentals sure will be rotten in 5 years when the medium price is $1.4M if your right that we get 15% gains for the next 5 years.

    I think this thing is tied to the stock market and rental market a bit closer over a 5 year stretch and if the rental market continue to show weakness driven by the 22% increase in supply we are experiencing, or if the stock market declines it will have some impact on housing.

  20. 20
    Brady says:

    Let’s say you wait five years to buy. Prices will go up 20% over the next two years, then a correction happens of like 10% over the following three years. Prices have still increased 10% over five years. Are you going to be that much better off even if there is a good correction? If you can’t buy now then think about a different location or buy something more creative like a duplex or a distressed property.

  21. 21

    RE: Suburban Mom @ 8

    I’m glad to see it didn’t bid up over asking. :) Yes I do believe it’s an all time high, but most sales right now in every neighborhood are selling at all time highs. I am bearish and thinking 18 months out we will start seeing the change, or thereabouts. But no question we are not slowing down for this season. What bothers me most is when that one house that should not sell at all at that price, does sell and bids out. So I’m glad to see that in your example it at least sold for under asking. Gives me some hope that people are at least using some kind of pricing strategy…once in awhile.

  22. 22
  23. 23
    BacktoBasics says:

    I moved to Seattle from Rustbelt in 2006 and read Seattlebubble. Can’t sell rustbelt house due to recession so I keep renting. In 2009, I found my ideal house and I bought it. Not absolute bottom but 20% from peak. Now it is double the price I paid. When Seattle pass the $15/hr wage law, I told my wife inflation is coming. Money will worth less in Seattle. Then in 2014, I started looking a SFH again. Found an old house at a very desirable but expensive location. I sold my rustbelt house at no loss and bought this one. Now another 50% gain. In 2017, Seattle housing sky rocketed again due to Amazon boom, I started look again, bought another old house in a very desirable neighbor again and rent it out. Zero cash flow but already got 15% gain from last year. Low interest, QE, booming stock market. I would rather own some land in Seattle then depend on stock market. Seattle, like bay area, has a lot tech company paying good salary, plus new immigrates with a lot of cash. To the north we have Vancouver where housing the 3x of Seattle, to the south we have SF where housing price is 2x to 2.5x of Seattle. I am confident Seattle will do well in the future. I mean draw a circle around the city, the inner the better. I don’t like to waste my time on traffic jam. Life is more precious than money. If you have 10% (if not 20% down), buy if you think you like PNW and plan to stay for the next 10 years. Bubble, yes, but when you look back, anytime is a good time to buy if you plan to live in it. Even if you bought in 2007, you will still ahead of others. Always look for an old house in a desirable neighborhood close to Seattle. The value is not the house, the value is the land and neighboring school: Low crime, educated neighbor with good income, good school.

  24. 24
    Eastsider says:

    RE: Suburban Mom @ 8 – 40% price gain in one year! The FED has got a serious problem…

  25. 25
    BacktoBasics says:

    Remember: In a booming market, leverage is your friend. if the market goes to the other direction, don’t sell, hold on to it through the recession and you will be fine. We all learn this from last couple of recessions.

  26. 26

    RE: Anthony Cacallori @ 11 – That was fun reading through that old thread.

    I particularly liked post 88 where I suggested Tim change his Friday Flashback series to an article about someone who in the past said something bearish.

  27. 27
    pfft says:

    “Now all I seem to be able to afford are the meth houses!”

    now that is funny.

  28. 28
    pfft says:

    By David @ 15:

    Inflation will make the price of the house today ever more friendly after your purchase. But if you wait – the pain never stops because inflation is your enemy.

    Actually studies have shown inflation between 2-4% is actually good for the economy. Don’t ask me to post a source though you have to do your own homework? Or do I think you should already know the answer given your comment? Quite the dilemma.

  29. 29
    greg you says:

    Seattle homeowners are holding on for dear life. Many including myself, don’t really like the weather, traffic, homeless, software mono-culture, taxes. Yet we hodl in our homes, Not selling, not buying just hodling, so sad.

  30. 30
    greg you says:

    Funny how FOMO works, Nearly 40% of millennials overspend to keep up with friends

    https://www.creditkarma.com/insights/i/fomo-spending-affects-one-in-four-millennials/

  31. 31
    greg you says:

    Could it happen in Seattle?

    Toronto’s housing prices are collapsing.
    http://www.businessinsider.com/the-housing-bubble-in-toronto-is-bursting-2018-4

  32. 32
    greg you says:

    Could this have an impact?

    U.S. 30-year mortgage rates hit 4-year high – Freddie Mac

    https://www.reuters.com/article/usa-mortgages-freddiemac/u-s-30-year-mortgage-rates-hit-4-year-high-freddie-mac-idUSW1N1Q5006

  33. 33
    Erik says:

    JustSomeDude is a buzzkill. Let us enjoy this buzz for the next few years while we line our pockets with theoretical money(equity).

  34. 34
    ess says:

    By greg you @ 28:

    Could it happen in Seattle?

    Toronto’s housing prices are collapsing.
    http://www.businessinsider.com/the-housing-bubble-in-toronto-is-bursting-2018-4

    There was an active policy in place to get the results that are happening now. The concern in Toronto, as in Vancouver was that it was “foreign buyers” that were driving the price of housing to those lofty heights.

    Of course, the problem is that even with “foreign buyers”, the majority of people who are financially devastated by these government actions are citizen residents who have bought in the past year or so who also are affected by these actions.

    Although Seattle City Council may try to emulate the actions taken in Vancouver and Toronto, they and other legislative bodies have been relatively unsuccessful in implementing “do gooder” legislation that ultimately will do more harm than good. And for all the talk of “foreign buyers” snapping up real estate in Puget Sound, it does not appear from any reliable statistics that this has been the issue as it has been up in Canada. It appears to be more an issue of supply and demand, and so long as the demand outstrips the supply, and there is the ability to pay for that demand, the strong Puget Sound market will continue. But anything is possible in regional or world events that could bring an end to the good times , and in addition, one must never totally discount the ability of governments on all levels to screw things up with counter productive or contradictory legislation.

  35. 35
    Deerhawke says:

    I have two examples for you.

    My wife and I got to Seattle in 1990 and everyone told us we should have arrived a few years earlier before the Californians arrived and prices doubled. We spent months searching but the prices were going up faster than we could save. Then Operation Desert Storm kicked off and the national and regional economies slid sideways. We looked at a house that had been overlisted and had become seriously shopworn. They kept cutting their price behind the market. Then the seller got a foreclosure notice from the IRS. A couple of months of weird negotiating and we bought a house in Greenlake that had been listed for $250K for $165K. It was a truly terrible house and the whole experience was super stressful. It needed a full remodel back to the studs and a lot of foundation work– while we lived in it. I sold it right at the peak of the bubble in 2007 for $900K.

    My nephew and his wife got here in 2015. They should have bought the very first house they looked at. After that, they were chasing the market. Every house was worse, farther out and more expensive. Last year, they got “lucky” when I was able to find them, off market, a place in the low 5’s when everything in the area was mid-6’s. Another truly terrible house. They are repeating our experience and remodeling on weekends. Lots of stress, lots of work, but everything in the neighborhood is now in the mid-7’s.

  36. 36

    One factor we haven’t discussed much is the impact of 1031 exchanges. Someone trying to complete a 1031 exchange by buying in the Seattle area will be under fairly significant time pressures. I believe they have to designate within 45 days of closing on the first property and then close within 180 days. The first deadline though is the critical one, and apparently you can only designate 3 properties, which in this market is a practically useless right. As a practical matter you need to be in contract within 45 days.

    Due to the tax hit, which will vary from party to party, parties closing out 1031s may be likely to be willing to pay more for the property than other buyers.

  37. 37

    RE: BudgetedHomeBuyer @ 1
    No One Can Afford KinderCare Daycare Anymore

    The businesses are closing down in Kent. This should cause more flight from the job market to care for kids. 70% of the Milenial women just want to be housewives with a working husband….the recent poll results that defy the Gen-X norms. You Milenials are innovative and smart for suggesting fiscal planning and not brainless debt. :-)

    The kids you raise will turn out much better with two parents raising them that way too. Ask any psychologist on child development.

  38. 38
    FormerSeattleite says:

    RE: Deerhawke @ 32

    Good for you and your wife, Deerhawke. From reading your posts over time it seems like you guys have done very well for yourselves (I’ve been reading the comments on this blog for awhile but had never commented myself until yesterday). And your nephew and niece-in-law are very lucky to have ready access to your knowledge and experience. My take from reading your posts is that you are cautiously bullish, correct me if I’m wrong.

    One thing that is hardly discussed in this forum is affordability from a cash-flow perspective. There is this notion among bulls that millennials such as myself should do whatever we can to get into a house – any house – because we will be priced out forever if we don’t. To your point, you can accomplish a lot through sweat equity after you get yourself into something, and I appreciate that point. My wife and I are both hard workers (we would not be where we are professionally and financially if we weren’t).

    But at what cost? To @BudgetedHousingBuyer’s point, if your housing payment eats up such a large portion of your take home pay that you don’t have enough cash flow for savings/emergencies, and the life you want to live at large, is that really worth it? Why is it preferable to own a house (as opposed to renting a comparable living space) if you can’t comfortably afford the payments over time? And who can afford the payments on a median King County house ($5-6k+/month) other than the super rich? For the rest of us (and my wife and I are doing pretty well ourselves), why stretch that far? Bulls will tell you, “Well, duh, you get the appreciation.”

    Exchange-traded funds have consistently out-performed the housing market, save for a few historical anomalies (2002-2007, 2012-present). You have to sell your house to realize that appreciation. I don’t think many millennials who are busting their butts to get into housing in the greater Seattle area (and starting families) are likely to do that anytime soon unless they plan to leave the area. Sure, they can leverage their lives even further by taking out home-equity loans and lines of credit, but that only makes financial sense if they use that leverage for additional financial gains/appreciation in the same or other asset classes – otherwise, it’s pure folly over the long run.

    If my wife and I continue renting a comparable living space and saving the difference, assuming we are able to keep our current jobs, we can save up six figures plus in additional cash over the next few years without any housing downside other than two things: (1) variable rental prices (who knows how much rents change); and (2) the opportunity cost of the tax deductibility of our housing payment, the effect of which was recently mitigated by the tax reform bill. Rental prices may actually flatten or decrease in the near future (and already are in some areas). The “appreciation” we miss out on is totally irrelevant to our housing situation unless we were to buy and sell.

