The impending Seattle housing market collapse. (apartments, rental, cheap home)

[MissingAll4Seasons]

Originally Posted by eskercurve

The fact that there's a fair number of people who refuse to lower their asking price is laughable to me. Yesterday I was cruising around West Seattle and there was this little bungalow that has two bedrooms and 1.5 bathrooms and they were asking $465k for it. I felt like inserting a flyer in the flyer handout box with a note saying "You're insane".

I'd bet dollars to donuts that they can't lower their asking price because that's the loan value. If they accepted anything less, they'd either end up paying several thousand out of pocket or trying to convince their bank to accept the short-sale (which is a feat unto itself).

[70Ford]

In this thread: http://www.city-data.com/forum/seatt...tle-not-5.html

Someone told me I could afford a 250K - 300K house on a 52K a year salary. I used to own a house. I don't think I'd want to buy a 300K home on 52K a year. We could extrapolate that out to you can afford a 312.5K to 375K home on 75K a year. You could go all crazy extrapolative and say you can afford a 500K-600K home on 104K a year. 50.76% of folks in Seattle won't be buying that 250K-300K home, though. They can't afford it. (Since they make less than 50K.)

Owning a home can kill you with incidentals. There's a million little things that can happen (that cost money/time/or both ... to fix.) I'm not saying I don't want to own a home, (I do) but somewhere a long time ago, I read you need to put away an extra $1000 a month for your house for a "just in case" fund. Houses are like cars. At the moment of purchase, they eat money. Over time, they can eat a lot of money.

$46,075 is the cutoff for "housing assistance available" level in Seattle. Conversely, you're only $5,925 bucks away from buying a 300K home. Which makes no sense, at all.

http://www.city-data.com/forum/seatt...6-075-you.html

These are examples of people the new tax break is designed to help: A single person earning $46,705, or 80 percent of the area's median income next year. A household of three earning $90,110, or 120 percent of the area's median income in 2009. The city defines an affordable place as costing no more than 30 percent of a household's income.


Moderator cut: link removed, linking to competitors sites is not allowed

Population:582,454

Income Less Than 15K 13.50%
Income between 15K and 25K 10.29%
Income between 25K and 35K 11.19%
Income between 35K and 50K 15.78%
Income between 50K and 75K 18.44%
Income between 75K and 100K 11.64%
Income between 100K and 150K 11.28%
Income between 150K and 250K 5.35%
Income between 250K and 500K 1.67%
Income greater than 500K 0.88%

****
P.S. If you know me, or have seen me write, there is typically something buried in there that takes a moment to grasp. Well, I don't normally type it out...but seriously....It's a lot more than 50.76 percent of the people who can't afford a 300K home.

It's pretty ...no...it's blatantly... obvious.

I also find it hilarious that a family of 3 making $90,110 a year needs housing assistance, but that's a horse that's been beat to death. That's $27,023 or $2253.75 a month. It's 30 percent of their entire paycheck for the year. Unfortunately, you are poor and you will be needing housing assistance.

Welcome to Seattle.

[Molly 56]

70Ford, you've mentioned a topic I rarely have the courage to say out loud, but...well, you brought it up.

Owning a house can be a big big bummer. I'm so glad I finally unloaded mine so I can sleep in peace here in my little apartment while I ponder what comes next. People forget property taxes when they figure in what it costs to own a house. Pest control; aging foundations (that you find out 10 years on were built wrong so the break in the hot water pipe costs you only a couple of thousand if you're lucky) New roof every 10-15 years or so; new siding; air conditioning system replacement (OK, not in Seattle, but I guess you have to worry about the heating system); tree trimming, or removal if one dies--(and yes, they can); Rotting deck that has to be replaced, worn out appliances and carpeting, "dated" (oh, that evil word from a real estate agent's lips) kitchens and bathrooms...yada, yada, yada.

