Updated: Apr 22, 2021
I am often asked, “Is now a good time to buy?” The reality is that market timing is everything and Western Washington is still booming with growth as many of the local Technology and Engineering companies continue their appeal to future WA State residents by offering lucrative career opportunities in one of the most beautiful cities in the world. Meanwhile, home builders are not putting enough hammers to nails to accommodate the population explosion.
As a land and sea locked region, we’ve started to run out of convenient space to build on; a major contribution to the decline in inventory. The low supply in urban regions is paving the way for what were considered rural areas to begin the transition to a more suburban style living. Examples of this can be found in Buckley, Bonney Lake, Snohomish, Monroe, Carnation, Duvall, and many others. People are, however, moving further out into these suburbs where they can get more land, more house, or perhaps both, for their dollar. This is especially true with many companies finding that their employees can efficiently work from home. With that said, the prices in the suburbs, and once rural areas, are moving upward to match the increase in demand. So, although, often more affordable than the most populous areas like Seattle and Bellevue, the prices are reflecting a price point that is ticking upwards where it once was much more affordable.
With a lack of available vacant or buildable land, much of the new construction in Seattle and other areas are to be found in turning neighborhoods like White Center, Rainier Valley, areas of North Seattle, and places where zero lot line townhouses can and are being built by smaller developers and investment groups. This is also true in places like Ballard, Shoreline, etc., where zoning codes have been revised to allow for higher density housing.
Below are median prices for single-family homes in neighborhoods nearby:
Bonney Lake/Lake Tapps: $515K
North Bend: $840K
Black Diamond: $580K
A mass exodus from the city to the suburbs would seemingly alleviate some inventory concerns, but with the aforementioned tech growth, these homes are being purchased just as quickly as they are being listed on the MLS (Multiple Listing Service). In 2021, I do not expect a big departure from the market we have settled into over the past year (and years before it). Fortunately, this frenzied market cannot last forever, and at some point, there will be additional housing inventory available that will create some much-needed stabilization. Until then, here are a handful of questions that you may want to ask yourself if you desire to buy a house but are thinking about sitting on the sidelines in hopes of a better future market.
· How much more appreciation will we see before a market correction happens and how major will that market correction be to offset appreciation and wait time? · Where will interest rates be when our available housing inventory finally does increase? · How much will you spend on rent that could go towards paying down someone else’s mortgage versus your own while you wait for a market that may never come to fruition?
The answer to these questions could further displace you from your ultimate goal of home ownership. Even if a significant market shift occurred in the future, holding out for that may not produce the outcome you are expecting. For example: A point increase in interest rates, from where they are at today, would decrease your purchasing power by well over 10%. Two points brings you to over 20%. And that would leave interest rates at still below 5% which is historically an incredibly good interest rate.
The Rent Hole:
If you’re renting a Single Family home on King County’s Eastside, you are likely looking at paying rents between $2500-$4000+/month. Multiply that by however many months or years you are planning on waiting out the market. That number is the amount of money you could be paying down your own home rather than the salaries of a property management company or the mortgage of your landlord. If properties continue to appreciate, which they typically do in the Puget Sound’s market, then you could be pricing yourself out of the house you actually want to buy versus what you will be able to afford.