To buy or not to buy????
I have watched the eastside market for the past couple years hoping that the prices might drop. But, alas, I see no signs of a price drop on the eastside. Should I wait for some more time or take the plunge & buy a home?
Thanks in advance.
Thanks in advance.
Comments
I am in the same boat or delimea rather. For me, the decision will come down to
1) my need for a home (ie: if you're getting married or having kids)
2) Whether or not the I can afford it.
I currently dont need a home but I would like to live in one ( I am tired of living in an apartment). But most of the homes within reasonable distance to MSFT are unaffordable for me (even with a ~80K Job at MSFT), so I've been holding out. I think whats puzzling for me is to see inventory going up, pending sales down, and only to medium home prices up YOY. I attribute this strange behavior to the rich buying more higher priced homes (maybe someone on this forum can give some input as to why this is happending on the EASTSIDE).
Going back to your question, if you can afford it and need a home, then you should buy one. Even if the market turns, you can live in it. But I wouldn't buy for the sake of speculating because homes are priced to perfection, leaving little or no room for the next homeowner for appreciation.
Whether or not the market will depend on the number of speculators on the market. On the east side (and without numeric proof), I dont see "too many" of these people. Most of the new home buyers I know on the east side are MSFTers who are moving up from renting because they've recently gotten married. And these home owners are not going to be selling their home at a loss because they'll just live in it regardless of what happens to the market.
Painfully watching on the side lines...
FirstTimeBuyer
Why risk your financial future by buying at the PEAK?
http://seattlepi.nwsource.com/opinion/3 ... son19.html
If you have 50 homes sold at 249K and 50 homes sold at 2 Mil, your median is 250K. BUT if you have 49 homes sold at substantially less money at 220K 1 House a bit higher at 274K and 50 homes at 1 Mil which would be substnatially less as well, then your median actually rises to 275k.
So even the upper crust homes may be selling for less, and the majority of the lower homes selling for less, but your median would still rise. IN this scenario, it rose 10%.
Wehn I drive around on the East side on the weekend, I see more open houses than I have ever seen in my life. I have a cousin who is a realtor on that side..She would not consider the market strong at all.
Hrm, well, maybe you should have grown a brain first and done a little research before moving from Boise to Seattle. Seriously, if you are planning a major move which involves selling your home, finding new employment, etc, you'd think affordability would be one of your top concerns.
Eeeeediots. Seriously, boo freakin' hoo!
I posted this graph on seattlebubble a few weeks ago - please ignore the fact that it's from a realtor's website, but I think it shows that we haven't yet seen a major slowdown on the east side:
http://workingforyou.typepad.com/reales ... ry_ea.html
I don't know how long this will continue - for quite a while, I've expected things to at least level off...
Boeing and Microsoft provide the kind of jobs that allow people to afford $750,000 starter homes.
Are you being serious? Most of the MS employees that I know cannot afford a $700+K home, unless they use "creative" financing or have ready wealth.
I don't think the verdict on Vista is clear yet (check out http://news.google.com/news?hl=en&ned=u ... 1113669668 ). Assuming Vista ends up doing well for the company, it's still not clear that it will translate to significant monetary rewards to its employees (or create new jobs).
That's true, but there are only so many Microsofties around -- and plenty of them own homes in the Montlake, Laurelhurst, and Madison Park areas of Seattle. Don't believe me? Look at all the nice automobiles stuck in traffic from 148th street in Redmond all the way to the water on SR-520 on the evening commute.
Money for these prices will have to come elsewhere than Microsoft.
I know several Boeing employees and children of Boeing employees. Boeing salaries aren't insanely high -- they are pretty much pegged to the market rate of the Puget Sound area. A lot of Boeing employees seem to live in the unincorporated area of Fairwood, east of Renton. 350-400k will still get you a decent home there.
Vista is a flop and MS and Boeing employees making $70-120K cannot afford a median priced home here in King County using a traditional mortgage.
Not going to happen... At least not for a few years!