Don't get me wrong--owning a house is lovely. Being able to reconstruct and set it up just how you like is wonderful and creative. Working in your own yard is healthy and spiritual (Better keep it up, though, or the neighbors will complain big-time) It's just that those calculators forget that the cost of MAINTAINING a house, so that if you ever have to sell it you won't take a serious hit, is a number that rarely approaches reality. A new home (in to me, a boring tract-neighborhood out on the edge of town) will of course, give you some years of leeway, but sooner or later, like a car, you will need to put in the time or the money.

[JesseJames34]

Originally Posted by Molly 56

70Ford, you've mentioned a topic I rarely have the courage to say out loud, but...well, you brought it up.

Owning a house can be a big big bummer. I'm so glad I finally unloaded mine so I can sleep in peace here in my little apartment while I ponder what comes next. People forget property taxes when they figure in what it costs to own a house. Pest control; aging foundations (that you find out 10 years on were built wrong so the break in the hot water pipe costs you only a couple of thousand if you're lucky) New roof every 10-15 years or so; new siding; air conditioning system replacement (OK, not in Seattle, but I guess you have to worry about the heating system); tree trimming, or removal if one dies--(and yes, they can); Rotting deck that has to be replaced, worn out appliances and carpeting, "dated" (oh, that evil word from a real estate agent's lips) kitchens and bathrooms...yada, yada, yada.

Don't get me wrong--owning a house is lovely. Being able to reconstruct and set it up just how you like is wonderful and creative. Working in your own yard is healthy and spiritual (Better keep it up, though, or the neighbors will complain big-time) It's just that those calculators forget that the cost of MAINTAINING a house, so that if you ever have to sell it you won't take a serious hit, is a number that rarely approaches reality. A new home (in to me, a boring tract-neighborhood out on the edge of town) will of course, give you some years of leeway, but sooner or later, like a car, you will need to put in the time or the money.

what about tax breaks at the end of the year? say, $10k for married filing jointly? real estate agents/accountants feel free to chime in on that....


the problem with renting is that you will never own the property and are subject to the ups and downs of an economy. a home will keep its price based on your loan agreement. a home you will, at the very least, own in 30 years if you mkae the minimum (what a mistake) required payment each month. note that i'm not adding in the usual mistakes people make like taking out an equity loan so they can buy that 'deserved' boat or hawaii vacation, etc.

[Ira500]

JesseJames34,
I don't think the actual benefit would be 10,000. You get to reduce the amount of interest paid and property taxes from your income( not including the 8000 first time buyers credit)..So for example if you borrowed 250,000 dollars the interest in the first full year might be 12,500 dollars per year, add 2500 for taxes, so you'd reduce your income by 15000 dollars from your income. If you're a married couple filing jointly, you'd reduce your income by that 15000 instead of the 10,200? the standard deduction for married filing jointly.
Is there a tax benefit? Sure. Is it huge? Could be if you bought a more expensive place or gave lots to charity or had big medical expenses, but otherwise it doesn't appear to be that huge, although the first time buyer credit would add significantly to it.

[jenlion]

I totally deserve a boat or a hawaii vacation. Something to relieve the stress when I think about just how true all the worst-case scenarios have come / are coming. All that's left is for one or both of us to lose a job! Hope that's not next, but it's startlingly possible this year compared to 18 months ago!!

Shoot, why NOT take out an equity loan and enjoy a boat or a vacation and feel better? Everything is crashing all 'round anyway, might as well get some play time in first.

:-D :-D :-D :-D :-D

Back to reality, no, we're not doing that. But I can dream. Everyone else did it, so why can't we? :-(

[JesseJames34]

Originally Posted by Ira500

JesseJames34,
I don't think the actual benefit would be 10,000. You get to reduce the amount of interest paid and property taxes from your income( not including the 8000 first time buyers credit)..So for example if you borrowed 250,000 dollars the interest in the first full year might be 12,500 dollars per year, add 2500 for taxes, so you'd reduce your income by 15000 dollars from your income. If you're a married couple filing jointly, you'd reduce your income by that 15000 instead of the 10,200? the standard deduction for married filing jointly.
Is there a tax benefit? Sure. Is it huge? Could be if you bought a more expensive place or gave lots to charity or had big medical expenses, but otherwise it doesn't appear to be that huge, although the first time buyer credit would add significantly to it.

i think 10k is big. that covers many of the expenses one incurs from owning a home, espeically in a state where you don't have AC units to repair/replace. i think the 10k is for the standard deduction for MFJ, not including taxes (aren't the taxes the itemized, not standard, deductions??). i guess big is relative to the person.

