|Headlines everywhere are proclaiming Seattle as the hottest housing market in the nation. Our humble city built on aerospace, trade, and influenced by a software engineer who donates millions, has found itself on the national map as the new darling of the tech world. Of course, this proclamation cannot go without mentioning the commerce juggernaut right in our own backyard, Amazon. I was told recently by Windermere’s Chief Economist Matthew Gardner, that Amazon occupies 20% of all Class A business space in Seattle – that is a lot! It seems you cannot drive down I-5 between Shoreline and the Sea-Tac Airport without spotting at least 15-20 cranes busily building more of that office space.
So, why Seattle? In contrast to California’s Bay Area, the cost of living here (rents and real estate) is half – office space costs half and companies can provide the same wages. This combination puts more money in employees’ pockets and companies are not as expensive to run, making profits higher. This has driven many companies to relocate or expand from the Bay Area to Seattle or Bellevue, markedly increasing the demand for housing. This has put an even tighter squeeze on inventory, putting us in the most extreme Seller’s market (0-3 months of inventory) we’ve ever seen. As a result, prices are driven up and values are hinging on commute times.
Below is a chart that outlines the amount of available inventory based on pending sales measured in months, and the median price in the month of March 2017. As you can see, there is a direct correlation between proximity to job centers (Seattle and Bellevue) and home prices.
If you have considered selling your home and making a move, now is one of the most favorable times to do so. If you are considering a purchase, the environment is competitive but there are opportunities. Aligning with an experienced and knowledgeable broker who can help you properly strategize is key. One might think it’s simple to sell your home in this market, but getting top dollar, strong terms, and a sale that will pass appraisal is the ultimate goal and takes a high level of communication and nuanced negotiations. The same applies to buyers. Education and a refined process helps empower buyers to make informed decisions and win. Our city is changing, and whether one thinks it is for the good, or the bad, is up to them. Either way, this is our new reality. Seattle is beautiful, prosperous and full of opportunities for those who choose to call it home. Like any opportunity, it needs to be properly analyzed, considered, and ultimately seized.
If you are curious how your home measures up in today’s market, please contact me. I’d be happy to provide you a complimentary market analysis to help keep you informed, or sit down and chat about the steps of a successful home purchase.
March | Rent vs. Own
With Seattle’s robust job market and high housing costs, there has been a lot of talk lately about the cost of living in the Greater Seattle area. In fact, Seattle is now the 5th most expensive city to rent in the country, according to a new study from Nested.com. The average monthly rental price for a one bedroom apartment in the city of Seattle is $1,790, according to Zumper.com, up 8.5% year-over-year; and a two bedroom is $2,470, up 6% year-over-year! With rising rental rates, still historically low interest rates, and home prices on the rise, the advantage of buying versus renting has become clear to those who have a down payment saved, good debt-to-income ratios and strong credit. Currently, the breakeven horizon (the amount of time you need to own your home in order for owning to be a superior financial decision vs. renting) in the Greater Seattle area is 2.4 years according to Zillow research.
An additional study by Nested.com outlines the monthly rental costs for a single person or a family of four, as well as the yearly income required. In Seattle, it costs the average single person $1,288.76 a month to rent, which requires an annual income of $53,328.00. The average family of four costs $2,665.34 for monthly rent, and an annual income of $101,186.48. That’s a lot of money one would be paying towards someone else’s investment! There are several factors to consider that will lead you to make the best decision for your lifestyle and your financial bottom line. One of the biggest factors is interest rates. Currently, the rate for a 30-year fixed, conventional, conforming loan is hovering around 4.25%. That is amazingly and historically low, making the advantage of securing a mortgage huge. The nice thing about having a mortgage is that the payment stays the same over the term of the loan. With renting, rates can be increased at any time, and you are paying down someone else’s asset, not your own. Owning gives the homeowner control over their overhead while getting to make their house their home. What is also great about owning, is that once you have hit the breakeven horizon, every month that ticks away thereafter is building your nest egg in value. The long-term benefits of owning are abundant, including the stability of not being asked to move. These are important factors to consider for everyone, but especially the younger folks who are enjoying the benefits of Seattle’s attractive job market.
Where folks are having to compromise most, due to affordability, is commute times and settling in less urban neighborhoods. Did you know that the average home price in South Snohomish County is 46% less than Seattle Metro? That is a huge savings! Some people, mainly millennials, have not been willing to give up living in the more core urban neighborhoods that have high walk scores and shorter commute times. That should be apt to change as rents are rising fastest in those areas. The advantages of moving out a little further and securing a home will start people on the track of building long term wealth. If you or anyone you know is currently renting and is considering a change, please let me know as I would be happy to get their questions answered to help them make an informed decision.
Windermere Foundation by the Numbers
Every time I sell a home a portion of my commission goes to the Windermere Foundation, which helps support low-income and homeless families and children in our area. The image below depicts some of the organizations that are served. For a more detailed report click here. Thank you for your business and support, which help to provide the opportunity to give back to the communities I serve.