  39. 39

    RE: Deerhawke @ 32
    I Read an Interesting Blog About Real Estate From Illinois Recently

    The owner was complaining that her whole social security check just covered the property tax increase there. One of the bloggers replied that they bought a house with 12% interest in the 80s on a $20,000 income with payments that wiped out the single income on mortgage alone …..but by gosh they barely made it [reduced their lifespan?] and anyone can starve and own a home that way…..:-)

    And we should just stop our whining….how about fiscal planning that includes a food budget too…LOL

    This is America ya know…

  40. 40
    ess says:

    RE: Deerhawke @ 32

    About how much do you think that house is worth now? Do you regret selling? Greenlake these days is one of the hotter neighborhoods in Seattle.

    Unfortunately, over the years , the walking path around Greenlake has gotten really crowded. We don’t go there as much as we have in the past, as we spend a majority of our time dodging people and not enjoying the walk. That is what happens when population increases dramatically, without a corresponding increase in park facilities.

  41. 41
  42. 42
    Anthony Cacallori says:

    By Kary L. Krismer @ 23:

    RE: Anthony Cacallori @ 11 – That was fun reading through that old thread.

    I particularly liked post 88 where I suggested Tim change his Friday Flashback series to an article about someone who in the past said something bearish.

    Good idea. I think the consensus in that thread was that 2015 was like 2006. Top-calling is hard!

  43. 43
    observer says:

    @36 Deerhawke

    How does one go about finding “off the market” properties? Any help would be appreciated. Also, Deerhawke, given your experience, say your nephew just moved to Seattle today, what would be your advice? Thanks!

  44. 44
    uwp says:

    By FormerSeattleite @ 38:

    One thing that is hardly discussed in this forum is affordability from a cash-flow perspective. There is this notion among bulls that millennials such as myself should do whatever we can to get into a house – any house – because we will be priced out forever if we don’t. To your point, you can accomplish a lot through sweat equity after you get yourself into something, and I appreciate that point. My wife and I are both hard workers (we would not be where we are professionally and financially if we weren’t).

    But at what cost? To @BudgetedHousingBuyer’s point, if your housing payment eats up such a large portion of your take home pay that you don’t have enough cash flow for savings/emergencies, and the life you want to live at large, is that really worth it? Why is it preferable to own a house (as opposed to renting a comparable living space) if you can’t comfortably afford the payments over time? And who can afford the payments on a median King County house ($5-6k+/month) other than the super rich? For the rest of us (and my wife and I are doing pretty well ourselves), why stretch that far? Bulls will tell you, “Well, duh, you get the appreciation.”

    Speaking as someone who has been “cautiously bullish,” I think this point has only recently begun to change in the past year (and mostly the past 6 months).

    Spring 2017 King County Median was $600,000 and interest rates were 3.75% for a mortgage payment around $2,200+taxes, while a decent 2BR rental in Seattle was probably $2,000-$2,500/month. Now a year later and the median is close to $700,000, rates are in the 4.25-4.50% range, property taxes are up 20%, and rents have moderated (or maybe even fallen). Not only do you need $20,000 more for a 20% downpayment, but your payments went up around $600/month. The math has swung pretty dramatically.

    San Francisco has shown us that with enough people, earning enough money, prices can rise to crazy levels. I don’t know that we are there now (or even close to there), but buying a home now is not a no-brainer like it was 2+ years ago.

    FormerSeattleite @ 38:

    Exchange-traded funds have consistently out-performed the housing market, save for a few historical anomalies (2002-2007, 2012-present).

    I would also push back slightly on this. Pure capital gains on housing may only “just” keep up with inflation over the long term, but if you take into account imputed rents (you do get to live there after all) the returns on real estate get pretty close to equities:

    https://www.frbsf.org/economic-research/files/wp2017-25.pdf

    Throw in some leverage at very low rates (with tax-deductible interest!!), and you have a pretty compelling investment – albeit, a somewhat illiquid one.

  45. 45
    Deerhawke says:

    RE: ess @ 40

    The house I sold in 2007 in Greenlake for $900k would probably sell now for $1.5M, maybe more. I never regret selling it because 1) We needed the money from the sale to get through the recession and 2) it was so much trouble. Everything was wrong with it– foundation, plumbing, framing, wiring, layout, you name it.

    I now live about 150 meters away and can still see that house from the family room of the house I built for myself in 2005/6. Every time I see it, I think that I am glad it is now somebody else’s problem.

  46. 46
    First Time Buyer says:

    Do you recommend buying a new house where the land value is cheap or buying a old house where land value is expensive? Would old house always imply more problems? Could the issues that you described identified during Pre-inspection?

  47. 47

    By uwp @ 43:

    Pure capital gains on housing may only “just” keep up with inflation over the long term, but if you take into account imputed rents (you do get to live there after all) the returns on real estate get pretty close to equities:

    https://www.frbsf.org/economic-research/files/wp2017-25.pdf

    Throw in some leverage at very low rates (with tax-deductible interest!!), and you have a pretty compelling investment – albeit, a somewhat illiquid one.

    Excellent points, and the imputed rents somewhat similar to the argument I’ve made about owning a house free and clear. I just ran some numbers, and using Zillow’s rental value for my house (which quite frankly I don’t know whether it’s high or low), I’m getting almost a 7% return. And that is tax-free income, meaning that if instead I was using after-tax dollars to pay rent I’d have to earn even more than the imputed value of the rent.

    BTW, I wouldn’t put too much emphasis on changing medians given our low inventory. The difference in the mix can be significant, and I know at least one month prior showed a significant increase largely due to mix.

  48. 48
    wreckingbull says:

    A common trope which is always dragged out in the SB comment section is “Can’t afford Seattle now? – Move to [Detroit|Cleveland|Kansas|other depressed city]

    There is another option.

    Stay in the PNW but move out of Seattle. Yes, you may have to rethink your career a bit, but most of the people here have the smarts and initiative to do so. I did this right before the 2007 bubble popped and have never been happier. You may not have the latest Poke restaurant down the street from you, but you can leave your doors unlocked and have money left over for other things besides housing. Quality of life comes in many different facets.

    I visit a client in Seattle twice per week. With the garbage, crime, homelessness, and traffic, I barely recognize my hometown. At first it made me a bit sad, but now I just feel relieved.

  49. 49

    By wreckingbull @ 47:

    I visit a client in Seattle twice per week. With the garbage, crime, homelessness, and traffic, I barely recognize my hometown. At first it made me a bit sad, but now I just feel relieved.

    I purposefully moved out of Seattle. I might move back once I’m over 70. Back in my 20s when I was living on First Hill I described it as an area good for the young and the very old, but not the in-between.

    I grew up over on the Kitsap Peninsula, so I appreciate living near a forest. Currently I live on the edge of a forest that is well over 100 acres, with the parcel I see being over 5.

    Oh, and I almost forgot. The less often you go to Seattle the more disgusting that it is.

  50. 50
    N says:

    The thing is, as Tim’s regional stats showed the inventory problem is worse outside King County. King County is the only county with year over year gains in standing inventory.

    This hasn’t been discussed much, but is it due to affordability in KC. Looking at today’s numbers KC is up approx 8% YOY while Pierce and Snohomish are DOWN 10-15% YOY. The same trend has been happening with rental rates, more pressure in the other counties in the last year.

    KC on the 3rd Friday in April:
    2016 – 2,363
    2017 – 1,821
    2018 – 1,962 and counting

    Pierce
    2016 – 1,811
    2017 – 1,457
    2018 – 1,318 and counting

  51. 51
    wreckingbull says:

    RE: N @ 49 – I should have been more clear – replace “Seattle” in my comment with “Seattle MSA” Things change drastically once you get a few counties away.

  52. 52
    Deerhawke says:

    RE: FormerSeattleite @ 38

    Yes, cautiously bullish is one way to put it. Or another way to put it is long term bullish, short term would not be surprised by a pullback at any time.

    Seattle is no longer the small/medium sized city that I moved to after living for a decade in Tokyo and New York in 1990. Then it was a place where you could have a reasonable life even if you were a family of academics. Seattle is in the middle of a structural transformation. My read is that Seattle has been and will continue to transform into a big technology-focused city. As it does, it will become cooler and more chic. A true world city with a worldly population. But has something been lost? You bet. It is less funky and affordable.

    If I could take you back to Fremont in 1990 for just a few minutes, you would understand what I mean. You would understand the bumper stickers on old pickup trucks in the area that say, “Thanks Suzie, Fremont S#cks now.”

    The questions you are asking are the same ones my kids are asking themselves now. They are really well educated and well plugged in to the local economy. One is in the middle of residency to be a doc– with excellent computer programming skills. The other knows a lot about managing people and programs with elaborate databases and is a consultant for one of the local tech behemoths. By any rational standard, they are a success.

    But as they look at the issue of buying a place, they don’t know how that is possible without giving up on having 1) a life or 2) a family.

    I don’t know if there is any one good single answer to this question. There are a lot of potential solutions. Among them:

    – Just keep renting and saving and hope for a downturn.
    – Buy a really bad house in a rising central neighborhood.
    – Leave Seattle and telecommute from out near Mt. Rainier or up on Whidbey
    – Go in together and get an old duplex to fix up?
    – Get a big old house together with a couple of other friends and do some co-housing.

    There are a lot more options than people usually consider. I have been trying to sell my wife on the idea of us finding a multifamily lot in Ballard or Greenlake where I could build the lot of us a triplex. It sounds better if I call it a family complex, but it still seems like a bit of a tough sell.

  53. 53
    Eastsider says:

    By Kary L. Krismer @ 46:

    By uwp @ 43:

    Pure capital gains on housing may only “just” keep up with inflation over the long term, but if you take into account imputed rents (you do get to live there after all) the returns on real estate get pretty close to equities:

    https://www.frbsf.org/economic-research/files/wp2017-25.pdf

    Throw in some leverage at very low rates (with tax-deductible interest!!), and you have a pretty compelling investment – albeit, a somewhat illiquid one.

    Excellent points, and the imputed rents somewhat similar to the argument I’ve made about owning a house free and clear. I just ran some numbers, and using Zillow’s rental value for my house (which quite frankly I don’t know whether it’s high or low), I’m getting almost a 7% return. And that is tax-free income, meaning that if instead I was using after-tax dollars to pay rent I’d have to earn even more than the imputed value of the rent.

    BTW, I wouldn’t put too much emphasis on changing medians given our low inventory. The difference in the mix can be significant, and I know at least one month prior showed a significant increase largely due to mix.

    The math is rather complicated. If you purchase your home and live in there for 30 years, you will be paying mortgage interest on the whole amount of the loan over that period. Mortgage loan interest rate is generally greater than home appreciation rate (of 4%) historically. During your ownership, you will also be spending huge sum of money to maintain and upkeep the property in addition to paying property taxes of over 1%. Note that IRS depreciation schedule for buildings is 27.5 years. Sure you get some ‘imputed’ rent and leverage (?) but all things considered, your investment in S&P 500 index (8-10%) is likely to outperform your home investment by a significant margin over the same period.

