Movin' on up in the Seattle area
For those of us who've purchased their homes several years ago but would like to upgrade to something a little bigger/nicer, this market is tough to time. I'm left analyzing not only if prices will fall, but how my homes value will change in relation to those I am looking at buying. And then there's the uncertainty surrounding interest rates -- saving $20K by waiting six months could be more than offset by interest rates rising 2%. So I am here asking for thoughts and/or discussion.
To be specific, I am thinking of selling my house near Greenlake I bought in 2001 for $318K. The zestimate is $574, but think $525K is more realistic market value based on what i am seeing.
Currently, I've been looking at houses in the Wallingford, West Seattle, and Central Area from $650K - $750K. Surprisingly, there's a lot of crap out there even at those prices, but I have found a few I really like. Homes in that price range seem like they've fallen more than those closer to the jumbo cut off.
I am currently contemplating a few options:
1. Do nothing and just be happy where I am.
2. Sell now, rent for 6 - 12 months and buy.
3. Remodel for more space.
Thoughts?
To be specific, I am thinking of selling my house near Greenlake I bought in 2001 for $318K. The zestimate is $574, but think $525K is more realistic market value based on what i am seeing.
Currently, I've been looking at houses in the Wallingford, West Seattle, and Central Area from $650K - $750K. Surprisingly, there's a lot of crap out there even at those prices, but I have found a few I really like. Homes in that price range seem like they've fallen more than those closer to the jumbo cut off.
I am currently contemplating a few options:
1. Do nothing and just be happy where I am.
2. Sell now, rent for 6 - 12 months and buy.
3. Remodel for more space.
Thoughts?
Comments
I would modify it a little though: Sell now, rent for 6-24 months, drive a really hard bargain and buy.
But then I thought: how would your current mortgage payments compare to rents?
If rents are the same or only slightly lower, maybe you should stay in your house and think about buying in a couple of years. I should slap myself here. What kind of advice is that from an agent?
I've been staring at the MOS in 720 where I live slowly rising towards a buyer's market, and realizing now's the time!
My plan is #2, but I wouldn't do it if the situation weren't pretty perfect (and I'm still trying to finagle it so it is.)
We are currently out of our house, as is all our furniture, as we were putting in wood floors. This experience and ever-escalating expense makes me realize you shouldn't do any remodeling on a place you don't intend to live in indefinitely. The experience is much more frustrating and painful when you can't fall back on the "I will enjoy these floors for ever" meme. Now all I have is "maybe we'll recoup 50% of our expenses" meme. Not fun.
So, given that we are out of our house and currently staying in a nicer place (in-laws' house, who live out of town), I think I have convinced my wife to sell now, instead of 1-2 years. Now all we have to do is talk the in-laws into renting to us for as long as my wife can tolerate, and we are golden.
Sell just after the crest of the top, and buy after a decline. At least that's the theory. Renting in between gives you much more leverage as well. No contingency nightmares, or being held over a barrel by adversaries who know you need a place to live or are currently carrying two mortgages and need to sell.
Just starting window-shopping in North-end, in-city neighborhoods in the 550-650 range (bought in 04, so don't have your equity luxury), and peering longingly up at the 750s, hoping they'll fall into our range of affordability before my wife loses patience.
Keep us updated on your plan.
Option 2 is probably your best choice if you want to try and maximize your gain. Seattle is lagging the leading bubble areas (e.g. CA) by about a year. With a recession under way, it is only going to get worse. You already missed the "peak" (mid 2007) but you can still get out with a decent profit / down payment for your "step up"....provided you can unload your home in a market with ballooning inventory. Pricing below your competition will be the key.
Based on previous bubbles I estimate "bottom" will be reached in about 2013 but this time feels different.....this may be America's "perfect storm" in which case housing may never recover (e.g. Japan).
One other good thing about dumping the house and being "free" is you are not anchored to a specific place in case jobs pick up somewhere else while Seattle is still "down".
Good Luck!!
One of the episodes on the HGTV (home & garden channel) featured a couple who had looked at a myriad of homes to try to get something more to their liking than their current house. They weren't finding anything they wanted, so the HGTV team showed them what they could do to remodel three houses on the market. But the team included the couples' own house in the remodel plans, and they liked the plan for their own house the best (after all, they did choose the house once before; there was a lot they still liked about it), and it was also the cheapest because it didn't involve the costs of selling/moving.
You might want to spend some money on an architect, to see what your house could be and for how much.
Other thoughts: a house near Green Lake is probably going to appreciate at a higher rate than many other Seattle areas, if only slightly. A smaller house can be made to seem more roomy with good design; there's lots of books on that, and of course an architect can help. I think house prices will fall more than $20K in that range in the next six months, so if it were me I wouldn't worry about interest rates during that time frame.
I dunno. I can get a 10/1 Jumbo ARM right now with no points for 5.25%. Let's say I'm looking in 6 months and rates are at 7%. The extra interest is close to $10K per year ($550K loan). The 20K drop in price is quickly overshadowed.
Today your 5.25% loan on $550k has a payment around $2500. At 7% with a $2500 payment you can borrow around $415k.
How do you feel about a $135k drop? If you think interest rates are going to 7%, buying today might not be the best decision.
This is exactly what I am struggling with. I do think prices will drop more, but I'm both a buyer and a seller. Granted my current house is cheaper than the one I would be buying, so the dollar drop should be less.
I have no idea what interest rates will do. I have a 5.25% 10/1 jumbo locked in for 90 days. I'm going to take a good look at what's out there and what i can see mine for.
There's a lot of factors involved: mid-range home values vs. higher range home values vs. interest rates. UUGGHHHHH
I figure on the Eastside (where I'm looking), prices are dropping around 1% a month. That could change as Microsoft starts filling their 10K new seats being built/leased there, but right now I doubt they'll stop the onslaught of falling prices. This thing seems to be a cascading failure that will take at least a couple years to play out.
Google for the "CEPR Housing Cost Calculator". It can help with your decision.
Having recently sold and moved to a rental house, I can tell you that the experience sucks. I'm getting too old for moving, for one thing. I never made so many payments in one month, although the total cost was expected.
Had my house been in the right location, I would have done everything I could to make it what I wanted it to be, rather than switch. (My preference on location changed over the years.)
I put my house on the market and it sold within a day at full price (Greenlake area). I've decided to rent for a bit and check out the market next spring. I must admit, despite my pessimism about the current housing market, there was a lot of interest in my "charming old house".
That said, yes, congrats to DrShort and his/her savvy agent.