Bellevue Real Estate Forecast

[eskercurve]

I am totally into renting right now. Typical returns on owning a home (i.e. when the break even point happens when you buy & maintain vs. rent & invest) average 10-15 years.

In Seattle, the reality is most of the time you're looking at 20+ years at current prices vs renting prices.

Coupled with recent layoffs and continuing weakness in our market, I don't see home prices appreciating anytime soon. I can rent a nice place with my wife and I for $1100 for a 3 br 1.5 bath townhome. In the same neighborhoods and same school districts as buying a home.

At current market housing prices, if I assumed a 2% appreciation rate on a home per year (average, and ignoring our dismal economy) and I assumed that I could instead take the 6% down I can afford on a home and invest it in a high DIVIDEND stock, like GE or AT&T, or Pfizer, just the dividends ALONE would mean that it would take 20 years for me to have said "yep, was a smart decision buying a home." That's when you factor in property taxes, home maintenance, commuting fees, etc.

Now, if you want to live in your home for 20+ years, then go on. But the reality is in this market people really need to re-evaluate the typical "renting is for losers" mentality people get. I know a guy who rented until he was 35. He saved enough money by living frugally, wisely investing his money, and making a few risky buys based on disposable income and not getting married ... and now he's retired. Forever. If he'd gotten married, gotten a car, lived at his means, etc., he'd likely be in the same boat as everyone else now.

[seattlenextyear]

Originally Posted by eskercurve

I am totally into renting right now. Typical returns on owning a home (i.e. when the break even point happens when you buy & maintain vs. rent & invest) average 10-15 years.

In Seattle, the reality is most of the time you're looking at 20+ years at current prices vs renting prices.

Coupled with recent layoffs and continuing weakness in our market, I don't see home prices appreciating anytime soon. I can rent a nice place with my wife and I for $1100 for a 3 br 1.5 bath townhome. In the same neighborhoods and same school districts as buying a home.

At current market housing prices, if I assumed a 2% appreciation rate on a home per year (average, and ignoring our dismal economy) and I assumed that I could instead take the 6% down I can afford on a home and invest it in a high DIVIDEND stock, like GE or AT&T, or Pfizer, just the dividends ALONE would mean that it would take 20 years for me to have said "yep, was a smart decision buying a home." That's when you factor in property taxes, home maintenance, commuting fees, etc.

Now, if you want to live in your home for 20+ years, then go on. But the reality is in this market people really need to re-evaluate the typical "renting is for losers" mentality people get. I know a guy who rented until he was 35. He saved enough money by living frugally, wisely investing his money, and making a few risky buys based on disposable income and not getting married ... and now he's retired. Forever. If he'd gotten married, gotten a car, lived at his means, etc., he'd likely be in the same boat as everyone else now.

So you live in both a 1 br loft and a 3 br townhome? You think Seattle is great but hate it and want to move to Singapore? I'm so confused.

[eskercurve]

Originally Posted by seattlenextyear

So you live in both a 1 br loft and a 3 br townhome? You think Seattle is great but hate it and want to move to Singapore? I'm so confused.

I live in the U district in a 1 br loft. Was looking at a 3 br townhome in bothell.

I think Seattle is awesome. I don't hate it, just certain parts of it. And I was being sarcastic about going to singapore.

[Ira500]

like GE or AT&T, or Pfizer, just the dividends ALONE

That's not without risk either. In fact, GE is down 50% in stock price from a year ago, and Pfizer and ATT are also down, and their large dividends would have hardly made a dent in the losses you'd have taken if you sold now after owning a year...Not saying buying a house is a good idea at all, but it's not like you can buy stocks and rest easy.

[eskercurve]

Originally Posted by Ira500

like GE or AT&T, or Pfizer, just the dividends ALONE

That's not without risk either. In fact, GE is down 50% in stock price from a year ago, and Pfizer and ATT are also down, and their large dividends would have hardly made a dent in the losses you'd have taken if you sold now after owning a year...Not saying buying a house is a good idea at all, but it's not like you can buy stocks and rest easy.

Very true. And it's also subject to the whims of the boards of directores. For example Pfizer's dividend is toast now after being merged with *oh drat forgot the name of the company* because they had to raise capital.

However, at present values all those companies are bargains. Compare to housing. Housing doesn't give you instant 5-8% returns just for owning them.

Also note that I said it is OK if you plan on staying where you live for 15-20 years. If you are a first time buyer though, or want to follow the traditional buy a "starter" home to build "equity" and then buy up ... now is definitely NOT the time to buy.

As a general rule of thumb ... do not buy in markets that are losing jobs.

To be fair though, very few average people could have anticipated this catastrophic collapse. Hindsight is 20/20.

[tmj in texas]

We love southern Bellevue, love the schools, so will buy in this same area. We new prices would drop when we came in the area a year ago, but didn't expect it to continue this long. We saved more money renting then if we had bought home and had $100k drop in value. We just signed another 6 months because not much on the market in this area. Few houses we liked came off before the holidays. Starting to see a few come on market now. A lot on market in Lakemont, but those are Issaquah schools. As for traffic in Bellevue neighborhoods, there is none. Just hills that are hard to deal with when we have snow. But that was unusual December.

[vk6443]

Sys, I am in the same boat. I lived in SEA for 20 years, attended UW, etc....moved away, to the other Washington....am now approaching retirement and plan on relocating back to SEA in about 12-15 months. I think my timing could not be better. Seattle has lagged behind the rest of the US in the housing market crash, and my feeling is they will hit bottom sometime next year. IMHO your timing is perfect.

Good luck to you.

[SYS]

Originally Posted by vk6443

Sys, I am in the same boat. I lived in SEA for 20 years, attended UW, etc....moved away, to the other Washington....am now approaching retirement and plan on relocating back to SEA in about 12-15 months. I think my timing could not be better. Seattle has lagged behind the rest of the US in the housing market crash, and my feeling is they will hit bottom sometime next year. IMHO your timing is perfect.

Good luck to you.

Good luck to you, too!