  54. 54
    Eastsider says:

    By Deerhawke @ 51:

    But as they look at the issue of buying a place, they don’t know how that is possible without giving up on having 1) a life or 2) a family.

    They may also want to consider whether their offspring will be able to afford to live in the area.

  55. 55
    Eastsider says:

    10yr UST @2.96% just hit the highest level since 2014. Soon (as in 2 weeks?) it will hit the highest level since 2011. I give it a 25% chance that we will see 5% mortgage rate this year, if the economy doesn’t tank.

  56. 56
    whatsmyname says:

    By N @ 49:

    The thing is, as Tim’s regional stats showed the inventory problem is worse outside King County. King County is the only county with year over year gains in standing inventory. ……

    Here’s what I think you are missing:

    KC: 2018 – 1,962 and counting …. in a population of 1,931,249 or 1 listing for every 984 people
    Pierce: 2018 – 1,318 and counting ….. in a population of 795,225 or 1 listing for every 603 people

    Nevermind the trends, KC has 63% more people for each unit of inventory. Pierce would have to get down to inventory of 808 to match the inventory pressure in KC; or KC would need inventory to rise to 3,203 to have the same pressure as Pierce.

  57. 57
    MINImalist says:

    By Kary L. Krismer @48,

    Read through this entire thread thinking we dodged the bullet until 48. Shh already, your forest must be east! Don’t send these poor folks over on that long arduous ferry ride.

  58. 58
    Erik says:

    RE: Eastsider @ 53
    The grandkids can just get a loan from grandpa dearhawk.

  59. 59
    Eastsider says:

    RE: Erik @ 57 – More likely live in / inherit his house. LOL.

  60. 60
    ess says:

    By Deerhawke @ 44:

    RE: ess @ 40

    The house I sold in 2007 in Greenlake for $900k would probably sell now for $1.5M, maybe more. I never regret selling it because 1) We needed the money from the sale to get through the recession and 2) it was so much trouble. Everything was wrong with it– foundation, plumbing, framing, wiring, layout, you name it.

    I now live about 150 meters away and can still see that house from the family room of the house I built for myself in 2005/6. Every time I see it, I think that I am glad it is now somebody else’s problem.

    Thanks for the info.

    Speaking of regrets about selling houses.

    I have mentioned this before. I was in a partnership where we bought a duplex in the U District, and sold it for four times the amount we paid. Sounds pretty good – except we bought at 28K and sold at 115K.

    Regrets – the value of the house currently hovers in the one million dollar range

    Problems – the house was not only old, needed a variety of updates. In addition, as a three story duplex, there were a variety of things I could not do, such as roof maintenance, clean gutters, wash and paint the outside. Plus the house was too close to the University – a great rental but not a place my wife and I wanted to reside in as non students.

    Benefits – the proceeds of the sale were used to put down payments on two small houses other than the one we resided in South Snohomish County.

    My partners and I thought we had made a killing by selling the house for 4x the amount we had paid less than 15 years previously. The bad news is that I don’t have half ownership of one house that is worth one million dollars. The good news is that the proceeds were used to purchase other property that has kept up with the Puget Sound real estate market.

    Moral of the story. Although real estate tends to increase in value over time in most areas, one really doesn’t know what is going to happen.

  61. 61

    RE: greg you @ 32
    Yes….I Noticed 10 Year Treasuries Were Like 2%

    They’re 3% now….savings interest went up too.

  62. 62
    Ira Sacharoff says:

    In 2006, it seemed obvious to me that prices were way too high and unsustainable. I was very happy to discover Seattle Bubble, which shared my beliefs. When the downturn came, I felt like a genius. I didn’t expect prices to stay down for as long as they did, and then I didn’t expect prices to soar as high as they did since the bottom, and keep going up. At some point, we’ll see another downturn. I can’t tell when, or how severe, but likely within the next couple of years. But like Yogi Berra said ” Predictions are hard to make, especially about the future.”
    And just from a pragmatic standpoint, it’s not worth it if you’re going to be giving up everything you enjoy just to be able to make your mortgage payment. I would not be willing to go on the Ramen and Beans Diet for years on end.

  63. 63
    Scotsman says:

    Don’t post much anymore but still check in once and a while, will be paying closer attention going forward. Discovered Seattle Bubble soon after it came online. Rented through the necessary collapse in 2007 and finally bought at the bottom in 2012. The house has since tripled in value and will be paid for by the time we sell in 2-3 years. I’m not in Seattle, but on the Eastside.

    This time is different- no crazy loans, less speculation, people in general buying homes they can afford. Check the default rate to get a real sense of what the economy is doing. When the market does eventually slow it won’t collapse like it did in 2007- the fundamentals are much stronger this time around. The Seattle market is one of a handful of national markets not only doing well but likely to continue to do well. Interest rates are going up but remain well below long term averages. Employment opportunities are strong and not really likely to decrease. I just don’t see much changing for the next several years short of some sort of national/international catastrophe that gets everybody.

    My oldest daughter lives and works in tech in the San Francisco area. If you think housing is insane here you should see what $750K buys down there- maybe an old garage converted into a studio- that only needs a bit of structural work. Everyone says it can’t go on- yet it does. And the default rate remains low. Like it or not Seattle is the new/next Silicon Valley but with even more diversified interests. Not even the idiotic local government can kill this goose- those golden eggs will keep coming. The 1990’s aren’t coming back.

    Want a house? Go ahead and buy- stretch a bit and expect that promotions, raises, continued equity growth and steady economic expansion will save you over time. And if it all goes to hell the most likely scenario is that you’ll just end up back where you started- down payment intact as equity, the only real pain a higher than desired payment (thanks to taxes) and some frustration. Will we see 15% gains year after year? Probably not, at least not consistently. But I highly doubt we’ll see prices drop below where they are now……ever. The growth will slow, maybe even level out like much of the Midwest. But there is no reason to believe that prices will ever fall significantly. Seattle has been a city of primarily renters since the ’80s. That’s not likely to change.

    I’m an economist, finance guy, multiple business owner (none real estate related), more often correct than wrong- at least as indicated by my financial statement. The last major mistake I made was thinking that traditional economics and the old rules still applied with some sort of inevitable collapse/reset rebalancing the markets. I no longer believe that. The powers that be will inflate us out of the current debt debacle. That’s the perfect time to own a house.

  64. 64

    RE: greg you @ 29
    In Seattle We are Not Good Socially Active Neighbors Either

    In Kansas I had ice cream socials, horse back riding and socialization with my neighbors….in Seattle we’re just the opposite….unfriendly, quiet and rude….there are exceptions, not many.

    High priced real estate absorbs all our time at work and turns us into haughty monsters? LOL

  65. 65

    RE: Scotsman @ 62
    A Lousy Time to Find a Job

    Or retire Scotsman.

  66. 66
    Erik says:

    RE: Scotsman @ 62
    You use to come on here all the time and it lead to you making a really good financial decision that made you hundreds of thousands of dollars. After you made that great decision, you decided that you no longer need to come on here since you made your purchase. Why change your process? What about knowing when to sell? What about advising your loved ones? What about when and where to buy rentals? Come back, the story isn’t over!

  67. 67
    Olympian says:

    Great Topic! I’ve been following this blog for years, so I appreciate all the dialogue that goes on here from the regulars. My social circles doesn’t involved heavy real estate talk which is an interest to me.

    I am late 30’s guy with a mid 30’s wife. I work in Seattle, she works in Olympia. We had the choice of whether to buy to setup homebase in Seattle or Olympia in 2012, and at that time looked at what my friends were paying to stay in the City, old houses in Ravenna for $650K, and balked and found a starter home in Olympia for $225K. It felt great to have a $1400 Mortgage Payment and it really felt like we made the right cash flow decision, but then the market went crazy and our friends in Ravenna now have Million Dollar homes with Equity . Thinking about their home equity dwarfing my investment accounts that I had been funding with my excess cash flow left a sour taste in my mouth.

    Then, the summer of 2017 happens and I change my mind again on who has it better. Our 1500 square foot starter home is outgrown with 2 young kids, so we do something none of my friends in similar family situations in Seattle can do: We decide to sell our house and buy a new house that has more space for our family. Our new house is at the high end of the market in Olympia at $550K and we do have a 5 party bidding war where the Seller countered $10K higher and we accepted. Still, after looking at 20 houses without making an offer, the first house we are serious about we are able to outbid and secure.

    We hold two houses for several months while doing some work on the new house, and go to sell our starter home in January 2018 and have 8 offers with personal letters, not a single offer at asking price or under. I think several others were mentioning earlier this month about why you would list low to encourage a bidding war, for us, we listed a little low because I am worried about appraisals in price brackets where buyers may not have the resources to overcome a low appraisal. Sure enough, we took our second highest offer because the buyer waived appraisal all together with a large down payment able to reduce a loan amount.

    Commuting to Seattle from a place like Olympia isn’t ideal. I have a 20 Minute drive to a Lakewood Park and Ride, and a 1 hour and 10 minute train ride on the Sounder to King Street Station. Door to door, it’s 2 hours. But my reasonably priced Olympia home is walking distance to well rated elementary, middle, and high schools, the City has access to the Sound, there are unique restaurants in an old school downtown.

    I don’t know what the right answer for the original commenter who is trying to save his way to affording a house in the right neighborhood. I do know with two young kids in daycare, the cash flow benefits that come from the commute drawbacks are worth it to us. Being able to telecommute a couple days a week also helps things. If I had to get back to Seattle area, I would consider locating near the Sounder stops at Puyallup, Sumner, Auburn and Kent. The Sounder is undiscovered commuter treasure.

  68. 68
    ess says:

    RE: Scotsman @ 62

    One major difference I have observed between the 2007 era and the present time is that the difference between rents and ownership costs are not so dramatic as they were back then. These days rents are so high that they can justify the benefits of home ownership. They did not back then – the only hope for those buyers were unsustainable price increases of housing.

    The problem with statistics is that they are applied across the board without further analysis. For example, on the issue of “affordability”, a couple with an income of ten to fifteen thousand dollars a month are going to be able to afford paying up to 50% of their monthly income towards a mortgage much easier than a couple also applying up to 50% of their income to a mortgage payment paying 50% while only earning half the amount of the first couple.

    Of course a few years of inflation as we have had in the past (ex- in the late 1970s and early 1980s) will make these prices obsolete.

    Will we have a pull back in real estate prices and how much will it be? Who knows? The only thing certain about the future is that it is uncertain.

  69. 69

    By FormerSeattleite @ 9:

    @Budgeted HomeBuyer,

    My wife and I are in exactly the same situation as you and your husband (combined income a little north of $200k; I’m in my early-thirties, she’s in her late-twenties; not saving quite as much as you guys due to student loan repayment, but no other debt).

