I'm a WS resident for about 7 years as a renter. I'm considering buying a home in the near term (next 1-4 months). A house or a townhome (not a condo). I've already been pre-approved for a loan and have a Realtor lined up I'm beginning to work with.
Does anyone have any thoughts on the market in general in WS (obviously, I'm looking for personal opinions, so don't hold back!)?
Any pitfalls to look out for? Any general areas to consider or not consider? Thanks!
transplantella
Member Profile
Seattle Bubble is a great resource.
WS is still volatile in the sub 400K .... it's all about income and education levels. WS in my humble opinion has a good 10 to 15 % yet to fall. Balance that against the 3.87 interest rates and probably a 5-7 year baseline recovery. Education levels are the best indicator of a specific geographic area. Very good private school base helps too. Depends on how long ya want to hold the property...If you are in it for 7-15 years... there are "good" deals. Stay far away from "mixed" planned communities with tiered income spreads. High Point is overpriced.
I'm not so sure "it's all about income and education levels." I'd say it's more about supply, demand, and the cost of renting vs. buying.
I would agree with Kootch about the timeframe. If you plan to stay 5-plus years, you'll probably be better off buying, expecially if you qualify for a loan at less than 4.5%. Less than 5 years you're probably better off renting. The costs of selling a house are very high so you want to make sure you can recoup your investment.
As for the mixed income properties, I've been very happy living in High Point, and a lot of my neighbors have been as well. It's been a lousy investment for those of us who bought at the peak, but I don't really view housing as an investment. I prefer to just find a place that I like to live.
I'd think twice about Arbor Heights. No sidewalks, no amenities nearby (none within comfortable walking distance). Bus service is already poor, and will become practically non-existent come September. Lots of rentals and car-ranchers. It's not all bad, but I don't think I'd buy here if I had it to do again.
On the plus side, there are some good deals to be had. The neighborhood is architecturally diverse, so you can find anything from a 1940's cottage to a hideous mega-box. Lots of choices in that sense.
dhg
Member Profile
I would say you might want to get to know the neighborhoods and choose that first. You can always change elements of the house but not the location. This is a really great time to buy. You have the luxury of time as I don't think prices will not be shooting up in the near future.
Don't know what your price range is, but if it's on the lower side, be prepared to tromp through a lot of houses. We looked for maybe 4-6 months before finding our house this Fall. Also, be prepared to be astonished at what people will DO to houses: add-ons here, illegal basements there, and ugly cabinets pretty much everywhere! That being said, persistence paid, (as did having a kick-ass realtor) and we found a decent (not perfect, but workable) place in a comfortable neighborhood near amenities.
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Also, when you are looking at something in a particular neighborhood, check SPD's crime statistics on their website. You want to know if that place on the corner is a known drug house. (For whatever reason...ahem.)
I love, love, love West Seattle. I am a native here, and bought a great house 21 years ago. I raised my children, and have a business here also. My first home I bought was a darling dollhouse. But wanting a large family, we had to move. I swear we spent almost a year looking at everything on the market. One day we stopped a a garage sale, and the folks said, hey the house is for sale too. It wasn't our dream house, but workable. The best part, was a handshake deal, he held the paper for 7 years we refinanced and bought him out. It was a "sweet" deal for us. It landed us west of 35th near admiral!! So look for thinks on your own too, one never knows what you might find! good luck!
I'm a renter also with no immediate plans of buying anything (because I can rent a far better place than I can afford to buy). But I'd be hesitant to buy now (even if I wanted to) only because I don't know what's going to happen once the viaduct comes down in terms of commuting to downtown. As much as I love it here, I also love that I can pick up and move if that becomes too much of a burden.
I bought my home in Arbor Heights at the end of August last year. I was looking for something residential and a bit less on the crime radar. After reviewing some information that can be found on the internet, I decided this location suited me.
Living in Arbor Heights gives me the opportunity to live residential while still being within easy travel distance (minutes) of the Junction, Alki and Downtown. Lincoln and Fauntleroy Parks are very close and so is Westwood Village. Burien, Tukwila are also close by.
The cost of my home was really very modest mostly because of the repairs/remodeling that needs to be done. It is an early 1940’s house that the previous owner decided not to update. The house has good bones, so I am not forced into fixing it quickly.
Fortunately I live where there are sidewalks unlike “anonyme”. I do agree that if you take the bus everywhere, you might have to make some adjustments. I drive so again, not an issue. For those who bike, it would work too.
Arbor Heights is like most of WS. We have areas of expensive homes and others areas that need work. This just seems to be the way of it here. Maybe that is the real charm of living in WS.
