Author Topic: Seattle home owners and FIRE plans  (Read 3973 times)

Frugal D

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Seattle home owners and FIRE plans
« on: August 11, 2016, 10:57:52 AM »
This probably could have gone in a couple different threads, but just wanted to generally get a sense of how Seattle home owners are adjusting, if at all, their FIRE plans based on our market's appreciation.

If you bought between 2011-2014, your levered investment is up anywhere from 40-60% which, for this community, could easily equal enough to FIRE or at least now be very close.

The problem, of course, is that you still have to live somewhere and that means moving well outside of Seattle to cash in on your equity. And if you have kids in schools you like you probably don't want to move them.

Anyway, just curious about how people are thinking about it and if it has at all changed your FIRE plans.

Landlady

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Re: Seattle home owners and FIRE plans
« Reply #1 on: August 11, 2016, 11:58:50 AM »
Hey Frugal D
I think about this a lot! I have two rental homes in Seattle. Until 3 months ago I lived in one side of the duplex that I bought in 2013. I haven't cashed out on the great market appreciation, but I did decide to move to a cheaper location, yet keep my investments in Seattle to hopefully continue appreciating and bring me rental income. But my kid is young and not in school yet, so this was easier for us.
But it sounds like you would like to cash in, but not move. I believe your options are to do a HELOC or use your appreciation as leverage to invest in real estate in another market or in an investment property. You could also use that appreciation to add value to your home with renovations, but that's silly since you won't see that money come back to you unless you sell.
We decided to follow the fiber internet trail to find a place to invest/live in outside of Seattle. We figured once a community got fiber internet then the techies with remote possibilities or second homes would follow. Thus, we're living in a place where hopefully we will see better than average appreciation, but for now it's cheap.

uwp

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Re: Seattle home owners and FIRE plans
« Reply #2 on: August 11, 2016, 04:05:02 PM »
That's an interesting idea Landlady.  I'm also a Seattle home-owner, where did you go to "follow the fiber?"

Vilgan

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Re: Seattle home owners and FIRE plans
« Reply #3 on: August 12, 2016, 12:15:50 AM »
Originally when our house started appreciating significantly in Seattle we were thinking of cashing out and moving out to the burbs once it hit a certain point. However, the burbs have been appreciating significantly as well! For a brief period we considered moving further away from Seattle but the longer we live here the more we love it and the more friends we make in the area. At this point, I think we would both happily work an extra year or two in order to stay in Seattle. We love our current neighborhood (Columbia City) with fabulous views, the lake, light rail, the library, and tons of great restaurants all nearby. At this point we don't need to be as close to downtown but we haven't had any luck finding a great walkable neighborhood in the suburbs that is as appealing as our current location.

Landlady

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Re: Seattle home owners and FIRE plans
« Reply #4 on: August 12, 2016, 11:13:31 AM »
That's an interesting idea Landlady.  I'm also a Seattle home-owner, where did you go to "follow the fiber?"

We moved to a small town outside of Leavenworth called Plain. There are maps online you can use to see which small communities have fiber internet grants.

hollyluja

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Re: Seattle home owners and FIRE plans
« Reply #5 on: August 12, 2016, 02:52:24 PM »
Portland here!  I don't have an answer, but I'm following this thread!  We bought a tiny, ugly house in a very walkable neighborhood in 2013 and it's appreciated something like 40%.... it's so crazy.

I grew up in a tiny town (7K people) and I hated not having an orchestra to play my violin in, or a chess club, or any advanced classes available.  My husband and I also love to tango (very mustachean hobby as you can work the door for admission!) and it's pretty much a city thing.

So we're feeling stuck and depressed about the situation.  My friends are cashing out and either leaving the area, or trading up and taking on huge mortgages.  Just like Buffett, I'm fearful when others are greedy.  I wish there was a way to opt out. 

At this point, we've decided to keep the tiny house (PITI 10% of our income) until we hit FIRE stash numbers (~5 yrs), and then decide.  My husband jokes that President Trump will have crashed the economy by then, and we can scoop up a giant house for nothing.

waltworks

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Re: Seattle home owners and FIRE plans
« Reply #6 on: August 13, 2016, 09:15:08 AM »
Just curious (I have never been to Seattle) - what are rents like? If your house is worth $700k or whatever, and you could rent one for $2000 a month or whatever, maybe it's just time to cash out and *not* move away?