    So, you are making over $16666/month together and having trouble saving even $3500/month?
    Well… I don’t think that homeowner ship is right for you. Just keep renting.

  70. 70
    Boater says:

    I keep seeing statements along the lines of ‘I’m a millennial looking to start a family and buy a SFH.’
    To me that’s the backdrop that keeps me from worrying about a collapse. At worst the market will have an orderly decline to a little above the affordability index.
    In Seattle proper the rental stock doesn’t reflect the needs of the public. Plenty of studio and one bedroom apartments are being built for people in their twenties or the perpetual single class.
    The problem is the Boomers are not swapping their SFHs for city apartments in anywhere near the rate that millennials are deciding they need more space than a one bedroom apartment affords.
    That alone would be a problem but add to it that Seattle is now a global talent destination and you have a true crunch that pushes up prices.

    I can see the global talent rapidly redirecting to another location but right now I see no reason for that to happen.

    The millennials may be forced to the outskirts or out of the area entirely. Once the kids are born and in school it gets harder to move away and return to the city.

    Neither of those changes happen overnight though so any changes in demand should be telegraphed well ahead of time.

  71. 71
    Eastsider says:

    By ess @ 66:

    These days rents are so high that they can justify the benefits of home ownership.

    There is no evidence based on the current cap rate for rental properties. It is a lot cheaper to rent than own in the area. If you do not plan to stay here for the long term, renting is a no brainer.

  72. 72
    Eastsider says:

    RE: Boater @ 67
    I am starting to see boomers leaving the area for sunnier climate…

  73. 73

    By Boater @ 67:

    The problem is the Boomers are not swapping their SFHs for city apartments in anywhere near the rate that millennials are deciding they need more space than a one bedroom apartment affords.

    The other issue is we’re starting to approach the decline in the number of boomers reaching retirement age, although admittedly some wait a long time after retiring before downsizing and/or moving out of the area. But unlike the slightly older group, they tend to live more in 2000+ SF houses with 2+ bathrooms, so what they vacate may be more attractive.

    BTW, totally an aside, but I have a foreign-born client (Africa) who told me: “Once people move here they don’t want to move away because of the weather.” People complain a lot about our rain, but most of the alternatives off the west coast are either very cold winters or a ton of humidity (or both).

  74. 74

    By Eastsider @ 68:

    By ess @ 66:

    These days rents are so high that they can justify the benefits of home ownership.

    There is no evidence based on the current cap rate for rental properties. It is a lot cheaper to rent than own in the area. If you do not plan to stay here for the long term, renting is a no brainer.

    Isn’t the cheaper part always true, almost as much so as the sun setting in the west?

    Also, renting is generally better for short term too, but what’s amazing right now though is how much people can recover who bought in the past 2-3 years. Often their profit will cover the mortgage payments they have made. I wouldn’t count on that same return for people buying now and selling 2-3 years from now.

  75. 75
    jaycee says:

    Not sure why everyone is saying millenials are doomed. I think they’re doing just fine.

    They are doing better than me (I’m 35) and most people I know. Yes, they don’t save enough for savings and retirement and spend too much on Starbucks and avocado toast. But the reality is nearly all millenials I know have parents helping them out. Downpayment for house? No problem. wedding? No problem. new car? yup. I look at my current neighborhood and most homes have mom and dad living with them. At my old neighborhood I witnessed the same thing. 1 house with 3 or 4 cars, means everyone living together to help pay costs. I also know a handful of millenials waiting for their inheritance after their parents die. So sad, but that’s how it is now. I know these are generalizations, a little harsh, but I can’t help noticing this more and more. anyone else see the same thing?

  76. 76
    Eastsider says:

    By Kary L. Krismer @ 71:

    By Eastsider @ 68:

    By ess @ 66:

    These days rents are so high that they can justify the benefits of home ownership.

    There is no evidence based on the current cap rate for rental properties. It is a lot cheaper to rent than own in the area. If you do not plan to stay here for the long term, renting is a no brainer.

    Isn’t the cheaper part always true, almost as much so as the sun setting in the west?

    No. One way to compare renting vs owning is use the cap rate. In the current market, you will loss money if you want to be a landlord. Five years ago, you could get a reasonable cap rate. It is still true in many parts of the country.

  77. 77
    Brian jones says:

    https://www.theguardian.com/media/2018/apr/22/michael-cohen-sean-hannity-property-real-estate-ben-carson-hud?CMP=share_btn_tw

    I wonder how many real estate groups like this are out there and how they have impacted inventory.

  78. 78
    Boater says:

    RE: Eastsider @ 72 – assuming you aren’t paying cash you’ll lose money.

  79. 79
    David says:

    RE: softwarengineer @ 63 – You are correct. People here use euphemisms like “Seattle Nice” or “Seattle Freeze”. In reality, many many Seattleites are just !icks.

    Maybe its the weather.

  80. 80
    Eastsider says:

    RE: Boater @ 73 – Even if you are paying cash, you can still lose money. There is the carrying costs (property tax, repair and maintenance, utilities, etc.) Condo HOA fees are over $1,000/mo on many high rises.

  81. 81
    Boater says:

    By Eastsider @ 69:

    RE: Boater @ 67
    I am starting to see boomers leaving the area for sunnier climate…

    I see some but I see more staying for mostly non economic reasons. They have established social groups and community. Maybe they still have children in the area but as often as not their children are in equally high cost areas that moving close to them isn’t really an option.

    I’m watching people age and I’m seeing one of two paths happening. You somehow get your kids to stay in the area and the family is blessed to circle around each other.
    Sometimes that doesn’t happen and all the kids move away. In those cases I see people join social groups like churches, charities or clubs to fill the need for community. The only people I know who leave the area personally are yacht clubs members. They spend winter somewhere warm and have big boats up here they spend all summer on.

  82. 82
    Eastsider says:

    RE: Boater @ 76 – It is not as simple as wanting to stay in the area. Many of these retirees do not have the income to keep up with the increasing cost of living in the area. Sure they may have the house paid for. But they still have to pay property tax which just increased by $100/mo. They will deplete their savings if they don’t keep tabs on their expenses. Will you choose to retire in NYC, London, or Tokyo?

  83. 83
    whatsmyname says:

    RE: Eastsider @ 72 – True, the cap rate is ONE way to look at an investment. You still have to understand its limitations. It is a static relationship between current operating income and price. Specific to other areas in the country, a lower cap could be the natural outcome of an expectation of higher growth. Specific to nearby properties it could be a function of anticipated viability of a higher use.

    Suppose John has an in-city parcel that could support an in-demand 40-unit apartment. The interim use is perfectly habitable SFR. The rents just cover taxes and insurance. The tenants pay all services. What is the NOI? What is the capitalized value at a reasonable cap? What is the economic value?

    Kerry’s point was that (assuming full leverage) it usually takes more cash flow to buy than to rent equivalent houses —at first. Over time, rents generally go up, debt goes down, part of that mortgage payment goes to paying down the loan (forced investment). You may have an opportunity to refinance to a lower rate. You reach the crossover point. The tenant is likely paying interest, maintenance and taxes very early on. In time, the tenant is also paying the principal payments, (investing for the landlord), and then throwing off spendable cash flow.

    Looked at statically, and at the beginning, owning is generally more expensive. Considering the fullness of time, renting is generally more expensive.

  84. 84
    Voight-kampff says:

    RE: whatsmyname @ 78
    Thanks. That was a very insightful and informative post for me. I have owned and lived in condos in downtown Seattle since 2003 (I’ve always bought a centrally located condo as a primary residence). I guess I am a strange investor that has done ok by selling and then downsizing to put cash in the bank every couple of years. I’m thinking about holding on to my last downtown condo now as a long term investment (I have already purchased, and moved into another one). I grew up poor, so when I see the ability to add tens of thousands to my bank account, I act, no matter what people on a blog say. Probably not a normal strategy (and my home is now 460 sqft), but now I have a pretty hefty emergency cushion, and have well over 20 percent down on my current residence. We’ll see. Real Estate is a strange thing, I’m a musician, and I guess I understand the guitar much better than Real Estate. I have no children, so there is no limit on how small my condo can be, lol!

  85. 85
    Boater says:

    By Eastsider @ 77:

    RE: Boater @ 76 – It is not as simple as wanting to stay in the area. Many of these retirees do not have the income to keep up with the increasing cost of living in the area. Sure they may have the house paid for. But they still have to pay property tax which just increased by $100/mo. They will deplete their savings if they don’t keep tabs on their expenses. Will you choose to retire in NYC, London, or Tokyo?

    Do you happen to know of any concrete examples of people moving over something less than a $500 month increase? I believe it’s possible in theory but I’ve never known it to be true with anyone personally. Not with homeowners. Renters yes but not owners.

  86. 86
    Eastsider says:

    RE: Boater @ 80 – If you look at the macro picture, there are always homeowners whose finances are precarious. Majority of Americans do not have $500 in savings to cover emergency needs. You are overestimating the ability of homeowners/retirees to afford an extra $500 in monthly expenses. If you were right, the last housing crash would not have happened. Further, many buyers in the last couple years were stretched financially. They would be the first casualties in the next recession.

  87. 87
    Eastsider says:

    RE: whatsmyname @ 78 – You are making many assumptions – e.g. “an in-city parcel that could support an in-demand 40-unit apartment”, “You may have an opportunity to refinance to a lower rate”.

    That said, I agree with you that owning is generally cheaper than renting over the long term. However, in an asset bubble, this may not be true. It is cheaper to rent in NYC, London, and Shanghai. The previous 3+ decades of ever decreasing rates has probably come to an end. So there goes your refinance opportunities.

  88. 88
    uwp says:

    By Olympian @ 67:

    Commuting to Seattle from a place like Olympia isn’t ideal. I have a 20 Minute drive to a Lakewood Park and Ride, and a 1 hour and 10 minute train ride on the Sounder to King Street Station. Door to door, it’s 2 hours. But my reasonably priced Olympia home is walking distance to well rated elementary, middle, and high schools, the City has access to the Sound, there are unique restaurants in an old school downtown.

    4 hours a day commuting. That sounds like hell.

  89. 89
    Eastsider says:

    By jaycee @ 75:

    Not sure why everyone is saying millenials are doomed. I think they’re doing just fine.

    They are doing better than me (I’m 35) and most people I know. Yes, they don’t save enough for savings and retirement and spend too much on Starbucks and avocado toast. But the reality is nearly all millenials I know have parents helping them out. Downpayment for house? No problem. wedding? No problem. new car? yup. I look at my current neighborhood and most homes have mom and dad living with them. At my old neighborhood I witnessed the same thing. 1 house with 3 or 4 cars, means everyone living together to help pay costs. I also know a handful of millenials waiting for their inheritance after their parents die. So sad, but that’s how it is now. I know these are generalizations, a little harsh, but I can’t help noticing this more and more. anyone else see the same thing?

