Author Topic: Seattle/King County housing market - UGH  (Read 366 times)

ReP

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Seattle/King County housing market - UGH
« on: February 11, 2018, 03:14:41 PM »
First let me say SORRY I know rent or buy is SUCH A tired topic and there are LOTS of resources that have been posted about this. I think I have a fairly good handle on the collective "maths" around renting vs owning.

BUT - living in Seattle/King County/Tech Boom Land is just really throwing us, because we don't have any plans to live anywhere else... at least prior to retirement. We could do our jobs else where but our community here holds intangible value for us...at least for now.

We're currently renting far below what we'd pay for a mortgage, living 3 miles from work and trying to use cars as little as possible (we do have 2 though). Living off one income...but maximizing all possible tax shelters. Value of having one parent at home while kid is young = intangible value #2 (for our family anyways). I have the potential to make around $80k NET in a stressful social services field which haunts me. We don't have enough cash for a 20% down payment bc we've been paying shit off so if we bought, we'd be stuck with PMI (I know we can finance out of it). We are trying to live mindfully, intentionally and as a result have a decent amount of leftover cash and have been putting that towards paying down school loans. We ask our landlords ~1x/year if they are willing to enter a rent-to-own or lease-option agreement. So far nada. I guess we're too good of tenants ;-)>

Other than that, I guess we're just in an uncomfortable phase. Hoping the inventory crisis will improve and keeping our eye out on new construction as it seems like a better value right now. So for now the question (for those of you that have been annoyed I haven't stated it yet!) that is hard to do the math on in this particular market is whether we should keep paying down debt - b/c we don't have any debt above 1.9% - versus saving to get ourselves into a goddamn house. I've seen many Mustachians on this board say they were very happy to get into something and fix their housing price in this type of area.

Thanks all - sorry no hard numbers for a case study, bc this particular issue feels more philosophical. Feel free to tell me I'm wrong!


uwp

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Re: Seattle/King County housing market - UGH
« Reply #1 on: February 12, 2018, 05:40:17 PM »
Fellow Seattleite here, and I hear you about the housing market.  It's insane. 

As to your central question, I think the majority of posters here would suggest investing before paying off 1.9% debt, but there will be die-hards who will tell you to pay off all debts.  If you're starting from scratch, saving up for downpayment in Seattle is a long term proposition, so I think investing (and hopefully earning +5%) makes more sense than paying down 1.9% interest.  Of course, depending on how much stretching you are doing on a mortgage payment, getting rid of the monthly payments on that debt would help your DTI ratio when applying for a loan, so it might make sense to pay it off before the purchase anyway.

Inventory will come back someday, that should ease some of the frenzy, and hopefully it will be when you're ready to buy.

SeattleCPA

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Re: Seattle/King County housing market - UGH
« Reply #2 on: February 15, 2018, 08:58:59 PM »
I don't have much worthwhile to add to your decision making, but one small thought from a fellow Kingcountian (new word but lets start using it and see if it catches on... I'm serious...)

One of the things you're paying for in King County is access to high paying jobs in the tech industry... and then access to nearly high paying jobs in the businesses that serve the tech industry, and then nearly nearly high paying jobs that serve the businesses serving the businesses that serve the tech industry... etc.

Given this, we can't compare the houses we look at or own or think about owning to the houses that seem to look identical that are 500 or 1000 or 2000 miles away. If you can make $1000 more a month here, that pays for $200K more house.

Bottomline: Housing prices are insane here... until you realize they buy proximity to tens of thousands of insanely well-paying jobs and just generally well-paying jobs. And then it all sort of makes sense. Kind of.
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Rich on Money

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Re: Seattle/King County housing market - UGH
« Reply #3 on: February 16, 2018, 02:21:57 AM »
I'm a real estate investor.  My advice is keep renting where you are.  You don't buy your house unless it would be a good investment.  Buying in a HCOL area is almost never a good investment.  If you need to move away and rent it out, it will make a dismal return.  Even if you live in it long term, I'm not convinced the appreciation makes it worth it.  As you pointed out, you are saving money renting instead of buying.  By the way, there are lots of expenses on top of your mortgage expense.  Taxes, insurance, HOA, repairs, capital expenditures, to name a few.   

Don't pay that low debt off, invest the money somewhere else.  Personally I would rent where you live, and buy a house in a market where cash flow is better (not a HCOL area).  You could invest with partners in a different state, or in multi-family real estate through a syndication deal, or just invest in index funds and stay out of real estate.

uwp

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Re: Seattle/King County housing market - UGH
« Reply #4 on: February 16, 2018, 12:33:17 PM »
I would somewhat echo Rich on Money.  If you have a good deal on renting, that would push me away from buying.  There aren't many good deals on rentals these days.

That is what I find as one of the biggest differences between the 2006 housing bubble in Seattle vs now.  We rented a 4br/2ba house in Ballard in 2006 for $2,000/month, at the time the owner was trying to sell it for 600-650k.  Even with 20% down, the landlord would still be paying around $3,500/month (6% interest rates back then!).  The market has changed enough now that $2,000/month in rent is a lot more comparable to what $2,000/month in PITI gets you.

It's not a market where you are going to be investing in rentals, but it doesn't scream "don't buy a house to live in."  If you're here, you gotta live somewhere.

fixie

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Re: Seattle/King County housing market - UGH
« Reply #5 on: February 16, 2018, 05:16:47 PM »
Yes, well 1k people move here everyday to join us Kingcountians, making all those nice things about living here less so all the time.  Based on the description of your situation, I'd stay where you are, invest, pay down debts...  You are close to work and in a good spot you may not need 2 cars, who knows?  Seattle is getting better in that area as long as you don't have to leave your neighborhood...  If you are here for the long haul just keep saving/investing as though you were building your down-payment... 

Ask yourself how important it is to own a house?  Are you willing/able to do all the work that goes with it?  Yard work/maintenance, fixing crap that breaks(even in a new home), spiffing up the place etc? 

The only way I got in was to buy a turd in 2010 and polish it the last 8 years.  Now I really just want all that work to be done and live a little.  No way could I buy a house these days!  Crawling through the attic on your belly wearing a tyvek suit and respirator?  Cleaning 6 tons of the former occupants' belongings out yourself, including a 1/2 gallon of milk put into a freezer in 1980?(yep, that was me)  How about a urine stalactite in the basement from where the dog peed in the living room?  Awesome, this house ownership thing!  And now, a 17% increase in property taxes!

Best of luck to you...

-fixie