I think it is important to keep in mind that all of us that are offering opinions come from a variety of backgrounds and we all have different expectations of what is acceptable when it comes to living conditions. Your best bet is to get out and walk the neighborhoods. Talk to the people who live there.
“The Velvet Bulldog’s” advice about using the SPD’s crime statistics is a great idea.
Best of luck to you!
dyn99
Member Profile
To echo previous posts, buying is a decision to make when you're planning on staying for a MINIMUM of 5 years. I think you need to be willing to stay for 10 if need be, in case economic conditions dictate that.
In the short term, the lower-end of WS real estate may underperform other areas of the city that are similarly located in proximity to downtown due to the viaduct traffic mess. I would guess by the time things are done, that will recover back to normal.
When we moved here, my drive to Fremont rarely exceeded 25 minutes during peak commuting time. Now, it can easily be 45. That will dissuade some people from moving to WS.
However, from an affordability perspective, from 1993-2003, median housing prices averaged 4-5x the median family income in King County. Currently they are close to 5x median family income, but from 1993-2003, 30 year fixed mortgage rates fluctuated between 6 and 9%.
With current rates in the 3.75 - 4.5% range, the mortgage payment on that median home is going to be 20%-40% lower than it would have been 15-20 years ago, relative to median income.
Although prices may not be increasing rapidly anytime soon, any time you can buy an asset for 20-40% less (on a monthly payment basis) than it historically costs, you're making a good purchase.
So if you're ready to stay in the place for 5-10 years, then it's a great time to buy.
We love Highland Park- we have an amazing group of neighbors, a lot of people moving into the area, and a very active and fun community group. (highland park action committee- hpac, and highland park improvement club: hpic1919.org) we have seen the neighborhood change a lot for the better in just the past 6 years. Chief Sealth High School is now considered better than West Seattle High and has the second longest wait list in the city- westcrest park is being redesigned, a spraypark's going in at highland park park, and riverview has a great play area and fields. It's just up the hill from highways to anywhere.the 16th and holden intersection is finally getting some businesses in there. housing stock is mixed, like all of west seattle- we've seen some cheap ones out there, like under $150k... a typical real estate agent might not look this way because they wouldn't make as much off of you. it's been a really supportive, fun, and easy neighborhood for our young family- and we're seeing more and more young families and couples buying here- and people that make the time to be informed and care about their neighbors and their community.
thee
Member Profile
When I was looking in WS about a dozen years ago, my realator --the late JB Webster -- gave me some great advice: Don't buy in West Seattle unless you have a view. He was not wrong.
Well, you can pay an extra $100,000+ for a kitchen-window view that goes off as soon as the sun goes down anyway, or you can roll that $100,000 into a better house.
Whenever I find myself craving a view, I just stroll down the street a few blocks and sit on a park bench. At our wonderful public parks, there are plenty of million-dollar views to be had for free.
What was true 12 years ago.. may not be now. I am one block out of the commercial zone.... as soon as congestion pressures force a re-zone, it's up for sale. View and all. It's worth more with 20 units on it than 1. The neighbor has agreed to roll in his too. There is no way historical prices have a thing to do with prices in the future. Sorry to burst a few bubbles. It has to do with total affordability, INCLUDING cost of living, taxes ... in fact, many housing markets declined in value long before the "bubble". I can show you properties all over this country with valuations less than 250K... with tax burdens that make them unsellable. Why I can show you a cute, 2 bedroom, 2 bath, 3/4 acre, on the shoreline of Lake Ontario..with a mini-barn, workshop, boathouse.... fully landscaped with pool.... the taxes are $1350 a month! Add state income taxes, sales taxes, regional transportation taxes.. It's all about affordability. There is a reason for all these post-Stalin edifices going up all over West Seattle... you are being gentrified. The city would rather see you stacked 8 stories high, 8 families to a floor...and having you pay $2100 a month in rent for a three bedroom. .. taxes.
I actually just decided to buy in West Seattle (signed papers today!). I have rented in Northgate for nearly 5 years in the same unit (originally with a commute downtown). The neighborhood has gone down hill and as home prices get lower my complex is attracting international NSCC and City U students and all of the young professionals who were respectful neighbors have long since left. Frustrations added up, new tenants that smoke in unit and smell up the halls, new tenant downstairs that cooks awful smelling food that wafts up the drains/fan ducts, loud music on week nights, parking neighbors denting my car, rent increases, etc etc I've had enough. I also got a new job down at Boeing Field last year and the commute is only getting worse from the north end due to all the construction. Many of my colleagues live in West Seattle and I've always loved my visits. Believe it or not, you guys have one of the closest bowling alleys to Northgate that's in city limits and certainly the nicest! I know for the future of my career, unless I go to Everett, it will be a decent commute.
