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Welcome to my new Real Estate advice column, “Dear Serena,” where I strive to answer your burning Real Estate questions. Email yours to me at serena@windermere.com and I’ll try to answer them in future columns.
Dear Serena,
I’ve been renting in South Seattle for several years. My landlord recently raised my rent $225/month and expressed his desire to sell next spring when my lease is up. I may be in a position to buy a house at that point but don’t I can afford the current prices in Seattle. That said, it seems like there’s more inventory lately. What do you expect the market to look like in spring 2017? And where can one buy a house for less than $500,000?
Thank you!
Sincerely,
“South Seattle Renter”
Windermere Realtor Serena Heslop has been serving South Seattle for 20 years.
Dear South Seattle Renter,
If only I had a crystal ball and could look into the future! All I can do it look at future projections and also look at the hard facts of past appreciation.
First, for something less than $500,000, I would suggest looking in the South Seattle neighborhoods of Upper Rainier Beach, Rainier Beach, Lakeridge or Brynmawr.
Second, the costs of waiting to buy is defined by the additional funds it would take to buy a home, if prices and interest rates were to increase over a period of time.
Freddie Mac predicts that interest rates may rise to 4.6% next year. And Core Logic predicts home prices will appreciate by 5.3% nationally. Seattle has tends to have higher appreciation rates, city wide it has been 11% this year.
If we take this projection let’s compare what you could get now versus a year down the road. Seattle is not cheap as we all know, so say you can buy a house for $425,000 putting 10% down with a current interest rate of 3.65% ( I am guestimating homeowners insurance and taxes) You would also have to pay private mortgage insurance (PMI) unless you have 20% to put down (a tall order for a lot of first time buyers).
So your monthly rate would be $2,253.93. PMI is $160.42.
If you waited a year and rates have increased to 4.6% as projected your mortgage would be $2,466.39, plus you would be buying less house if the price projection is correct so the house would be $403.750.
So waiting does not make a lot of sense if you can buy now.
Also If we look back to last year the median list price of pending sales in South Seattle was $416,238 and this year it is $485,462, so that is actually an over 15% price increase! So again it seems wise to look sooner rather than later, unless Donald Trump gets in and then I think a lot of folks will be leaving the country and Canada will have to build a wall to keep us out!
Sincerely,
Serena Heslop, Realtor
