The Good, The Bad, The Alternative
Heads Up! This is not going to be the most happy post you read today, but I feel like it’s a necessary bulletin at this point. I have numerous clients that feel like they can’t afford Seattle prices and have simply given up. This is mainly for them.
This is the current map of available residential homes for sale in the Seattle area that are listed below $350,000. It looks much the same at $400,000.
Before you look at that map and take the wrong lesson from it, that one listing in Ravenna is a bankruptcy short sale with over $20,000 in fees that must be paid in cash. It’s been on the market for over 300 days. It is not a sign of activity in this price range.
To my many demoralized clients that are looking in that big empty space for a residential property in this price range, this post is not meant to depress your further. I just want to illustrate the hard fact that Seattle home prices in these areas have surpassed your budget. I’m still trying to find places for you, but the hard truth is that it’s time to consider alternatives. Prices will not be dropping any time soon.
Real estate prices in the entire region are on the rise. The world is much bigger than Seattle. If you can afford to borrow $350,000, then I can find you a property. Interest rates are low right now. Once you’ve locked in an investment, you will likely start realizing instant equity growth.
This is an excellent way to build wealth. Waiting for prices to come down is not a winning strategy. Before homes become affordable, rents will increase and squeeze out people that can’t afford them. Eventually it will put the squeeze on you. People will be moving further and further from the city trying to chase cheap and unstable rent.
Now, imagine you own a property just outside of Seattle. Flash forward to a likely scenario of next year, when rent and home prices have increased even more than today, and interest rates have possibly increased just a little bit, making it slightly more difficult to purchase a home. More people are going to be moving out of the city and trying to find something more affordable nearby. You, the homeowner, stand to profit off of this squeeze. Not only will the equity in your home increase, but you will likely be able to rent your home for a price that pays your mortgage and gives you a little bit of spending money on top of that. Maybe that little extra bit of cash is enough to help you afford to rent in Seattle. Either way, your investment is paying for itself and equity is building. Down the road, you may be able to refinance or sell your property at a high enough profit that you can now afford a home in Seattle. This is fundamental Real Estate investing.
You don’t even need to set your sights that far from North Seattle. Look at that map again. Notice that just below Downtown Seattle, we start seeing some listings in the $350k price range. South Seattle has better transit options that North Seattle, and they are getting better all the time. If you want to live in a home you own, and you still want Seattle, consider where the Light Rail runs.
Take it from me; everything that you like about North Seattle can be found in South Seattle. I lived in Ballard for 5 years, and have lived in South Seattle for the last two.
So, why isn’t it more expensive? Often, people cite more crime as a reason to avoid South Seattle, but this is a stigma. South Seattle today is very different from the South Seattle of two decades ago. Capital Hill, one of the most desirable neighborhoods in the city, has much more property and personal crime, on average, than say… Beacon Hill. Overall, though, Seattle crime is low when compared to other cities, so you can’t really go wrong. You can usually tell if an area is bad by how it makes you feel to stand in it. Trust your instincts.
Anyway, South Seattle is just one of many options. If you’re looking for an investment property to get your foot in the door of the real estate world, consider where the jobs are. Consider the paths that commuters take to get to those jobs. Have you considered Des Moines? Renton? Shoreline? Lake Forest Park? Where do people need to live to be near what they want?
I know it’s frustrating trying to buy property in Seattle, especially if you can’t afford the area that you want. If it’s important to you, it’s not a good idea to wait for market conditions to get better. Market conditions are as good as they are going to get for buyers for the foreseeable future. Interest rates are not going down, and prices are only going up, so it’s important to strike while you’re willing and able.
I’m here to help. If you’re curious about buying here, you want the knowledge of somebody that’s been living in the trenches of this crazy market for the last few years. I know how it works and I know how to make it work for you. Give me a call, shoot me an email, or invite me to happy hour, and I promise I can help set you on the right path.
Finally, I know that I didn’t really discuss the condo market, which is very different from the residential property market. I may post something about condos in the future, but most of my current clients are looking for residential homes, so that’s where my mind is at the moment.