not worth it to buy a house in the seattle area? (Bellevue: sales, real estate)

[civic94]

I am pretty good at accounting, bottom line, money in and out, etc. Im 26, and I moved here 12 years ago. I have been looking at homes, at the price / sq. ft for buying and renting, and when I do the math I compare apples to apples, such as in the the same neighborhood/ within a few blocks for renting and buying a house.


it just seems like it doesnt make much sense to buy in the seattle area, unless a person lives here for at least 15 years. the math that i did (prop tax, insurance, maintenance, upkeep, etc) it seems like it takes about 8 to 10 years to meet the break even point, I put down 15 years because if a person sells, they have to pay extra fees for the an agent, and the expenses of moving to a house, and moving out of the house, time to buy and sell, updating and fixing things that cost money where renting wont, etc. the bottom line is 15 years to make it worth while.


I did the math for other cities and it made more sense there, but then again seattles economy is much stronger. I would hate to buy cheap in a city, only for the economy to tank and a house becomes worthless.


how have you guys fared? did you guys buy or rent? or are you on the sidelines like me doing all the math? and for the folks who bought, was it worth it?

[Flightoficarus87]

You sound better off financially than myself (I've only rented property), but basically, you have the right idea there/the same conclusion many others here have come to - Seattle is an expensive place to live, at least in terms of housing costs (Obviously not SF/NYC bad, but still spendy). So yes, if you're going to buy in Seattle proper, you might want to stick around for awhile for it to pay off.

With the prices most of the nicer homes are going for in Seattle proper, alot of people who choose to stay here have fled to the neighboring areas where you tend to get much more house for your money. Personally, I'm curious to see how home prices play out over the next several years around Beacon Hill, and Columbia City/Rainier Valley. More affordable houses there compared to the rest of Seattle, and it seems like an area that could be a target for gentrification (This has already happened in Columbia City).

[Beenhere4ever]

I've never checked but anyone know the median income in King County in relation to that benchmark nationwide? I suspect there's a gap, and when there's more money, assets can sell for more.

[Hemlock140]

We've been in this house 20 years, paid $190, last refinance in 2004 was appraised at $674,
after the bubble it's now at $525. That's still almost 3 times the original purchase price. Most people stay in their house about 7 years, and that used to be enough to double the value, not any more. From what I see lately 15 years is probably about right if you are looking at it as an investment. On the other hand, with rent so much higher these days buying even with the additional expenses, as long as the interest is tax deductible is saving you money every month. That, and you will have something when you do move. With rent, that money is gone forever, and you can't do anything to make your home more to your liking without a lot of cooperation from the landlord.

[jm31828]

I guess it depends where you are looking. If by "Seattle area" you mean Seattle proper, then yeah values are high and it is tough to get in, and values will only slowly go higher.
However if you go out to some of the suburbs there are much better deals to be had. We bought in 2010 in Lynnwood- brand new construction 1300 square foot house with 3 bed/2.5 bath, two car garage, for $236K. You couldn't really rent anything like that for what we pay in monthly mortgage payments (or it would be about the same), so in our case we are coming out ahead. And prices are only going up, so there is no better deal to be found than what you could get now.

[Vinylly]

Originally Posted by civic94

I am pretty good at accounting, bottom line, money in and out, etc. Im 26, and I moved here 12 years ago. I have been looking at homes, at the price / sq. ft for buying and renting, and when I do the math I compare apples to apples, such as in the the same neighborhood/ within a few blocks for renting and buying a house.


it just seems like it doesnt make much sense to buy in the seattle area, unless a person lives here for at least 15 years. the math that i did (prop tax, insurance, maintenance, upkeep, etc) it seems like it takes about 8 to 10 years to meet the break even point, I put down 15 years because if a person sells, they have to pay extra fees for the an agent, and the expenses of moving to a house, and moving out of the house, time to buy and sell, updating and fixing things that cost money where renting wont, etc. the bottom line is 15 years to make it worth while.


I did the math for other cities and it made more sense there, but then again seattles economy is much stronger. I would hate to buy cheap in a city, only for the economy to tank and a house becomes worthless.


how have you guys fared? did you guys buy or rent? or are you on the sidelines like me doing all the math? and for the folks who bought, was it worth it?

If you are an ecomomist, you are most likely correct. A real estate salesman will probably dispute your research, simply because he depends on his sales to make a living. I would be very afraid to buy a house at this time. We are still in a very uncertain ecomomy, specially with the current president that sits in the White House, -if he's not somewhere on a mulit-million dollar vacation. Economists are predicting we are about to fall over the cliff into a deep-deep recession, where all prices will fall.
On the otherhand we bought our house on Capital Hill when we were in our twenties and I was beginning to teach school. The reason we bought there was because Capital Hill homes were the cheapest in the city and first year teachers didn't make much money. Today homes on our block are selling for over one million dollars. We paid $18,000 for it. You can't even buy a car for that price now. But that was in a different era. Seattle and the N.W. was not in the world spot light then as it is now. People on the east coast didn't even know there was a Seattle, now the whole world seems to all want to move here, -if you read this website.