    I’m not sure how you came up with the conclusion that the millennials are doing just fine. It is bad. Really.

  90. 90

    RE: uwp @ 88
    And Then You Find Out a Robot Replaced You at Work

    https://www.thesun.co.uk/tech/6119569/robots-outnumber-humans-2028-2033-emotions/

    LOL…we don’t need workers in Seattle anymore, maybe someone to grease the attorney robot….yes Kary, even you.

  91. 91
    BacktoBasics says:

    Let’s say you commuting 2 hrs a day. 52weekx2hrx5day=520 hrs/year wasted. Hr per year =8760 hrs.
    Assuming you have 30 years of career. Total hr lost = 520 hrs x 30 years = 15600 hrs. So you will loose 2 years of life on the road. Worth it depend how is value your life.

  92. 92
    Boater says:

    By Eastsider @ 86:

    RE: Boater @ 80 – If you look at the macro picture, there are always homeowners whose finances are precarious. Majority of Americans do not have $500 in savings to cover emergency needs. You are overestimating the ability of homeowners/retirees to afford an extra $500 in monthly expenses. If you were right, the last housing crash would not have happened. Further, many buyers in the last couple years were stretched financially. They would be the first casualties in the next recession.

    Go read the report that’s based on. Yes a large number of young people have zero savings. But when you get to older Americans and especially the ones most likely to own a home the idea that there are swarms of older homeowners with zero savings looks pretty unlikely to me. They seem as a group to be saving more vs less than their younger counterparts. So back to my last question to you. Do you have a concrete example of someone older(let’s say GenX or older) taxed out of their home?

    I’ve only personally encounter one person taxed/expensed out of home ownership and they were a younger inheritor of the home with a mental illness. They simply couldn’t emotionally handle home ownership even though hanging onto the home would clearly have been the best financial choice they could make.

    I can see a theoretical way to arrive at taxed out of an area but in the Seattle area specifically it would take something like the Mcleary decision and it’s tax solution for it to happen. Assuming you have any social circle it’s just hard to believe you would economically decide that abandoning a lifetime of social capital buildup in an area to go somewhere else entirely is the best choice.

    I say here specifically because we have low power costs, restrictions on tax growth especially as it relates to property tax. Your property tax rate increase is not based on an absolute value but how your property does relative to the whole county. Amazon means items cost essentially the same regardless of geography. Labor is high but that’s where a lifetime of social capital pays off with access to helping friends and family. Home prices are almost irrelevant because we’re talking home owners here not renters or prospective buyers.

  93. 93

    By BacktoBasics @ 91:

    Let’s say you commuting 2 hrs a day. 52weekx2hrx5day=520 hrs/year wasted. Hr per year =8760 hrs.
    Assuming you have 30 years of career. Total hr lost = 520 hrs x 30 years = 15600 hrs. So you will loose 2 years of life on the road. Worth it depend how is value your life.

    But the alternative is spending 16 waking hours a day in the polluted, crowded city that is Seattle. That would lead to a lower quality of life unless you’re of the age where you take advantage of the nightlife.

    Not everyone commutes because they cannot afford to live in Seattle. A lot of people don’t want to live there.

  94. 94
    BacktoBasics says:

    By Kary L. Krismer @ 93:

    By BacktoBasics @ 91:

    Let’s say you commuting 2 hrs a day. 52weekx2hrx5day=520 hrs/year wasted. Hr per year =8760 hrs.
    Assuming you have 30 years of career. Total hr lost = 520 hrs x 30 years = 15600 hrs. So you will loose 2 years of life on the road. Worth it depend how is value your life.

    But the alternative is spending 16 waking hours a day in the polluted, crowded city that is Seattle. That would lead to a lower quality of life unless you’re of the age where you take advantage of the nightlife.

    Not everyone commutes because they cannot afford to live in Seattle. A lot of people don’t want to live there.

    When is the last time you walked in Seattle? Air quality is Seattle is much better than LA and no worse than Olympia and Lakewood thanks to Purget Sound Wind. The problem for walking in Seattle is you have to be fit to climb the slops which benefits your muscle. The life in City of Seattle is very interesting: Library, Shopping, Theater, Museum, local restrurant. Can’t find outside of city. And did I mention the view of Olympic Mountain and city in the dark raining winter? When you cat got stuck on I-5. What you breath is the emission from cars in front of you.

  95. 95
    Minnie says:

    RE: Kary L. Krismer @ 93

    “Not everyone commutes because they cannot afford to live in Seattle. A lot of people don’t want to live there.”

    SO true. Not everyone wants to live in Seattle. There’s plenty of places in the metro-area that do not have insane commutes, but allow you to hear the birds, smell the trees and all around feel like you have have a slower pace of life and are at the beach.

  96. 96
    ohd1122 says:

    By BacktoBasics @ 94:

    By Kary L. Krismer @ 93:

    By BacktoBasics @ 91:

    Let’s say you commuting 2 hrs a day. 52weekx2hrx5day=520 hrs/year wasted. Hr per year =8760 hrs.
    Assuming you have 30 years of career. Total hr lost = 520 hrs x 30 years = 15600 hrs. So you will loose 2 years of life on the road. Worth it depend how is value your life.

    But the alternative is spending 16 waking hours a day in the polluted, crowded city that is Seattle. That would lead to a lower quality of life unless you’re of the age where you take advantage of the nightlife.

    Not everyone commutes because they cannot afford to live in Seattle. A lot of people don’t want to live there.

    When is the last time you walked in Seattle? Air quality is Seattle is much better than LA and no worse than Olympia and Lakewood thanks to Purget Sound Wind. The problem for walking in Seattle is you have to be fit to climb the slops which benefits your muscle. The life in City of Seattle is very interesting: Library, Shopping, Theater, Museum, local restrurant. Can’t find outside of city. And did I mention the view of Olympic Mountain and city in the dark raining winter? When you cat got stuck on I-5. What you breath is the emission from cars in front of you.

    RE: BacktoBasics @ 94

    Can’t find outside of city? Guess you didn’t look very hard. Also, there are commuting options that don’t involve being stuck in your car in I5 gridlock.

  97. 97
    Joe_Clave says:

    Another renter here.
    To me, the whole “it’s different this time” mantra rings hollow. Could I be wrong? Sure. If so, I’ll move. But I’ll be darned if I will pay these prices to live here.

    The biggest thing for me is that most I see online looked flipped and that”meth houses” are basically being sold as land to developers. In other words, investment, speculative and otherwise, appear to be on the rise. I think the sentiment “JustSomeDude” has been hearing is “you can’t lose money in this market!” That’s when you know it is time to run for the hills.

    Also, I am a bit flabbergasted at some of the salaries and costs I see bandied about. We are a single income family making less than $100k/year. My first thought is, “ya’ll don’t know how to save money if you make ~$200k”. My second thought is, I might just have to face the reality that the Puget Sound area is simply not friendly to our lifestyle choices.

  98. 98
    uwp says:

    By BacktoBasics @ 94:

    When is the last time you walked in Seattle? Air quality is Seattle is much better than LA and no worse than Olympia and Lakewood thanks to Purget Sound Wind. The problem for walking in Seattle is you have to be fit to climb the slops which benefits your muscle. The life in City of Seattle is very interesting: Library, Shopping, Theater, Museum, local restrurant. Can’t find outside of city. And did I mention the view of Olympic Mountain and city in the dark raining winter? When you cat got stuck on I-5. What you breath is the emission from cars in front of you.

    The Seattle-focused complaining from folks outside the city is always hilarious. I work in Bellevue (live in Seattle) and the majority of any non-work related get-together inevitably devolves into Eastside folks disparaging Seattle as a socialist hell-hole. It’s a wonder I’m still alive after 15 years in the city.

  99. 99
    Coop says:

    Interesting comments. I think the OP was well said. We can look at trends, numbers, stats, etc, but at the end of the day a lot of us are scratching our heads wondering how prices continue to skyrocket. Amazon is adding jobs, but certainly not as many that can afford the average Seattle home price of $700k.

    Yes, many are leaving the city to start families, (can you blame them with the drugs, homelessness, pollution, traffic and so on?) and that spreads the increases outward, but in my opinion, we’re going to see a correction. It always seems to take longer to correct than it should, but a bubble still expands ever so slightly AFTER it pops.

    There’s the higher DTI allowance, I have to think banks have come up with other creative mortgage products, and I see hints of speculation surfacing. I think it’s close to peaking. Still, there isn’t much inventory, building starts are reasonable, but I think the bigger picture is the bigger threat this time.

    I think overall economy is going to get hit, and I think some tech stocks are going down. Economic growth and downturns are a normal cycle. We’re close to the longest growth period ever, with more net worth than ever, and at some point it will turn around. This time, unlike the dotcom, interest rates won’t be able to pump up a housing bubble in response.

    Yeah, yeah, a broken clock is wrong twice a day. But look at incomes, look at prices, look at history. You think there are a lot of tents in Seattle now?

    If we are in a bubble, as many suggest, then truly, the sooner it corrects the better.

    Is it 2006 all over again?

  100. 100
    Sid says:

    By Coop @ 99:


    Amazon is adding jobs, but certainly not as many that can afford the average Seattle home price of $700k.

    Not only Amazon but a lot of other big name tech companies are also adding jobs. Tech worker compensation has risen quite dramatically over the last few years due to the booming stock market. Majority of employees working at these companies can afford $700k homes.

  101. 101
    BacktoBasics says:

    The driving force behind this bubble is the limited supplied and increase demand. Plus we have low interest rate and good paying job. Assuming a couple making combined 200k in Seattle. 3x to 4x means 600K to 800k affordbility. Stretch further to 5x will get you to 1 mil. In SV, a couple typically makes 300k
    times 4 to 5 equals 1.2 to 1.5 mil. Don’t forget Seattle doesn’t have income tax plus relative low property tax. If people complain property tax, go check NJ, NYC and TX . Seattle is the 1st city that has $15/hr wage considering $8/hr national. So rent shall be also high. I ate out recently and amazed how expensive now to eat out knowing larger % of those cost went to real estate.

  102. 102
    Minnie says:

    RE: uwp @ 98

    Its cute when folks from Bellevue/Redmond/Issaquah/etc discuss Seattle because its like they are talking about an island.

    In my younger days, I thought Seattle was the coolest, and Bellevue sucked, because Seattle had “great restaurants and bars”. Then my lifestyle changed and I realized something about Bellevue; they have better schools, better parks, better community centers, better roads, a better police force and better services for the general public. And none of the crazy “we did it first” politics Seattle has.

