{"id":3557,"date":"2008-12-03T11:26:02","date_gmt":"2008-12-03T19:26:02","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=3557"},"modified":"2008-12-04T13:17:47","modified_gmt":"2008-12-04T21:17:47","slug":"renting-in-and-around-seattle-still-the-smart-financial-move","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/","title":{"rendered":"Renting in and Around Seattle Still the Smart Financial Move"},"content":{"rendered":"

Let’s take an updated look at some Seattle-area rent vs. buy comparisons to see if the situation has improved at all since we analyized it last summer<\/a>. Back then, the real-world example I used compared two similar homes in Kirkland. Total monthly costs for the rental were $1,515, while the home for sale would have cost $2,690 per month—a difference of $1,175 in favor of renting.<\/p>\n

For the purpose of our comparison, we will again assume that the potential home buyer or renter is a married couple with enough in the bank to make a 20% down payment and are qualified for a 30-year fixed-rate loan at current rates (5.75%).<\/p>\n

In today’s first comparison, I found two homes in Kirkland.<\/p>\n

For rent—4-bed, 3-bath, 1,800 sqft house with a 2-car garage. Monthly price: $1,495.
\nFor purchase—4-bed, 2.75-bath, 1,900 sqft house with a 2-car garage. Price: $400,000.<\/p>\n

I’m not going to go over exactly how all the values below were calculated, since it has been covered extensively before<\/a>. If you would like to follow along at home, feel free to download my spreadsheet<\/a> that will calculate the costs for this or any other set of inputs.<\/p>\n

\n\n\n\n\n\n\n\n\n\n
 <\/td>\nRenting<\/strong>   <\/td>\nBuying<\/strong>   <\/td>\n<\/tr>\n
Rent\/Mortgage:   <\/td>\n$1,495<\/td>\n$1,867<\/td>\n<\/tr>\n
Insurance:<\/td>\n$20<\/td>\n$163<\/td>\n<\/tr>\n
Property Tax:<\/td>\n–<\/td>\n$383<\/td>\n<\/tr>\n
Tax Savings*<\/span>:<\/td>\n–<\/td>\n($254)<\/span><\/td>\n<\/tr>\n
Maintenance:<\/td>\n–<\/td>\n$333<\/td>\n<\/tr>\n
Total:<\/strong><\/td>\n$1,515<\/strong><\/td>\n$2,492<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

*: (year 1 only, less standard deduction)<\/span><\/p>\n<\/blockquote>\n

In today’s comparison, the monthly savings from renting has dropped slightly down to $977. But how does the financial situation change over the next five or ten years? Let’s add a few more assumptions. 1) The house appreciates an average of 1% per year (probably generous). 2) You can invest your cash and get a 2% rate of return. 3) The renter adds the $977 monthly savings to their investment. 4) To realize any cash gains on the house will require paying 6% to agents and 1.78% in excise tax. 5) Interest earned on your cash investment is taxed yearly according to the 25% tax bracket. 6) Rent increases at 3% per year.<\/p>\n

Given those assumptions, after 5 years today’s renter would have $145,000 in their investment, while the buyer would net just $91,000 from the sale of their home. After 10 years, the renter has $208,000, and the home buyer that sells will walk away with $141,000.<\/p>\n

Let’s run the numbers for another pair of homes, this time closer in, in the ever-popular Ballard.<\/p>\n

For rent—3-bed, 1-bath, 2,180 sqft house with a no garage. Monthly price: $2,195.
\nFor purchase—3-bed, 2-bath, 2,100 sqft house with a 1-car garage. Price: $550,000.<\/p>\n

\n\n\n\n\n\n\n\n\n\n
 <\/td>\nRenting<\/strong>   <\/td>\nBuying<\/strong>   <\/td>\n<\/tr>\n
Rent\/Mortgage:   <\/td>\n$2,195<\/td>\n$2,568<\/td>\n<\/tr>\n
Insurance:<\/td>\n$20<\/td>\n$163<\/td>\n<\/tr>\n
Property Tax:<\/td>\n–<\/td>\n$527<\/td>\n<\/tr>\n
Tax Savings*<\/span>:<\/td>\n–<\/td>\n($433)<\/span><\/td>\n<\/tr>\n
Maintenance:<\/td>\n–<\/td>\n$458<\/td>\n<\/tr>\n
Total:<\/strong><\/td>\n$2,215<\/strong><\/td>\n$3,283<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

*: (year 1 only, less standard deduction)<\/span><\/p>\n<\/blockquote>\n

So over in Ballard today’s renter will save $1,068 a month. With the assumptions stated above, after 5 years the renter has $181,000 in the bank, while the buyer gets $125,000 from the sale of their home. After 10 years, the renter has $246,000, the buyer gets $195,000.<\/p>\n