It's not my intention to slam Microsoft, although from 1986-2003 I was involved in computer network integration and saw firsthand how MS killed off its competition, one by one. That's just the nature of the Corporation, but MS was especially adept at it. If we still had anti trust laws in place, we all might be using a different OS. Gates' foundation may be a good thing, but it only serves to stave off criticism of MS business practice imo.
My point was one that Tim and others have made many times - home values in Seattle are not sustainable/affordable no matter how many new people Microsoft or Boeing bring in. Incomes have not kept pace with inflation while housing has bubbled into the stratosphere.
But as far as MS salaries affording even starter homes in the current market, you are absolutely correct -- a vast majarity (myself included) either can't afford it or are unwilling to pay that much.
A friend who works at MSFT spent 6x his annual salary to buy a new home in Redmond.
That kind of income duplication is reckless (imo), but he views his house as a place to live -- and isn't trying to flip it any time soon.
Balmer came out the other day and said the companies projections were a bit "too high"
And some early reporting by way of Fleck:
"...accounts of reporters who chose to cover the story. My favorite quote comes from a New York Times story titled "Vista Arrives with Limited Fanfare" -- in which reporters Jeremy W. Peters and Thomas Crampton offer this description of the post-debut scene: "About nine hours later at the Best Buy in Midtown, several Microsoft employees, store clerks and journalists on hand heavily outnumbered actual customers at a promotional event featuring Microsoft's chief executive, Steven A. Ballmer, who appeared with two Vista beta testers."
All of this hype about how Vista was going to drive demand has it exactly backwards -- Vista is going to freeze demand. Vista isn't exactly bug-free yet. Plus, it's not an upgrade but a conversion, and even tech neophytes have sensed this. (An upgrade is simple. A conversion is hard work. Successfully implementing it takes lots of planning, and gobs of resources.)
--- and as far as speed, it appears that Vista is actually slower even on machines built to run it. There are marginal increases in speed when heavy multithreading applications are used.
Sorry to be off topic, but I think Microsoft has an uphill climb over the next few years.
Quite possibly. But keep in mind that the server version of Vista (aka "Longhorn") hasn't even been released yet. That's a pretty big market.
Google has a very vulnerable underbelly...it's the dissatisfaction of its advertisers. Google is where MSFT was in the early days of Windows. Arrogant, product/technology focused, product driven. Microsoft is heavily investing in fine tuning the technology to bring parity in its search algorithms to those of Googles.
Currently, MSFT is spending little to no money on marketing its search product, as that it's fine tuning the message. Once that is done, the marketing spigot will open up.
Additionally, on the advertising sales and service side, there is a hyper focus on the customer/advertiser. The advertising market would welcome warmly a competitor to Google. Advertisers don't like the arrogance and poor client service that Google offers.
As for software, the OS just isn't sexy anymore. Office is doing much better than Vista. Moreover, as the transition to Vista inevitably occurs over the next 3 years, query share for search will also increase.
Services are the future of MSFT, and they have fat margins.
Only a handful of companies have been successful (so far) in monetizing Services. Even Google hasn't been able to monetize services much beyond Search & AdSense.
BTW, new single-family homes are still selling like hot-cakes on the eastside -- even though the selling price is over $700k.
It would be interesting to know what kind of mortgages they are using to afford these homes and what their mortgage-to-income ratio is. I think that would give us true insight on what's going to happen.
It is of course a calculated risk that prices will go up another 5-10% this season (which is why we started looking in January) but many of the properties out there now seem to be the end of the party folks really going for it. They are asking just massive appreciation to what many of them paid in the past year or so.
The folks that you see selling ordinary houses for 3/4 of a million will run out of other (highly leveraged) "end of the party folks" to buy from shortly.
After quite a bit of watching & waiting, I'm thinking of taking a plunge and buy a home on the eastside. I don't see any signs of the market slowing down. I can't seem to find any reasonably priced (less than $1500/month) decent-rentals on the eastside either. I'm seem to be catching the "I'll be priced out forever" fever :-(
I don't need to a home right now, but would need one in about 9-12 months. Any logical & concrete reasons to stop me from buying a home?
