Take a look at this article in the Seattle Times. This is really great news for you…IF you are 1) relocating to a less heated market, or b) downsizing. For everyone else, hang in there.
Seattle area home prices, June 2016
Much debate has been raging about whether or not this is a “bubble” like we experienced a decade ago. Some say it is, I say it’s not. Not a bubble, anyway. Maybe more like a balloon.
Unless Amazon slows down, and Google, Facebook, biotech, and the rest of the employers in our region, this market won’t pop. Deflate a bit, sure. But it won’t fall off a cliff again anytime soon. The bubble that burst into the Great Recession was driven by access to money. Sub-prime lending. People who couldn’t or shouldn’t normally be able to get a loan were able to, borrowers were taken advantage of, blah blah…you’ve heard this all before.
The challenge now is that the cat’s out of the bag: the Seattle area is a fantastic place to live. People want to move here, and they are coming with big paychecks. Many come from areas like San Francisco, where prices (for rent, too) are DOUBLE what they are here. Unfortunately, paychecks for folks who are already here aren’t necessarily keeping up. And it’s really tough to save up for a down payment when almost half your income is going towards rent. Or you can sell, and maybe make some good money, but then where do you go?
It seems my informal polls of friends, clients, and family echo what we see in the news: we’re still stuck. “I would love to move. I can sell my house and make a ton of money…but where will I go?” I hear it all the time. That and, “We’ll just wait it out until prices go down.”
But here’s the deal: They won’t. Prices will stabilize at some point. There will be a breaking point where the multiple-offer-$100k+-over-asking insanity will stop. But unless something drastic happens to Seattle-area employment and/or even well-qualified borrowers can’t get loans, be prepared for this high-prices market to continue for years to come.
Looking for the home you’ll be in for decades?
Keep looking, keep your chin up, and be ready to rock and roll. Get as much cash together as you can. Bigger down payment, earnest money…all that helps in a multiple offer situation. Yes, you may very well be buying high. (If I knew where prices are going to tip, I’d write a book and retire). But even if prices take a big dip, after 7 to 10 years, you’ll most likely be back on track with your equity and be fine in the end. It was totally scary for folks who bought in the bubble and saw their values plummet, but if they stuck it out, it’s all good now.
Not sure if you’re sticking around?
This is trickier. There is, of course, more of a risk that you may not make that money back if you need to sell in the next few years. That said, if you are able to buy, it may still be a good idea. After all, you can sell a house or a condo. You can’t sell all that money you’re spending in rent. And the mortgage payment, at today’s interest rates, is probably going to be about the same or less than what you are currently spending in rent. (I’m happy to provide a list of my favorite lenders if you want to see where you sit currently.)
It’s not impossible to buy right now. It just takes more fortitude, and probably more cash than it would in a more “healthy” market. Want to discuss your options? Ping me and let’s talk.