Seattle Times Gives Anecdotes Of Their Own
Here's another one of those stories that follow the basic formula of: take an anecdote, fill in all the back story, write it as dramatically as possible, and stretch it to a full-length article. Today's topic: finding a nice house for less than $400,000 around Seattle is darn near impossible. It certainly doesn't qualify as "news," but it at least makes a semi-interesting read.
Adam and Leticia Hewitt's adventure in Puget Sound-area home buying began innocuously enough, with Adam dutifully researching the housing market to allay the couple's anxieties over their move north.I seem to recall hearing some people claim that even if the Puget Sound sees price declines, the "close-in" neighborhoods to Seattle will be safe, because people want to live close to where they work. What I find particularly interesting about this anecdote is that not only did their subject family end up way up in Lynnwood, even the "high up corporate" people in Starbucks were recommending Issaquah.
...
The manager of a Starbucks store in Portland, the 32-year-old accepted a promotion in February to financial analyst in the corporate office south of downtown Seattle. But the thrill of career advancement spiraled into distress as the couple searched for an affordable place to live.
...
"All I kept hearing about Seattle was that traffic was terrible," [Leticia] said. "Everyone said that we may as well spend more on housing to live closer to work, that the investment would be worth it in time saved on the commute."
...
After Adam started his new job in Seattle, co-workers at Starbucks offered good-intentioned advice.
"Live in Issaquah," they said. "It's great there and the housing is affordable."
Adam explored Issaquah and found houses selling for as low as $600,000 and as high as seven figures.
"They were right — it is great out in Issaquah. But the housing is not affordable. I began to realize that everyone I was talking to was high up in corporate and making a lot more money than I was."
...
The couple finally found their dream house within the Red Oaks subdivision in north Lynnwood, a house that had been on the market since February but had not yet sold because two offers had fallen through.
...
The commute still is so fresh that Adam is timing the compromise each afternoon.
"Forty-two minutes," he said about one recent commute home. "But yesterday, it was only 32."
If home prices do not go down, this kind of scenario will continue to play out in Seattle, and in fact only get worse.
(Stuart Eskenazi, Seattle Times, 09.05.2006)
21 comments:
why would they move so far north of the city. They could have gone 10-15 miles east of issaquah and gotten a really nice house for 400K with a better commute.
Lynnwood is horrible...
He's working at SBUX corporate, and she's a nurse. Although it suggests he's mid-level, between them they must conservatively make $100k-$120k+.
When a childless (for now) couple with maybe twice the median household income and presumably cashing out some previous equity can't afford anything closer than Lynnwood, it's a sign of how unsustainably out of whack things are. With the recent price runups, who is going have the money to buy anything? Welcome to Seattle, where 3/4 of the population are above median.
Unfortunately an article like this won't be seen as indicative of any kind problem. It'll just encourage more people to leverage themselves to death in fear of being priced out.
Unfortunately an article like this won't be seen as indicative of any kind problem. It'll just encourage more people to leverage themselves to death
I believe this was the intent of the article. I've been scratching my head about this piece, but your comments have put the article in perspective.
I'm not holding my breath for the Times article on people that found good deals and bought below asking. Nobody benefits from that kind of irresponsible rogue reporting. (sarcasm)
That's part of the problem, the media has zero interest in telling the truth about pricing. They'll keep quoting the NAR all the way down because of advertising dollars.
between them they must conservatively make $100k-$120k+.
Hmm...that's not exactly a large income, and how much good will it do if prices keep going up?
between them they must conservatively make $100k-$120k+.
Hmm...that's not exactly a large income, and how much good will it do if prices keep going up?
um, if median income is around $50K, that means half of people are earning less, thus making 2X median is not alot of money ? Everyone can't be above average :-)!
My wife and I are pulling in about 230K total a year. We currently have a house in Bellevue we bought for 270k about 4.5 years ago, which is probably worth about 550k now and we have a relatively small 200k mortgage. Zero car payments, and Zero debt, other than our mortgage. We are looking for a bigger house and plan to sell our current house. So given our financial picture, how much house do people think we can comfortably afford? In fact, I'd like to get an idea of what other families are doing that are in same financial boat as us.
You guys are very lucky. It sounds like you can sell that place and, even after paying off the mortgage, walk away with a profit.
I'd take that profit and rent for the next year, keeping a close eye on what's happening in the market (ie. how fast and far it's falling).
I would NOT buy a house based on the 2 incomes. We may be in for some very rocky times ahead.
well, if you read this blog, you'll get two responses:
1.) Sell your house, move into a rental in Black Diamond and wait for signals from above
or
2.) Buy in Ballard
as for a real answer, usually 2.5 to 3 times your income as a mortgage
anon 10:38 - we're in more or less the same boat incomewise.
We have a 560k mortgage on a 900k house (well, zillow thinks 1.1, but I beg to differ).
