Better off renting or buying a condo now in Seattle? (Bellevue: sale, to rent)

[Ira500]

Originally Posted by bigal32

Because you'll have no trouble finding real estate agents who insist that now is the best time to buy, ever, check out seattlebubble.com for the other side of the argument.

I strongly recommend Seattle Bubble for a much more balanced view of the housing market, interesting discussions, and frequent comments by yours truly.

[LookinForMayberry]

It's part of the smug, self-congratulatory behavior that Seattle residents tend to exude, given that they live in the best place in the world, bar none. (Overlooking the fact that most of them suffer from SAD, and have to fly to one of those secondary locations twice a year to recover.)

Just callin' it the way I see it, my opinion only.

Addition: Oops! Sorry, just saw that you were writing about Des Moines, which -- BTW -- is NOT part of Seattle. Though we own two homes in the Seattle metro, one in town and one in the 'burbs, in your shoes I would rent in Seattle at least for the first few years. I wouldn't live in Des Moines.

[Swigchow]

Has the Seattle Condo market bottomed or is there another 20% drop pending?

[Ira500]

Has the Seattle Condo market bottomed or is there another 20% drop pending?

I think it depends on the location and type of condo. If you're talking lower end outside of Seattle, there's a ton of them out there, and since there are a bunch of newer condos that have entered the market in recent years, and since there are a fair number of those condos being foreclosed on: we haven't bottomed. I honestly don't think we'll see another 20% drop, I think it'll be less than that, but some nonetheless...And some unique older condos should hold their value more, like the 1920's old brick buildings around the First Hill/Capitol Hill border.

[CityProcessService]

[quote= wouldn't live in Des Moines.[/quote]

have you been to Redondo Beach in Des Moines, bar none top ten places to live in Western Washington

[jessicazi]

Originally Posted by CityProcessService

have you been to Redondo Beach in Des Moines, bar none top ten places to live in Western Washington

Agreed. Des Moines offers some great places to live with gorgeous views of the sound.

[Swigchow]

Originally Posted by Ira500

Has the Seattle Condo market bottomed or is there another 20% drop pending?

and since there are a fair number of those condos being foreclosed on: we haven't bottomed.

How discounted are the REO's?

[Ira500]

I'd say in general the REO's are discounted 15-20% from other comparable properties currently for sale, but as much as 40% or more off sales prices of the summer 2007 peak.

[JesseJames34]

Originally Posted by Ira500

exit 82,
Seattle has seen a lot of new condo developments over the last few years, and there are a few more getting finished. But I'll give you both arguments.

1. It costs a lot to build in Seattle, between the cost of land, labor, materials, permitting, and the myriad of regulations the City requires. If the builder/developer wants to make any money, they have to charge a lot. And every market is different, so you can't really compare Seattle to Little Rock or NYC.

2. Or can you? Historically, every city has a sale price over rent ratio. Two years ago homes in the Seattle area were selling for about 300x the monthly rent for a similar place. Now it's down to something like 235x, but the historical ratio is closer to 150-175.
There is also a historical home price to median household income ratio...it used to be something like 3.5x the median household income, now it's more like 4.5, down from something like 5.25.
what's all this got to do with anything?
If you can find a condo to buy where your monthly payments, including taxes, insurance, and condo fees are not significantly higher than what the rent would be for the same place, then it might be worth buying. Or, if you just feel a lot better owning a place, then that emotional satisfaction might be worth the extra money.
But from a strictly practical viewpoint, with some exceptions, renting makes more sense. A lot of condo rents are about half of what the mortgage payments would be.
Also, the direction of sales prices has been down since July 2007, and that decline does not appear to be ending, so if you bought now you'd be assuming the risk of further erosion in prices.
But...there are a few places for sale that are significantly under market value, including short sales, bank owned property, and desperate sellers, those might be worth it. Also, at some point, probably somewhere between the next 6-18 months, we will hit bottom, and then might truly be a pretty good time to buy.

I think that is about all the data the OP needs to make the right choice, in my opinion.

----------------------
Interestingly, in a recent article (probably cnn money a month or so ago) i read, the sales price to rent ratio you mentioned showed seattle area as the worst place in the country to buy housing of the places they listed.

[JesseJames34]

well, i can't find the article i was referencing, but here's something similiar:
25 real estate markets poised to fall - Seattle (22) - FORTUNE

Home price/rent ratio: 38 - this i think has seattle listed as one of the worst on their list of 25 slides. (note: "*Home price/rent ratios are for June 2007" , but relative to the rest of the country also falling it's probably not a whole lot different today)

"Note: People typically won't spend more in monthly costs to own a home than they would to rent. While prices soar from time to time, sending the ratio to exceptional heights, the relationship eventually should return to its historical average. "