-W

Roland of Gilead

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Re: Seattle home owners and FIRE plans
« Reply #7 on: August 13, 2016, 09:45:12 AM »
That's an interesting idea Landlady.  I'm also a Seattle home-owner, where did you go to "follow the fiber?"

We moved to a small town outside of Leavenworth called Plain. There are maps online you can use to see which small communities have fiber internet grants.

We rode snowmobiles in that area for quite a few years.  Plain had the closest hotel to the sno park.  Nice little tiny town.

undercover

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Re: Seattle home owners and FIRE plans
« Reply #8 on: August 13, 2016, 08:49:31 PM »
We decided to follow the fiber internet trail to find a place to invest/live in outside of Seattle. We figured once a community got fiber internet then the techies with remote possibilities or second homes would follow. Thus, we're living in a place where hopefully we will see better than average appreciation, but for now it's cheap.

That's quite the speculative play. Looks like a beautiful place to live though!

Vilgan

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Re: Seattle home owners and FIRE plans
« Reply #9 on: August 14, 2016, 02:16:33 AM »
Just curious (I have never been to Seattle) - what are rents like? If your house is worth $700k or whatever, and you could rent one for $2000 a month or whatever, maybe it's just time to cash out and *not* move away?

-W

Rents are increasing along with property values and are generally appropriate for housing values. A 1 bedroom apartment seems to run around 2k and a 2 bedroom around 2.8k. No one really rents the homes that sell for 700k because rent ends up being so high that people that can afford it would rather have a much lower mortgage payment. I've read about places like Toronto where rent is way out of proportion, but haven't seen that sort of thing in Seattle at all. The high cost seems to be heavily driven by demand for people who are moving here for good jobs rather than speculation/investment.

I think cashing out and then continuing to live here would be a poor financial decision. What's the planned upside? Companies are constantly opening up new Seattle operations or expanding existing Seattle operations. Rent has roughly doubled in the past 5 years according to https://www.rentjungle.com/average-rent-in-seattle-rent-trends/ and jobs continue to become available faster than the housing market can cope with. It seems likely that the growth will slow sometime soon as the current rate is unsustainable, but even a slower rate (5% a year instead of 11%?) would still result in increasing housing costs for someone who doesn't own their own home.

CoffeeToaster

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Re: Seattle home owners and FIRE plans
« Reply #10 on: November 10, 2016, 03:05:36 PM »
I'm expecting we'll retire somewhere besides Seattle due to the high cost of living. One thing we're trying to work on is having a rental property that we could theoretically turn into a short term rental (waiting to see how the legislation works out in the coming years) because then we could "visit" Seattle whenever we wanted with a place to stay.

Seattle Carter

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Re: Seattle home owners and FIRE plans
« Reply #11 on: November 10, 2016, 03:25:09 PM »
FrugalD, I'm in the exact same position. My two kids are young enough (5 & 6) that I'm not worried about moving them, but I'm not clear on where we might move to. I've been researching towns and small cities in the Puget Sound area, but it's hard to know what it would be like to live there with only online research. Some places that looked interesting:
  • Maple Valley
  • Snohomish
  • Issaqua
  • Newcastle
  • Lake Forest Park

clarkfan1979

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Re: Seattle home owners and FIRE plans
« Reply #12 on: November 13, 2016, 11:14:29 PM »
Remember the goal is happiness. Would you be happy moving away from Seattle?

I have found myself in similar conversations with homeowners in Denver. Their house that they bought for 250K in 2009 is now worth 500K. They like to brag about the equity and being rich. However, you can't really do anything with the equity unless you want to move far away or refi and use the money for some other investment. None of them want to do that, so I just smile and nod.

cheddarpie

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Re: Seattle home owners and FIRE plans
« Reply #13 on: November 30, 2016, 08:40:35 AM »
Posting mostly to follow.

I own my home and at times I'm tempted to cash out, but for now I don't want to leave Seattle and don't know where else I would go. I bought in 2012 so my appreciation is at about 80%. Insanity.

Seattle Carter

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Re: Seattle home owners and FIRE plans
« Reply #14 on: September 25, 2017, 09:42:43 PM »
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