I looked at several townhouses and condos in the area but my price range contained lots of short sales and foreclosures. Both have their drawbacks, do your research on the process. (Pictures are deceiving if looking online at Zillow!) Many were down near Roxbury which as a young single woman I was not comfortable with. (One home had the ground level windows tagged!) I ultimately decided on High Point and I'm excited about the community. It was in my entry level price range and I'm getting something brand new that won't require maintenance. Since I'm in my late 20s, life could be completely different in the next 5 years (married? kids? job transfer?) but I'm not going to worry about that now. What I know is that I'm comfortable with the payment, it's only a few hundred more than my rent and much less than the brand new units in the Alaska Junction. If life really changes that much, I do have the option of taking a roommate or potentially renting. The rates and prices are really good right now. If you have the financial means and a good downpayment, you can pay less per month. Probably not an investment, but a great time to lock in a rock bottom rate on a 30-year fixed. Find an agent willing to work with you, your price range, and help you see what all of the options are!
dyn99
Member Profile
Kootch - affordability is one factor. However, if it was the only factor, the market would have already bottomed - like 2 years ago:
http://seattlebubble.com/blog/2012/02/09/reader-rant-seattle-home-prices-still-make-no-sense/
Supply and demand have much more to do with prices than affordability do. Currently, there is an excess supply of the "median" home, and low demand.
However, if prices trend downward below historical averages, investors will swoop in and buy up undervalued property. They can already do well on purchasing quality rentals for a fraction of their price a few years back, and they create positive cash flows.
Don't discount history. The best predictor of what people will do in any given situation is what they did in the past in a similar situation.
Housing in Seattle may eventually grow in price beyond historical averages, due to lack of land supply or other macroeconomic factors, but for the time being, as a whole, you can pretty much count on them being in the same range as they were pre-bubble.
If people had used this metric over the last 10 years, they would have stopped buying in 2004 and started buying in 2011. And they would have been a whole lot better for it.
redblack
Member Profile
in my opinion, it's a matter of perspective.
the bottom line is whether you want a home to live in, or just some investment that you don't want to lose your a$$ on.[sic]
on the first count, west seattle is a great place to call home.
on the second count, as others have said, buying property for investment isn't such a good idea right now. here or anywhere else in seattle.
the even more bottomer[sic] line is that you have to follow your heart. if you want a home - and especially if you find one that's perfect for you - you will find the means to make it happen.
and you will find a way to deal with the commute. all around the world, people do it every day.
I don't care how much "demand: there is for housing, if you can't afford it, you aren't moving in See how much demand there was when FHA gutted loan standards? The zero down, 100 per cent book to value loans.... the classic bubble. Unless I missed my eco 101 class.... that which is subsidized increases... since loan standards are now higher, and the inventory is high..with most home loans being secured by the value of the property..banks won't take the risk.. house prices will continue to fall. Numerous wailings on this very blog about not being able to re-fi ..or qualify to re-fi. As most middle class folks relied on equity appreciation for at least part of their retirement...anyone over 50 will never see the same standard of living. Supply and demand are the measure of affordability. See all the rentals going up in the air? The vultures are feasting ... look at applications for new permits... rental apartments. Take a look at your escrow account for taxes... the banks absolutely count that in determining your risk. If you are plopping 500 a month in escrow for taxes... believe me... it counts. Every MMSI has a formula for calculating your loan potential. The more revenue the city gets per square foot the more they delight in it. Anyone else notice the year after appraisal appreciations? Anyone get their property they purchased in the last 10 years "depreciated" for taxes?
And don't forget the "tax shelter" of deducting mortgage expense which you don't get as a renter All front loaded for the young start out family..., and there is no capital gains on the sale of a primary residence as it increases in value..all things to go bye bye to close that looming 7 trillion more in acquired debt... you young passionate democrats...watch Seinfeld reruns....
"Supply and demand have much more to do with prices than affordability do." ..... hard to believe that was actually posted....
I just purchased in the Westwood area in September. Love my house, my neighbors... it has been a great decision for me so far.
Other than maintenance expenses, which have been very little so far, my monthly living costs are only slightly higher than when I was renting. In fact, the rental market is strong enough that I could probably rent my house for more than my total cost.
It may not appreciate in 5 years, it may even depreciate... but my plan is to keep it as an investment for the long-term. At least I'm throwing money at something that'll I'll eventually own outright, instead of a landlord. Maybe in 30 years, I'll get something out of it.
Well, maybe. Thirty years is a long tome to be paying interest expense. I never added it up... I am too afraid to see how much my investment really "cost" me. The landlord gets to depreciate the building.....I think for 27.5 years. At these interest rates.... 20 or 15 year loans .... you'll save many many thousands.