    Younger people spend more $ nowadays because a lot of them don’t stay in and drink at home and play cards with their friends anymore, it has to be go out for cocktails before dinner at the hot new restaurant and then over to the bar with the $15 craft cocktails which is easily a $200 night excursion. When you eat and drink out all the time, $200K before-tax-dollars doesn’t go too far.

  103. 103
    BacktoBasics says:

    By Minnie @ 102:

    RE: uwp @ 98

    Its cute when folks from Bellevue/Redmond/Issaquah/etc discuss Seattle because its like they are talking about an island.

    In my younger days, I thought Seattle was the coolest, and Bellevue sucked, because Seattle had “great restaurants and bars”. Then my lifestyle changed and I realized something about Bellevue; they have better schools, better parks, better community centers, better roads, a better police force and better services for the general public. And none of the crazy “we did it first” politics Seattle has.

    Younger people spend more $ nowadays because a lot of them don’t stay in and drink at home and play cards with their friends anymore, it has to be go out for cocktails before dinner at the hot new restaurant and then over to the bar with the $15 craft cocktails which is easily a $200 night excursion. When you eat and drink out all the time, $200K before-tax-dollars doesn’t go too far.

    Redmond, Bellevue and Issaquah are all part of Seattle Metro Area. So Seattle Bubble cover the whole area. To est side people, Seattle is sort of island if not Manhattan island to the New Yorkers.

  104. 104
    Wowza says:

    RE: David @ 7 – You lost me at Obama depression…like you were depressed during his presidency?

  105. 105
    redmondjp says:

    RE: BacktoBasics @ 103 – I’ve never had to avoid stepping in human feces anywhere on the Eastside. I can’t say the same for Seattle. YMMV

  106. 106
    Eastsider says:

    By Boater @ 92:

    Go read the report that’s based on. Yes a large number of young people have zero savings. But when you get to older Americans and especially the ones most likely to own a home the idea that there are swarms of older homeowners with zero savings looks pretty unlikely to me. They seem as a group to be saving more vs less than their younger counterparts. So back to my last question to you. Do you have a concrete example of someone older(let’s say GenX or older) taxed out of their home?

    Here is some data –

    According to the research, the average retirement savings for families aged 50 to 55 is $124,831. For families aged 56 to 61, it’s $163,577. Those figures are far less than the $1 million that many experts recommend as a target for retirement savings. While Social Security can supplement existing retirement savings, the average monthly retirement benefit of $1,329 may not be enough to fill the gap.
    https://www.thebalance.com/average-retirement-savings-by-age-4155888

    Don’t forget that most homeowners’ net worth is their homes! A typical Seattle area retiree is not a former high tech worker. (Do you know the median pay of an Amazon worker is $28k? lol) More old people are working nowadays to make ends meet. Perhaps your social circle is not typical?

    Cost of living in Seattle ranks 25th out of 336 cities in the world according to Expatistan. Compared to Tucson’s 181st, no wonder some people here are looking to retire there.

    Btw – Amazon (or Home Depot, Priceline, Uber,…) does not always charge the same online price for all geography.

  107. 107
    ess says:

    By Minnie @ 95:

    RE: Kary L. Krismer @ 93

    “Not everyone commutes because they cannot afford to live in Seattle. A lot of people don’t want to live there.”

    SO true. Not everyone wants to live in Seattle. There’s plenty of places in the metro-area that do not have insane commutes, but allow you to hear the birds, smell the trees and all around feel like you have have a slower pace of life and are at the beach.

    For those who find the urban experience more exciting than a slower pace of life in the burbs, perhaps this is an area of Seattle that may have some appeal.

    https://www.seattletimes.com/seattle-news/homeless/seattle-neighborhood-is-split-is-licton-springs-tent-city-helping-or-hurting-drug-users/

  108. 108
    ess says:

    RE: Eastsider @ 105

    Cost of living in Seattle ranks 25th out of 336 cities in the world according to Expatistan. Compared to Tucson’s 181st, no wonder some people here are looking to retire there.

    _______________________________________________________________________________________________________________

    Uh oh, you let the cat out of the bag! Now we will have to pay more if we relocate to the Tucson area!

    Another interesting place – Tulsa OK. My friend’s kid just bought his second rental there. A 3/1, 1008 sq foot house – fairly nice shape – less than 100K. With housing prices like that – one can leave in the winter and summer when the weather is not the best and take some nice vacations with all the money that is saved on real estate. And guess what? Tulsa is a fairly nice place to live, and you can get around with something that is motorized.

  109. 109

    RE: BacktoBasics @ 94 – To be clear I wasn’t saying no one wants to live in Seattle, only that some people don’t. Previously I said Seattle is very good for the young and very old, and I also mentioned nightlife. But Seattle is dirty, and comparing it to L.A. doesn’t change that.

  110. 110
    Brianna says:

    It’s good to remember: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” Sir John Templeton

  111. 111
    Boater says:

    By Eastsider @ 105:

    By Boater @ 92:

    Go read the report that’s based on. Yes a large number of young people have zero savings. But when you get to older Americans and especially the ones most likely to own a home the idea that there are swarms of older homeowners with zero savings looks pretty unlikely to me. They seem as a group to be saving more vs less than their younger counterparts. So back to my last question to you. Do you have a concrete example of someone older(let’s say GenX or older) taxed out of their home?

    Here is some data –

    According to the research, the average retirement savings for families aged 50 to 55 is $124,831. For families aged 56 to 61, it’s $163,577. Those figures are far less than the $1 million that many experts recommend as a target for retirement savings. While Social Security can supplement existing retirement savings, the average monthly retirement benefit of $1,329 may not be enough to fill the gap.
    https://www.thebalance.com/average-retirement-savings-by-age-4155888

    Don’t forget that most homeowners’ net worth is their homes! A typical Seattle area retiree is not a former high tech worker. (Do you know the median pay of an Amazon worker is $28k? lol) More old people are working nowadays to make ends meet. Perhaps your social circle is not typical?

    Cost of living in Seattle ranks 25th out of 336 cities in the world according to Expatistan. Compared to Tucson’s 181st, no wonder some people here are looking to retire there.

    Btw – Amazon (or Home Depot, Priceline, Uber,…) does not always charge the same online price for all geography.

    So I’m guessing the answer to do you have a concrete example is no since I keep asking and you keep giving essentially nation wide aggregate answers.
    Once again the data your showing is a highly condensed summary which doesn’t really nice you a good picture if what’s going on. When you see the data broken down by age group and within an age group what you find is some fraction never saves anything. That group isn’t important to this discussion because if you never save then you never own a home. It’s possible to do but it doesn’t reflect the majority.
    Of the people who develop enough of a savings habit to purchase a home I find it hard to see them actually taxed out of their home. They tend to develop the habits needed to stay in the home. They get creative and rent sections of the home to family or friends who are not savers or are getting started, etc. I’ll agree it’s possible and happens in small numbers but it just doesn’t seem like it makes up a significant amount of movement.
    I have no need to be in Seattle. I like it but I could live anywhere. When I go around looking at relative costs of living most are within a few percentage points of each other if you take out housing costs. And since I’m already a home owner my cost is pretty fixed at this point.

    I’m just saying some of this looks better on paper at a high level than I suspect it does when you punch all the numbers and actually do it.

    Most folks I see heading south from this area are moving for climate not cost.

  112. 112
    Erik says:

    RE: uwp @ 98
    I moved from east side to Seattle because I don’t want to be associated with east side people.

  113. 113
    ess says:

    By Brianna @ 109:

    It’s good to remember: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” Sir John Templeton

    The home buyers at open houses I observe don’t look euphoric – more like shell shocked.
    I don’t think anyone is euphoric about this market – more like resigned

  114. 114
    pedaltothemetal says:

    With all the high net worth in Seattle we can’t seem to get decent schools, decent roads, decent mass transit etc. At lease some money went to the higher fences on the Aurora bridge, general helpful during the rainy months, will be super helpful in the next downturn.

  115. 115
    Joe says:

    People need to remember that home prices and stock prices move together. Look at the charts. All the detailed home price stats are just noise. All you have to know is what stocks will do, and they are currently valued higher than any point in history. It’s not hard to predict what happens next.

  116. 116
    pedaltothemetal says:

    Seems the only way to keep up with inflation is to buy more real estate in Seattle. Totally makes sense. I’ve liquidated all of my other assets because you know what? You can’t stop Seattle. Developers! Developers! Developers! Developers! Steve Ballmer for mayor!

  117. 117
    ohd1122 says:

    By pedaltothemetal @ 115:

    Seems the only way to keep up with inflation is to buy more real estate in Seattle. Totally makes sense. I’ve liquidated all of my other assets because you know what? You can’t stop Seattle. Developers! Developers! Developers! Developers! Steve Ballmer for mayor!

    This site needs a “star” or “like” feature for posts like this.

  118. 118
    whatsmyname says:

    RE: Eastsider @ 87 – Not assumptions; hypotheticals – plausible things that can and do happen. The point was to see the limitations of the cap rate analysis. I like a good illustration, but it doesn’t have to be 40 apartment units. It could be 20, or 10, or a small commercial or office project, or a sub-dividable lot. Or it could be bigger. Having said that, I am a big fan of cap rates. They facilitate comparisons, prompt questions, and can help you see what those intangibles might really cost.

  119. 119
    pfft says:

    By softwarengineer @ 64:

    RE: greg you @ 29
    In Seattle We are Not Good Socially Active Neighbors Either

    In Kansas I had ice cream socials, horse back riding and socialization with my neighbors….in Seattle we’re just the opposite….unfriendly, quiet and rude….there are exceptions, not many.

    High priced real estate absorbs all our time at work and turns us into haughty monsters? LOL

    you should like you’d be a hoot to live next to. do your neighbors seem rude before or after you tell them how the earth is overpopulated?
    :)

  120. 120
    pfft says:

    By Scotsman @ 63:

    I’m an economist, finance guy, multiple business owner (none real estate related), more often correct than wrong- at least as indicated by my financial statement. The last major mistake I made was thinking that traditional economics and the old rules still applied with some sort of inevitable collapse/reset rebalancing the markets. I no longer believe that. The powers that be will inflate us out of the current debt debacle. That’s the perfect time to own a house.

    what you really mean is that you were wrong? yeah that’s it.

    “more often correct than wrong- at least as indicated by my financial statement.”

    OR you were just cautious enough to not be out of the money if you were wrong. Like a gambler who goes through a bad streak but has proper money management.

  121. 121
    pfft says:

    By uwp @ 88:

    By Olympian @ 67:

    Commuting to Seattle from a place like Olympia isn’t ideal. I have a 20 Minute drive to a Lakewood Park and Ride, and a 1 hour and 10 minute train ride on the Sounder to King Street Station. Door to door, it’s 2 hours. But my reasonably priced Olympia home is walking distance to well rated elementary, middle, and high schools, the City has access to the Sound, there are unique restaurants in an old school downtown.