I’m certainly not one to say that no one should buy a home ever, but the way things look around Seattle at present, renting for now is still clearly the way to go. Remember that the rentals in my comparison were nice, large houses. If you can stand renting a smaller apartment for a while you’ll be saving even more.<\/p>\n

Of course there are always exceptions to every scenario. I’m sure there are people out there today finding amazing deals from highly motivated sellers. If you find such a deal, more power to you. But for most of us, renting in Seattle is still the smart financial move.<\/p>\n","protected":false},"excerpt":{"rendered":"

Let’s take an updated look at some Seattle-area rent vs. buy comparisons to see if the situation has improved at all since we analyized it last summer. Back then, the real-world example I used compared two similar homes in Kirkland. Total monthly costs for the rental were $1,515, while the home for sale would have…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[206],"tags":[28,452,61,59,440,84],"coauthors":[],"class_list":["post-3557","post","type-post","status-publish","format-standard","hentry","category-features","tag-affordability","tag-buy-vs-rent","tag-fundamentals","tag-rent","tag-right-time-to-buy","tag-saving"],"yoast_head":"\nRenting in and Around Seattle Still the Smart Financial Move \u2022 Seattle Bubble<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Renting in and Around Seattle Still the Smart Financial Move \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"Let’s take an updated look at some Seattle-area rent vs. buy comparisons to see if the situation has improved at all since we analyized it last summer. Back then, the real-world example I used compared two similar homes in Kirkland. Total monthly costs for the rental were $1,515, while the home for sale would have...\" \/>\n<meta name=\"twitter:creator\" content=\"@The_Tim\" \/>\n<meta name=\"twitter:site\" content=\"@SeattleBubble\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The Tim\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/\",\"url\":\"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/\",\"name\":\"Renting in and Around Seattle Still the Smart Financial Move \u2022 Seattle Bubble\",\"isPartOf\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\"},\"datePublished\":\"2008-12-03T19:26:02+00:00\",\"dateModified\":\"2008-12-04T21:17:47+00:00\",\"author\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\"},\"breadcrumb\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/seattlebubble.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Renting in and Around Seattle Still the Smart Financial Move\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\",\"url\":\"https:\/\/seattlebubble.com\/blog\/\",\"name\":\"Seattle Bubble\",\"description\":\"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\",\"name\":\"The Tim\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"caption\":\"The Tim\"},\"description\":\"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.\",\"sameAs\":[\"http:\/\/SeattleBubble.com\/\",\"http:\/\/facebook.com\/is.totally.pointless\",\"https:\/\/x.com\/The_Tim\"],\"url\":\"https:\/\/seattlebubble.com\/blog\/author\/timothyellis\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Renting in and Around Seattle Still the Smart Financial Move \u2022 Seattle Bubble","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/","twitter_card":"summary_large_image","twitter_title":"Renting in and Around Seattle Still the Smart Financial Move \u2022 Seattle Bubble","twitter_description":"Let’s take an updated look at some Seattle-area rent vs. buy comparisons to see if the situation has improved at all since we analyized it last summer. Back then, the real-world example I used compared two similar homes in Kirkland. Total monthly costs for the rental were $1,515, while the home for sale would have...","twitter_creator":"@The_Tim","twitter_site":"@SeattleBubble","twitter_misc":{"Written by":"The Tim","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/","url":"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/","name":"Renting in and Around Seattle Still the Smart Financial Move \u2022 Seattle Bubble","isPartOf":{"@id":"https:\/\/seattlebubble.com\/blog\/#website"},"datePublished":"2008-12-03T19:26:02+00:00","dateModified":"2008-12-04T21:17:47+00:00","author":{"@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f"},"breadcrumb":{"@id":"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/seattlebubble.com\/blog\/2008\/12\/03\/renting-in-and-around-seattle-still-the-smart-financial-move\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/seattlebubble.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Renting in and Around Seattle Still the Smart Financial Move"}]},{"@type":"WebSite","@id":"https:\/\/seattlebubble.com\/blog\/#website","url":"https:\/\/seattlebubble.com\/blog\/","name":"Seattle Bubble","description":"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f","name":"The Tim","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70","url":"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g","caption":"The Tim"},"description":"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.","sameAs":["http:\/\/SeattleBubble.com\/","http:\/\/facebook.com\/is.totally.pointless","https:\/\/x.com\/The_Tim"],"url":"https:\/\/seattlebubble.com\/blog\/author\/timothyellis\/"}]}},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p6wh0F-Vn","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts\/3557","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/comments?post=3557"}],"version-history":[{"count":0,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts\/3557\/revisions"}],"wp:attachment":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/media?parent=3557"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/categories?post=3557"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/tags?post=3557"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/coauthors?post=3557"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}