[Ira500]

Most real estate agents are going to tell you that it's worth it to buy a house, because your mortgage payments go towards paying off your mortgage, where paying rent is just "throwing away money."
But I'm not going to tell you that. From a financial standpoint, in the in city Seattle neighborhoods and nearby eastside towns, mortgage payents for the exact same house are going to be many hundreds per month over the rent. And in 2007, when real estate agents(and everyone else) were saying that if you didn't buy a house now you'd be priced out forever, prices declined significantly in the Seattle area. The area that experts said was immune to price declines. Buying a house is a risk. No matter how many people tell you "It's a great time to buy", they don't really know.
But some people are much happier when they own their own house, and it's worth it to them to not have the hassles and insecurity of being a renter. And as jm31828 stated, the Seattle area is a lot bigger than Wallingford, Queen Anne, Bellevue, and Sammamish. There are places within 30-45 minutes of either DT Seattle or DT Bellevue where the typical mortgage payment will be equal to or lower than the rent. Generally, these are places where the public schools aren't as good, places that aren't thought of as cool and hip. They're north and south. Lynnwood and Mountlake Terrace, among others, in the north and Renton, Kent, Bryn Mawr, Auburn, etc. in the south.
My wife and I bought a house in Leschi in 1986. We got an unsolicited offer to sell it in 1999, which we accepted. We moved south to the Renton area and were able to pay cash for the house, no mortgage. People have made money by owning houses in the past. Maybe they will again in the future. But I completely agree that houses in places like Sammamish and Kirkland and Ravenna and Ballard seem too expensive compared to the rents for very similar houses. And some people do pay attention to historical median home price to median rent ratios. It all depends why you want to buy a home. I would not buy a home in one of these more desirable areas if I were thinking of it as a financial investment. If it made me happy to own a home, and I were planning on living there for years, then that's a different story. And if I could be happy in Mountlake Terrace or Lakeridge or Kent, it would be far less than a 15 year payback time. Plus there is a tax benefit for homeowners, something to consider.

[mkarch]

From purely an investment standpoint, you're probably correct on the vast majority of single family homes that have been on the market lately. It also seems that we're in a period where owners of SFH rentals (in my part of North Seattle) are deciding it's time to sell. Most of the lower priced houses I've seen sell in the past year appear to be primary residences or flips. I have to admit these two trends show some eerie parallels with the 2003-2007 time period, though I don't think the disparity in price to income or price to rent is anywhere near as out of balance as it was back then.

However, my own experience is that at certain price points the difference between renting and buying isn't enough to swing towards renting if you plan on living there for the foreseeable future. Even in Ballard, if you're looking to spend $2000-$2500/month in rent, you can get a lot of the same value buying a home with a similar monthly outlay.

The exact house you buy might not be ideally suited as rental revenue generator, but let's face it the same qualities that make a rental worth more aren't necessarily what people prefer to live in long term (IE more bedrooms and parking over family living space)

[civic94]

Originally Posted by jm31828

I We bought in 2010 in Lynnwood- brand new construction 1300 square foot house with 3 bed/2.5 bath, two car garage, for $236K. You couldn't really rent anything like that for what we pay in monthly mortgage payments (or it would be about the same), so in our case we are coming out ahead. And prices are only going up, so there is no better deal to be found than what you could get now.

well im pretty sure you guys came up with a down payment and there is probably a small HOA fee in the new communities, and when come selling time, you guys have to hire an agent. at 1300 sq ft and a single house, i would imagine the rent would be around 1300 to 1500 a month if you rented the place, it just depends which part of lynnwood you are in, but for the most part its around a dollar $1/ sq ft.

on the other hand, i can see that buying a brand new home, you wont have to worry about anything for at least a decade, as the roof, plumbing, water heater, and everything is new. I would say the break even point there might not be 15 years, but its still a few years. all i have to say is when you sell the place and the fees are paid, thats when you know if its worth it or not . whatever values on zillow means nothing, the house is worth what someone is willing to pay for it.


I do agree that living in the burbs might make more sense, in this case, everett has boeing. the thing is, if a person looses a job there, and can only find a job in federal way, then they are screwed in their commute, whereas someone living close to the Seattle area can adjust.

[headfact]

If you had a bought a 500k average home in Seattle when you first posted this two years ago.. Your house would now be worth close to $700k without doing any renovations. True fact, so hopefully next time your gut tells you jump on opportunity, realize people in other markets don't see what you see. Our area is growing fast and I don't think it will stop any time soon Buy if you can asap!