    4 hours a day commuting. That sounds like hell.

    you aren’t driving the whole thing though.

  122. 122
    Luke says:

    By BacktoBasics @ 23:

    I moved to Seattle from Rustbelt in 2006 and read Seattlebubble. Can’t sell rustbelt house due to recession so I keep renting. In 2009, I found my ideal house and I bought it. Not absolute bottom but 20% from peak. Now it is double the price I paid. When Seattle pass the $15/hr wage law, I told my wife inflation is coming. Money will worth less in Seattle. Then in 2014, I started looking a SFH again. Found an old house at a very desirable but expensive location. I sold my rustbelt house at no loss and bought this one. Now another 50% gain. In 2017, Seattle housing sky rocketed again due to Amazon boom, I started look again, bought another old house in a very desirable neighbor again and rent it out. Zero cash flow but already got 15% gain from last year. Low interest, QE, booming stock market. I would rather own some land in Seattle then depend on stock market. Seattle, like bay area, has a lot tech company paying good salary, plus new immigrates with a lot of cash. To the north we have Vancouver where housing the 3x of Seattle, to the south we have SF where housing price is 2x to 2.5x of Seattle. I am confident Seattle will do well in the future. I mean draw a circle around the city, the inner the better. I don’t like to waste my time on traffic jam. Life is more precious than money. If you have 10% (if not 20% down), buy if you think you like PNW and plan to stay for the next 10 years. Bubble, yes, but when you look back, anytime is a good time to buy if you plan to live in it. Even if you bought in 2007, you will still ahead of others. Always look for an old house in a desirable neighborhood close to Seattle. The value is not the house, the value is the land and neighboring school: Low crime, educated neighbor with good income, good school.

    So how leveraged are you?? We come on this website to try to find evidence to help us understand what’s going on in the housing market. This website IS the evidence..

  123. 123
    pfft says:

    By Erik @ 111:

    RE: uwp @ 98
    I moved from east side to Seattle because I don’t want to be associated with east side people.

    LOL. That’s the truth. Some people just don’t want to live w/ suburban people and vice versa.

  124. 124
    sfrz says:

    RE: Erik @ 111 – That is not true. You previously stated that when this blows up, you are going to purchase in the east side.

    I love the east side. No puke, blood or poop on the streets to step around. Bus stops have people waiting on buses without crap smeared down the walls. Needles in playgrounds? Tents against your homes? Pee jugs sitting on the sidewalks? Ish.
    No thanks. I’ll pass. Green grass, trees, trails. Green Acres baby.

  125. 125
    Erik says:

    RE: sfrz @ 122
    I’ll buy on the east side and rent to low testosterone computer people all day. Lots of money to be had on the east side. I prefer living in west Seattle though. Pretty snobbish when I lived in Kirkland. The east side consists of someone that was smart and got rich, those people are usually great. It’s the people that marry that person and their offspring I don’t like. Egotistical yuppie puppies. I like east side in small doses.

    West Seattle is laid back and I don’t have to deal with people trying to one up each other. I do kinda like Merced island. Nice people and nice dog parks without the snob feel even though mercer island is probably much richer.

  126. 126
    Erik says:

    RE: pfft @ 121
    It’s not the population density, it’s the people that bother me.

  127. 127
    Erik says:

    RE: sfrz @ 122
    I do see your point though. I don’t take public transportation, but my girlfriend does. She has a lot of anger towards the poor poor unfortunate homeless people. She’s from Cleveland and she says these stupid Seattle liberals allow all the stinky loud homeless people ride the bus for free. She claimed she was a liberal in cleveland. Now that she sees how Seattle is, she says she’s somewhere in between.

    I think we need to move these homeless people to a place where they can fit in and call their home. Somewhere not too far from Seattle. Let’s see… North Everett would be a great place to dump them. In north Everett, you wouldn’t even notice because some of the residents look homeless. When I lived in north Everett I would chase homeless drug addicts off my lawn before I put up a fence. I chased one homeless drug addict off my lawn and he kept saying he just moved in next door. I wasn’t having his lies and kept at him until he left. Later I realized he was my new neighbor. A little embarrassed, but that’s how life works in north Everett. You go from one traumatic event to the next.

    East side is polished. I’m more rough and tumble, so I probably fit in better in Seattle.

  128. 128
    Millenial Engineer says:

    By kenmorem @ 10:

    RE: BudgetedHomeBuyer @ 1
    i assume your $3500/mo savings excludes what you put into 401k, roth, etc. if not, then you need to become a better saver at that income level.

    my wife and i saved $120k for a downpayment in 16 months and made 10% less than you and maxed out other retirement vehicles. if there’s a will there’s a way.

    Please explain that one to me. 90% of $175k would be $157.5k/yr, over 16 months would be $202k. Assuming you and your spouse each max out your IRA limit that reduces tax liability to $188k ($5500/yr/person*2 people*1.33 years = $14,500). At a 25% effective tax rate that becomes $138k. For you to save $120k in that time period, you’d have to live on $1500/month. In the Seattle metro area that doesn’t quite pencil out for two people –even if sharing a studio apartment in Tacoma, taking Transit to Seattle, eating sack lunches every day.

  129. 129
    Millenial Engineer says:

    I’ve been reading the SB for over 3 years now, since about the time I seriously considered moving to Seattle. At that time I was shopping for a house in the midwest but had the oppurtunity to relocate for work to Seattle, a place I loved and previously looked for work after graduate school. I decided to put the home-buying on pause and follow my instincts west (after negotiating a minor cost of living adjustment). When I first moved here in fall 2015 I could have purchased a home just under the Seattle median home price –around $450k. Being new to the city I wanted to spend a year getting my bearings to figure out where to buy and settle down. I wish I hadn’t. In the 2.5 years following I’ve gotten 5-8% annual raises, but home prices have climbed significantly faster –an all to familiar story for many. Now my partner and I are having a child this summer and the conversation is less about when we will buy a house, but when we will move and where we will go. Combined we make $120k, and yet something has to give. We’ll stay put where we are for now, in a small 2/1 house that rents below-market, but eventually that will catch up and we’ll move on. Fortunately, neither of us love the city itself. I work downtown and I get tired of walking passed vomit, used needles, feces (both human and canine), urinating men, and limebikes parked in the crosswalk. Unfortunately, we love the outdoors and Seattle is unique in that it is a major city (jobs) in close proximity to the mountains and sea.

    It certainly comes across as sour grapes and spilt milk, but we want to enjoy our time here and it’s difficult to feel connected to a community when you rent and worry about being able to stay put for another year.

    A move back to the central midwest looks increasingly likely. We’ll be able to keep our jobs and salary, buy a modest house for $300k within a 15 minute drive to work, where parking at the office is free, and be able to save enough to take some wonderful trips throughout the year. The winter is colder, but they are also sunnier and mold doesn’t grow on the window sill. The summers are hotter, but everyone has AC. Luckily Amazon HQ2 isn’t heading there, so perhaps there is time to make it work after enjoying Seattle a little longer.

  130. 130
    jjjj see says:

    RE: Erik @ 125 – lol, love the Everett stories! I’m amazed how Everett is the way it is today despite a huge Boeing factory presence thru the decades.

  131. 131
    jjjj see says:

    RE: Eastsider @ 89 – basically, they have a safety net to fall back on.

  132. 132
    Doug says:

    Bears, look away. Seattle just absolutely crushed the rest of the nation in February’s CS HPI. Not even close.

  133. 133
    Saffy The Pook says:

    By Erik @ 125:

    RE: sfrz @ 122
    I do see your point though. I don’t take public transportation, but my girlfriend does. She has a lot of anger towards the poor poor unfortunate homeless people. She’s from Cleveland and she says these stupid Seattle liberals allow all the stinky loud homeless people ride the bus for free. She claimed she was a liberal in cleveland. Now that she sees how Seattle is, she says she’s somewhere in between.

    I think we need to move these homeless people to a place where they can fit in and call their home. Somewhere not too far from Seattle. Let’s see… North Everett would be a great place to dump them. In north Everett, you wouldn’t even notice because some of the residents look homeless. When I lived in north Everett I would chase homeless drug addicts off my lawn before I put up a fence. I chased one homeless drug addict off my lawn and he kept saying he just moved in next door. I wasn’t having his lies and kept at him until he left. Later I realized he was my new neighbor. A little embarrassed, but that’s how life works in north Everett. You go from one traumatic event to the next.

    East side is polished. I’m more rough and tumble, so I probably fit in better in Seattle.

    You sound like a charming couple who would be wonderful neighbors.

  134. 134
    Rupert D says:

    National trend has been for strong annual price increases….Seattle just leads the pack ahead of Vegas and San Fran. Highlights below:
    Home Prices Continued to Rise in February.
    The S&P CoreLogic Case-Shiller National Home Price Index rose 6.3% last month.
    Prices have risen for 70 consecutive months since May 2012, with annual increases averaging 6% over that time, Mr. Blitzer said. That compares to the previous housing boom, when price rose for 182 consecutive months from January 1992 to February 2007 and gains averaged 6.1%. That suggests strong price gains could have plenty of runway left.
    Home-price gains accelerated in 2017 compared with 2016. Nonetheless, economists expected the pace of price growth to slow this year, due to a new tax law enacted in late December that reduced the incentive for homeownership, as well as rising mortgage rates that make owning a home less affordable.
    Affordability challenges and the shortage of inventory are dampening home sales. Existing-home sales increased 1.1% in March from a month earlier but declined compared with a year earlier, the National Association of Realtors said Monday.
    Markets that are seeing the steepest increases remain concentrated in the West. Seattle reported the largest annual gain, at 12.7%, followed by Las Vegas at 11.6% and San Francisco saw a 10.1% gain.
    Month-over-month, the U.S. Index rose 0.4% in February before seasonal adjustment, while the 10-city and the 20-city index both rose 0.7% from January to February.
    After seasonal adjustment, the national index rose 0.5% month-over-month. The 10-city index and the 20-city index both rose 0.8%. All 20 cities saw price increases in February before and after seasonal adjustment.

  135. 135
    Rupert D says:

    Additional commentary from S&P Case Shiller press release….
    “Increasing employment supports rising home prices both nationally and locally. Among the 20 cities covered by the S&P CoreLogic Case-Shiller Indices, Seattle enjoyed both the largest gain in employment and in home prices over the 12 months ended in February 2018. At the other end of the scale, Chicago was ranked 19th in both home price and employment gains; Cleveland ranked 18th in home prices and 20th in employment increases. In San Francisco and Los Angeles, home price gains ranked much higher than would be expected from their employment increases, indicating that California home prices continue to rise faster than might be expected. In contrast, Miami home prices experienced some of the smaller increases despite better than average employment gains.”