[JesseJames34]

[quote=jenlion;8859916]I totally deserve a boat or a hawaii vacation. Something to relieve the stress when I think about just how true all the worst-case scenarios have come / are coming. All that's left is for one or both of us to lose a job! Hope that's not next, but it's startlingly possible this year compared to 18 months ago!!

Shoot, why NOT take out an equity loan and enjoy a boat or a vacation and feel better? Everything is crashing all 'round anyway, might as well get some play time in first.

:-D :-D :-D :-D :-D

Back to reality, no, we're not doing that. But I can dream. Everyone else did it, so why can't we? :-([/quote]


Why shouldn't you? Because you're a responsible citizen that probably doesn't have the need to indebt yourelf anymore than you may already be. And oh, because I don't want you to possilby forclose on your home because you lose employment and can't sell it for what you owe. then to have the bank take it from you...leaving you with the debt (unless bankruptcy)? Then having them write my president/congress and telling him/them they need more money from people like me(lucky enough to still be employed) because they have an underwater property that they have to resell to another citizen for the original value five years ago. yet, possibly still reaping benefits from you on your original (partially?) loan from them and getting some cash from Uncle Sam (aka that's you an' me). Other than that, yeah, you probably do deserve a vacation for not helping screw up our country. I sound cynic, but i'm not...



on a lighter note, if you think you might need an equity loan to keep you afloat while you are insecure about your job, then that might not be such a bad idea. just know that the purpose is just that (sort of house INS) and you will lose a bit on interest. when things are more solid, pay it all back.... i would only do this route if you thought the amount borrowed would be sufficient for the amount of time you think you may need it. really just try to reduce your monthly expenses the best you can(car loans, CC debts, etc), so that a lower paying job might keep you steady.

[texastrigirl]

In the right circumstances you can do well owning a house but in many cases you might break even if lucky over time (and I am speaking of a nationwide attitude, not a I lived in Cali and made $1M on my home in 3 years attitude). It's such a complex calculation to do the proper math because of the tax effect, the inflation effect, the time value of money, etc. so these are just base numbers without most of that factored in. Example: we bought a relatively new house in Austin TX in July 2000 in a very desirable neighborhood with great schools. Since we were 12 miles from Austin we only saw 27% appreciation in purchase price vs. sales price over the 7 years. That was about $60K. We had to put $5K maintenance in it to get it ready to sell. Over the 7 years we lived in it our property taxes were about $32K (Austin has high property tax!). We also paid mortgage interest over the 7 years on a $170K loan balance. Not to mention the $44K I had to put down that was not earning interest elsewhere. Not to mention the big water bill to keep our grass remotely healthy per the HOA regs. Even tax effected for the fact we got to itemize, I would be shocked if over the course of the 7 years we made any money. My guess is that we broke even. I am a CPA and I have run the numbers but everyone has their own math to do. Home ownership rarely makes great financial sense (except if you were my in-laws and made $800K on your Bay Area home in 8 years time!) but emotionally I think it can be hard to beat having a cozy home, a yard to love, a place where you raise your babies and neighbors that become like family over the years. Sometimes it can make you a lot of money but on avg. it's not wise to think of it as an investment first and foremost. It's really a place to live more than anything. Again, just my story but run your numbers sometime to see hold they hold up.

[jenlion]

Totally agree with texastri. Your home shouldn't primarily be an investment, rather your... home. When you rent anything can change at any time, so you don't put down the roots and you don't make it yours. When it's yours, it's just different. You belong there and nobody else!!