We pay about 3800/month for PITI, which (after doing this for a year or so) feels relatively affordable.
"My wife and I are pulling in about 230K total a year. We currently have a house in Bellevue... which is probably worth about 550k now and we have a relatively small 200k mortgage... So given our financial picture, how much house do people think we can comfortably afford?"
Your data isn't complete enough to speculate about your financial fortitude. How old are you, and what is your net worth?
Peckhammer said...
"My wife and I are pulling in about 230K total a year. We currently have a house in Bellevue... which is probably worth about 550k now and we have a relatively small 200k mortgage... So given our financial picture, how much house do people think we can comfortably afford?"
"Your data isn't complete enough to speculate about your financial fortitude. How old are you, and what is your net worth?"
We are both in our mid thirties, with a toddler. Both have professional jobs. Myself a professional geek at MS, and my wife a senior level finance manager at a fairly large company.
We have been somewhat lucky in various investments and have about 400K cash saved up. This is excluding 401k, of which we have an additional 300K between the both of us. So including our house equity, our networth is around 1 million.
I think you can still find plenty in Seattle under 400k. Correct me if I am naive. But in my barely in-city neighborhood of Skyway (and the nearby unincorporated areas), there have been affordable houses for sale for as long as I have been watching. We're not a cool neighborhood. They're not glamorous, McMansion type houses (well, there are a few of those), but most are on large lots with actual trees. Commute to downtown is usually 10 minutes. Most people don't even know where Skyway is, or that any part of it is in Seattle. Their loss.
Now I have a question for the prognosticators among you. Regarding those of us under the median income, who bought a long term residence we could afford in an unfashionable neighborhood: what will the impact of a bust be like for us? We have a conservative fixed mortgage based on about 20% or our incomes and bought three years ago. But I guess I'm curious about the big picture. Won't the biggest spenders be the biggest losers? Or is this just denial?
We are both in our mid thirties... So including our house equity, our networth is around 1 million."
Here's my quick calculation:
Required Income (Current):
$ 230000
Required Income (Future)
$ 415405.58
Years Until Retirement: 20
Years After Retiring: 30
Annual Inflation 3.0 %
Annual Yield on Balance 7.5 %
You need to accumulate $7172321.19 by the time you retire (assuming 55 years old -- yeah it's early) in order to replicate your $230K income that you enjoy today and live for another 30 years.
So, you indicate that you have a networth of $1M -- which indicates that you are 1/7 of the way to what you may need to continue your lifestyle after you retire. Your actual question was how much house can you afford -- but I think the question you really need to answer is where should you put your money to be sure that it grows to $7M in 20 years. If putting your money in your house will achieve that kind of return, then do it.
IOW, how much house you can afford should be based on more than just your abilty to make mortgage payments.
These people could have moved into parts of W Seattle or S Seattle and had a much shorter commute to downtown, but you got pick carefully down there.
There's not telling where prices are going to go until we see how real this recession is. Pain is what defines ow low we can go. 100% appreciation in f8ive years if a pretty good investment. I'd take the money and run, rent for a year or two and see where prices are at.
Buy land and build your own house next year. Take advantage of the downturn for builders which will hit next year.
Regarding those of us under the median income, who bought a long term residence we could afford in an unfashionable neighborhood:
How was the market so far out of balance back in those days that a below median income allowed you to buy a house??? Sure I know people making below the median that have bought recently - but the caveat is they didn't pay for the house using their income!
Agreed Uptown - if you are patient, buy a teardown (lot if you are lucky) and build new
I've seen so many people settle for these POS pillboxes in city which were never meant to be more than worker housing (tricked out w/ granite, et al). Find a killer location and go from there. I know a guy who can build a great "Northwest Craftsman" for $300K ($100/SF). Basically, there is so much profit right now, the finished retail price to joe consumer is out of hand. But if you own a lot or can get something decent, you can create a brand new home suited to your needs. Some of the sacrifices people are making to call home are a joke. Mostly land value.
For example, I know a guy who just built a custom contemporary in NE Seattle (modest finish and small, only 2000 SF) for $275K. He bought the lot for $50K in 1999 so he's sitting pretty - value around $600K. Just going to rent it out and sit tight.
Bottom line - do it yourself and act as gc you will learn a lot. Look for teardowns - they are out there w/ an occasional lot or two. For better locations you will be $400+ now, but that may change. I have been looking myself for a while - wish I would of pulled the trigger on a rare Washington Park lot @ $450K last year.
Part Bear-
Your quote sums it up nicely:
"The biggest spenders (in proportion to their incomes) will be the biggest losers."
If you can comfortably afford your home, don't sweat it.
It's those who are stretching to make payments that need to worry now.
The Lynnwood couple is just picky and there are certain neighborhoods closer to Starbucks HQ that they simply don't want to live in.
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