Well, maybe. Thirty years is a long tome to be paying interest expense. I never added it up... I am too afraid to see how much my investment really "cost" me. The landlord gets to depreciate the building.....I think for 27.5 years. At these interest rates.... 20 or 15 year loans .... you'll save many many thousands.
alki_2008
Member Profile
@kootchman...what did you mean by this "there is no capital gains on the sale of a primary residence as it increases in value"
Is there a new law that I wasn't aware of?
This works if the owner lived in the house for 2 of the past 5 years, but otherwise...capital gains are taxed. No?
dyn99
Member Profile
Alki_2008, I don't think Kootchman really likes logic or numbers, so I wouldn't put much faith in his/her "details".
Anyone that thinks you should not consider historic values when discussing asset prices clearly failed Econ 101.
Housing is plenty affordable in this city, based on current incomes and current interest rates. Historically, over 50% of Seattleites rented homes. Typically renters are in the lower portion of the income distribution bracket - not always, but typically. Therefore the "median" family income is typically buying below the median price (or should be).
Median family income is about $66k, and median price is about $320k in King County. At today's rates, with 20% down, that means that person is spending about $1220/month on their mortgage payment, excluding taxes and insurance. That is about 22% of gross income, and after taxes/insurance (which vary), should still be well under 30% of gross income. That is affordable, especially when you consider historical standards.
And you're right on the capital gains taxation, but there is also some limitation on the gain - like $250k or so (don't quote me on exactly what it is).
I know... I mean what the heck I've only purchased a dozen or so homes .. after you deduct expenses for stuff like landscaping, improvements etc... the capital gains for the average homeowner is nill. Historic values over what term? I can pull the five years after the "turn out the lights Boeing Bust" you can use those numbers or I can pull the last 10 years...and cry even more. All these underwater homes were "affordable" too.. didn't mean they were a good deal did it? Wanna buy a home on Euclid Ave in Cleveland,,once the home of ole JD Rockefeller himself? Just tear off the condemned signs and move right in! quote from wiki "By the 1920s, the former "Millionaire's Row" was in decline. During the Great Depression, many mansions were converted by their owners into rooming houses, which accelerated the decline. In the 1950s," Given that logic... dump every cent you have into the market and follow a DJI index fund... the annualized return sure beats the hell out of real estate. over the last 50.. . Spoken like a true realtor. I defy you to show me an increasing market valuation when unemployment is above 8%.... 25% of the total home loans outstanding are underwater... I follow the same trends you do...and "affordable" doesn't mean a good investment does it? we are not at the bottom of the market yet. Hey.... a home in Newark NJ is affordable today at $5,500...and sold for 120K 35 years ago. jeesh... I'll buy a few months later in a rising market before years early in a down market. And my point was... since rate are so low....take any chance you get to pay off in 15 or 20...this is an unparalled time to build equity quickly... it's 3.88 money...use it. It's a far better position to be in when ya see the banker when half your mortgage is paid off...and then you want to convert it to a rental AND buy up. There are some good deals out there... use the low interest rates to build equity.... equity is money in da bank! Debt is debt... affordable or not. In point of fact most economists point to the 30 year mortgage as a part of the bubble...it allowed builders and sellers to inflate housing prices because it was "affordable".. it's like the 72 month car loan....the pretty shiny "beemer" is "affordable"...over 7 years. Meaning you can make the payments. I may be wrong, actuarial tables may be a myth.. but I would count heavily on subsidizing your SS if I was is the sub 50 group....just my opinion. I passed econ 101 AND history 101 too...
kootch...
did you factor the "value" of not paying rent into your equation?
Note: to do that, you subtract the market cost of renting the home you purchased from all of those improvements you made...
and yes, i know the IRS doesn't require you to do that...
but if you are going to make an accurate analysis of cost/benefit... it matters
WorldCitizen
Member Profile
Seriously, though, if you like West Seattle and are willing to ride out the volatility at the lower (below 400K) range which is most likely to stick around for the next few years, until the stock of homes on the market decreases, then barring you buying a home with a major problem and in a bad location, your investment will be a good one. If you buy to make a quick buck, and you aren't a contractor that intends to do all the work to fix the place up yourself, then it ill most likely will not net you very much in the turn around. Each situation is different, but the market isn't "calm" now, and most likely won't be for a couple more years. The only person who would tell you differently is trying to sell you something.
I would suggest looking into buying in a highly walkable neighborhood. Or one with a view. That's always going to be in demand. Regardless of the market.
angelescrest
Member Profile
A nearby elementary school with a great reputation should be considered as well.
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