Affording a Home (Seattle, Everett, Rainier: real estate market, apartment, foreclosure)

[Jordan475]

This may sound like a ridiculous question, but how can anyone in Seattle possibly afford a home? With a median price at 500,000 dollars, you need 100,000 dollars saved up just to get a down payment. Who on earth has this kind of money? I'm 23, in law school currently, and will hopefully be making a decent salary in two years. I am, however, going to be in fairly significant debt. I try to live as far below my means as I possibly can, no car, take public transportation, eat basically cream of chicken soup. And still, the idea of home ownership seems completely out of reach to me. Maybe I'm just naive and young, but at what point in life are people actually able to buy around here? Personally, I don't see it as possible til I'm at least 35.

[Embraer]

Housing isn't as bad as it seems. Your best bet would be to rent the first few years until you have a better salary going for you. That is my plan.

Check craig's list for some great deals on home and apartment/condo rentals.

[Ultrarunner]

I was 23 when I bought my first home and I did put down 20% from money I had saved working nights and weekends through High School and College. I saved a lot on college expenses by staying local.

Back then my house cost $65,000 and I put down $13,000. The first 18 months were harder than I would have ever thought. Twice, each year, it was always a scramble to come up with the money to pay the property Tax and never wanting to open the envelope to see how much higher the taxes had gone up over the previous year. Thankfully, with a roommate paying $200 a month and splitting the utilities, I got through it.

The roommate thing worked great financially, but it still did not feel like my house. A couple of years later, I bought a duplex with my equity. Living in the small unit and renting out the house part did wonders for my cash flow and I no longer had to share "My Space" It also gave me lots of tax advantages being able to write off expenses and depreciate 70% of my cost against my Federal Income Tax. (The Tax guy divided the space I occupied vs. the rented space based on the square footage of each unit)

It can be done. The questions is how much are you willing to sacrifice. For me, having a 3 year, 5year and 10 year goals brought everything into prospective.

Good Luck... I'm sure you will look back in few years and say, "Remember when you could get a decent home for only 500K."

[magrack]

Originally Posted by Jordan475

This may sound like a ridiculous question, but how can anyone in Seattle possibly afford a home? ....

Bottom line is, many can't.

According to Puget Sound Business Journal (http://sanantonio.bizjournals.com/seattle/stories/2007/04/09/daily20.html - broken link) the average wage in King County is $1,043 per week, or a little over 52K a year. That's an average; half the people make less than that

If you use the basic formula of 30% of gross for housing (including PITI), that's about $1300 per month.

You do the math.

Easily 250,000 people out of the half a million there can't afford to buy an "average" home.

[secret_squirrel]

I don't live in Seattle; partly because I can't afford it, partly because what I can afford in Seattle isn't worth the value of living in a city with narrow, crowded, potholed streets, questionable schools, wacky leadership and high taxes. So we live in the suburbs.

I have friends who were college educated professionals, but they moved to Boise because they wanted to be able to buy a house and have a baby someday. Some people move to the inner-city neighborhoods. In South Park, Rainier Beach, Beacon Hill, and West Seattle, "bargains" under 400k can be found if you are willing to put up all that comes with those areas.

Lots of others move to outlying areas. I bought my first house with a 3% down FHA loan when I was 20 and the seller paid closing costs. It was in Everett, 3 bed/1 bath/1200sf but it has charm and gave me a place to start. Unless you have unlimited cash, real estate is about compromise.

Condos are a good place to start for young single people. It's become nearly impossible to buy a home on just one average income. And it's not just Seattle - I saw a real esate show on TLC profiling two friends in Edinburgh who were buing a condo together because they couldn't afford anything separately.

[wythors]

My nephew and his wife-to-be decided that they couldn't afford to live in Seattle with their $150k+ salary and ended up buying a remodelled townhome in Portland for $225,000.

[jwb123]

Housing isn't as bad as it seems.

How do you know? You don't even live there.

It actually IS as bad as it seems. We, on a $120-140K+ salary were priced out of the market - as we didn't want to go any further away from Seattle than we already were.

I think it was Wythors who posted the Seattle PI recent article about the lack of affordable living in Seattle... I think that thread is gone, but I am sure the article could be googled.

I think that people WERE buying into these huge mortgages with very little down... and that's how they were affording it. However, as we all have heard, that mortgage market is going away now due to the high foreclosure rate.

[scirocco22]

However, as we all have heard, that mortgage market is going away now due to the high foreclosure rate.

huh? Explain, please.


--'rocco

[jwb123]

The subprime, Zero down, mortagage it all, if you are breathing you have a loan, market.

[Ultrarunner]

I think Secret has it right... real estate is about compromise.

If no one could afford to buy, the inventory of available homes would continue to rise until owners with no other choice would lower their price or simply walk-away.

30 year mortgages and such are really the product of the post world war II GI Bill and FHA. Prior to that, most mortgages were 10 years or less and 25% downpayments the norm.

I think it is still a fact that more people and a greater percentage of people own homes today than any other time in US History.

Owning a home is NOT for everyone and many people live quite well renting.

At least we live in country where we do have choices.

I've been through 3 cycles of the Real Estate Market. Without fail, I always here people say remember when you could buy a house for "X" dollars. My parents said $25,000, my Grandparents said $10,000 and my Godfather paid $2,900 cash for a 2 year old home in 1931.

Real Estate is about compromise... just remember they are not making "New" Real Estate anymore.