  136. 136

    Great Blogs and an Assortment of Great Opinions

    I love it when we’re bright, enthusiastic about our life’s plans…

    No, we can’t all agree….so what?

    Seattle is taxing employers now for homelessness relief; but $75M in $0.26/hr per worker tax for Seattle still seems cruel to employers and a drop in the bucket to home the homelessness…like the useless train they built to raise property taxes way too much.

    King County is broke? The recent election indicates it [fire and police departments with unfilled positions] its true, but is it? The Department of Licensing collects checks for car tab delivery….I’d avoid checks with the [broke?] D.O.L. Why you asked? They can get mysteriously get lost when you mailed them and when you stop check them the D.O.L will charge you dishonored payment fees because they will contradict the lost check allegation with trying to cash the lost check after they know the stop check got issued….LOL….you can’t fight city hall, even if they lie. Of course they do this to collect not only the inflated tab fees, but tag on another $25 Dishonored Payment fee…..a scam IOWs. They send you a letter to bring cash only at the Seattle D.O.L., what this really means is you can make the cash plate number deposit in Kent instead. But their affidavit contradicts this fact….LOL…punishment, just because?

    Keep the group-think on ethical subjects that help people not hurt them. Be honest.

  137. 137
    ess says:

    https://www.seattletimes.com/business/real-estate/seattle-area-home-price-growth-from-current-boom-has-surpassed-last-decades-bubble/

    YOY housing prices for Seattle up the highest for US metropolitan areas. So what else is new?

    In the past two years – prices in the area have increased some 25%. That provides some cushion for everyone who bought prior to two years ago. Unless there is a major housing depression, the next downturn should not be more that 15 -25%.

  138. 138
    BacktoBasics says:

    The mortgage defaulters and foreclosers are back after 7-year credit lock period. Owning your own house is still the American dream.

  139. 139

    By BacktoBasics @ 138:

    The mortgage defaulters and foreclosers are back after 7-year credit lock period. Owning your own house is still the American dream.

    It’s not necessarily seven years. FHA is three and VA two.

  140. 140
    BacktoBasics says:

    By Millenial Engineer @ 129:

    I’ve been reading the SB for over 3 years now, since about the time I seriously considered moving to Seattle. At that time I was shopping for a house in the midwest but had the oppurtunity to relocate for work to Seattle, a place I loved and previously looked for work after graduate school. I decided to put the home-buying on pause and follow my instincts west (after negotiating a minor cost of living adjustment). When I first moved here in fall 2015 I could have purchased a home just under the Seattle median home price –around $450k. Being new to the city I wanted to spend a year getting my bearings to figure out where to buy and settle down. I wish I hadn’t. In the 2.5 years following I’ve gotten 5-8% annual raises, but home prices have climbed significantly faster –an all to familiar story for many. Now my partner and I are having a child this summer and the conversation is less about when we will buy a house, but when we will move and where we will go. Combined we make $120k, and yet something has to give. We’ll stay put where we are for now, in a small 2/1 house that rents below-market, but eventually that will catch up and we’ll move on. Fortunately, neither of us love the city itself. I work downtown and I get tired of walking passed vomit, used needles, feces (both human and canine), urinating men, and limebikes parked in the crosswalk. Unfortunately, we love the outdoors and Seattle is unique in that it is a major city (jobs) in close proximity to the mountains and sea.

    It certainly comes across as sour grapes and spilt milk, but we want to enjoy our time here and it’s difficult to feel connected to a community when you rent and worry about being able to stay put for another year.

    A move back to the central midwest looks increasingly likely. We’ll be able to keep our jobs and salary, buy a modest house for $300k within a 15 minute drive to work, where parking at the office is free, and be able to save enough to take some wonderful trips throughout the year. The winter is colder, but they are also sunnier and mold doesn’t grow on the window sill. The summers are hotter, but everyone has AC. Luckily Amazon HQ2 isn’t heading there, so perhaps there is time to make it work after enjoying Seattle a little longer.

    Seattle is a very liveable city and has beautiful ourdoors. You can’t get everything for nothing. You can always find a small old house within your budget if not to midwest standard. I am from rust belt state. You will get use to this kind insane house price. But every other people can do why can’t you. You have good Amazon job. Not everyone has this. Start a small house within you budget level. For 800K you can still find one in the city close to Amazon. Live with it. In 10 years, you would have more equity than people move back to midwest. Then you could stay and cash it out and move wherever you want and buy a house with cash.

  141. 141
    Millennial Engineer says:

    RE: BacktoBasics @ 140

    I do not “have a good Amazon job”. In fact, I don’t work in tech. Both my partner and I work full time, and our combined income is not extreme by any measure. I’m not sure how you think anyone, even a single person, let alone a family of 3, could afford an $800k house on a salary of $120k/yr. That’s nearly 7x income, and 5x is pushing it as a rule of thumb. Our budget would max out at around $550k, but as the subject of this post points out that only buys the ‘meth houses.’ Not to mention, after maxing out that $550k budget on our meth house there is nothing left over to remodel the drug den. I’m a structural engineer, with a background in construction, so I certainly could self-perform a majority of the work to renovate or build a home but land prices are so high that buying land and getting a construction loan on our budget is unreasonable.

    We’re considering Kitsap, due to the passenger ferry service from Kingston and Bremerton, but those have services come and gone before. I’m also looking down south (thanks to some helpful posts in this thread); Kent and Auburn look like they could be a reasonable commute via train. Unfortunately, those services can be unreliable with landslides, but they look more promising long-term than fast ferries and at least have bus alternatives.

    Keep in mind: not all Millennials are out of touch, and not all engineers work in software.

  142. 142
    uwp says:

    By Millenial Engineer @ 129:

    I’ve been reading the SB for over 3 years now, since about the time I seriously considered moving to Seattle. At that time I was shopping for a house in the midwest but had the oppurtunity to relocate for work to Seattle, a place I loved and previously looked for work after graduate school. I decided to put the home-buying on pause and follow my instincts west (after negotiating a minor cost of living adjustment). When I first moved here in fall 2015 I could have purchased a home just under the Seattle median home price –around $450k. Being new to the city I wanted to spend a year getting my bearings to figure out where to buy and settle down. I wish I hadn’t. In the 2.5 years following I’ve gotten 5-8% annual raises, but home prices have climbed significantly faster –an all to familiar story for many. Now my partner and I are having a child this summer and the conversation is less about when we will buy a house, but when we will move and where we will go. Combined we make $120k, and yet something has to give. We’ll stay put where we are for now, in a small 2/1 house that rents below-market, but eventually that will catch up and we’ll move on.

    A move back to the central midwest looks increasingly likely.

    Or just be willing to live more than 10 miles outside the city. Burien, Normandy Park, Renton, Shoreline…

  143. 143
    BacktoBasics says:

    RE: Millennial Engineer @ 141

    Can you afford to rent a SFH close to your work? $120k income can still afford x6 $720k if you save by have no car and take public tranport. That will free $400 to $500 a month. Then you have option to rent one room for $800 to $1000 a month. That’s a total $1500/month saving toward a house payment.

  144. 144
    Erik says:

    RE: BacktoBasics @ 140
    Bad advice. 10 years is too long to make a reasonable assumption on where Seattle housing prices will be.

  145. 145
    ess says:

    RE: Millennial Engineer @ 141

    check north – south Snohomish County. Some great towns with some modestly priced housing, and light rail is coming to MLT and Lynnwood. Edmonds is a particularly charming city, with some houses selling for below 500K.

  146. 146
    Mathew says:

    You’ve got to think outside the box. Fortune favors the bold. I bought bought a townhouse in 2007 and the economy tanked immediately. Layoffs, car accident… I did a short sale in 2010. Had a baby, then in 2014 got an $150k inheritance. I couldn’t believe how much it felt like. Went to a financial analyst who told me to buy the most expensive house I could afford. Got lucky again and got a foreclosure on Queen Anne with views for $665,000. Mortgage was $3k/month, which was steep but we made it work. This week marks 4 years in the house and it’s worth $1.4 million. We’re sitting on $900k in equity. We could move to Bainbridge and pay $600k for a beautiful home and have enough left over to pay for our sons college, jump start our retirement and not have a mortgage at all. You can do it too. Amazon is about to announce their second headquarters. There is no safer bet than real estate there. Borrow, work nights, do anything to make it work. Be smart and brave. Work the system. Don’t hate it. RE: BudgetedHomeBuyer @ 1

  147. 147
    BacktoBasics says:

    By Mathew @ 146:

    You’ve got to think outside the box. Fortune favors the bold. I bought bought a townhouse in 2007 and the economy tanked immediately. Layoffs, car accident… I did a short sale in 2010. Had a baby, then in 2014 got an $150k inheritance. I couldn’t believe how much it felt like. Went to a financial analyst who told me to buy the most expensive house I could afford. Got lucky again and got a foreclosure on Queen Anne with views for $665,000. Mortgage was $3k/month, which was steep but we made it work. This week marks 4 years in the house and it’s worth $1.4 million. We’re sitting on $900k in equity. We could move to Bainbridge and pay $600k for a beautiful home and have enough left over to pay for our sons college, jump start our retirement and not have a mortgage at all. You can do it too. Amazon is about to announce their second headquarters. There is no safer bet than real estate there. Borrow, work nights, do anything to make it work. Be smart and brave. Work the system. Don’t hate it. RE: BudgetedHomeBuyer @ 1

    Fortune always favor risk takers. And you are lucky to have a down pay of $150k,

  148. 148
    Ron Ramirez says:

    By Mathew @ 146:

    Amazon is about to announce their second headquarters. There is no safer bet than real estate there. Borrow, work nights, do anything to make it work. Be smart and brave. Work the system. Don’t hate it. RE: BudgetedHomeBuyer @ 1

    Huh?! How does HQ2 equate to RE being a great investment? No one knows where HQ2 will be yet. Since insider trading houses is not illegal, you can bet that once the decision is made the big money will have already moved in and bought all in cash to front run the future demand.

    For Seattle RE the news of HQ2 is horrible news for demand. It’s Amazon telling the world that their future growth is going to be diverted away from Seattle. Many of the current building projects prior to HQ2 announcement were assuming that growth was all going to be in Seattle. Not only that, but a material portion of current Amazon employees will opt to move to HQ2, since so many were imported to Seattle and hate the weather. This head tax thing is just the icing on the cake.

    You got lucky with an inheritance and a big leveraged investment. That’s great for you, but lots of people lost their asses trying to play the exact same game as you. They dice just didn’t favor them as much. When the next downturn hits it’s going to get ugly. So many people like you thinking RE is “no safer bet” is the exact same silliness that lead to 2008’s disaster.

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