I can't speak for the Eastside...but Ballard and N.Seattle in general is red hot right now. Really doesn't seem any different then 2005 or 2006. Homes are flying off the market in 1 week tops. Within a few blocks of my house 6 houses sold in a week!
The house right behind me just sold: 7311 18TH AVE NW 98117. Only two bedrooms, 1120 sq.ft. It was actually flipped...bought last June for $340...sold for $445 9 months later for nearly 100K more!
I was walking by this cool farmhouse today: 6312 30th Ave NW
The owner was standing outside....she was really nice. She told they had just put it up for sale and already had loads of people calling...many offering to pay for the whole thing in cash! It's really nuts....there's still incredible demand for good houses.
I also notice today that zillow revised the value for my house...it shot up another 16K in just one month! Now stands at $549,788. That's $167,359 more then when we bought it this month in 2005.
Synpathetic...remember you bet me my zillow value would tank???? Nice prediction....
It seems to me you're taking the wrong approach. You're asking people to give you reasons not to buy, when the question I would be asking is reasons to buy. If the arguments already posted here and on the blog, in addition to the state of the national housing market, don't give you serious pause, then I don't see anything anyone says changing your mind. Sounds to me like it's already made up. If it's what you want to do, do it. Just be sure you can live with the outcome.
I understand that most of the people on this blog are more interested in SFH vs condos however due to my personal situation, condo life is a better choice for me.
I have followed the Seattle condo market like a hawk. Primarily the mid end units at places such as 2200Westlake and the Cosmopolitan. The rate that the resales are selling at or the rentals being rented is alarmingly slow and this is from an economists point of view. There also seems to be concern about just *how many people were investors that claimed to be purchasing for a residence...I think that somehow affects the interest rate on the mortgage but I'm not sure. With the number of units that come on line if there is too high of a proportion of investors it will push prices down. How far is a guess but as we can see the news hasn't been getting better lately but rather worse. The owner of the cosmo blog who is a resident has been quite candid about the situation as it truly is an area of concern.
I'm not asking for your validation because I can see it with my own eyes and have been keeping multiple spreadsheets since the beginning of January when inventory started to rise after the winter holidays season. It is a much easier market to follow and within a building that has 50+ units for resale or rent it is easier to compare apples to apples. That is admittedly harder to do with a SFR.
My concern...aside from the fact that condos are supposedly a leading indicator...is that the price of condos has escalated beyond belief and there seem to be quite a few people that are "holding" an extra condo. Even though I feel that the SFR won't necessarily go down as much I am concerned that with the way that many of these condos were financed and that condos in general are priced in the stratosphere when it comes to $/sf there is alot of potential equity that could be wiped out that would have adverse effects on the economy. People are already having trouble reselling units at the $650/sf range yet there are multitudes of buildings that are really no different and cater to the same crowd yet people already reserved their units there at more than 700/sf. The "pre-sale" situation creates a problem that is more unique to condos than a SFR however there are alot of $'s tied up in condos right now and the global economy is teetering (for lack of a better word) and has been reflected in the market volatility as of late.
I'm not going to try to convince you to sell your house or anything like that. That is an entirely personal situation and everybody's situation is different. You may very well have a large safety net...who knows. I would however recommend that you not look at the equity in your house as money earned and then tap into your "equity" because in essence, all you are doing is borrowing more money and going further in to debt. Let that equity grow over time...make larger than necessary payments if possible...and look at it as a nest egg...you have plenty of years ahead of you as most of us on this blog hopefully have.
I wouldn't touch a heloc with a ten foot pole....mostly my house is a place to live. If it appreciated at or slightly above the rate of inflation I'd be happy. But it's nice to know that some day I can get a little more back then I paid for it. But I'm not going to use that equity to accrue more debt. I actually hate owing $....