urbnlivn, a seattle condo blog

35 responses so far ↓

• 1 Brian // Feb 19, 2007 at 12:18 pm

  Too pricey for “normal” people? Or too pricey for people who moved here from Boise, didn’t research the market, had their delusions of grandeur smashed, and think condos are too small (i.e. beggars can’t be choosers)???

  It is what it is.

• 2 jo // Feb 19, 2007 at 1:11 pm

  Boo hoo. Too bad for them. You move here, you have to give up in some areas. They’re just not willing to give up a house in exchange for a condo. Don’t feel the least bit bad for them.

  And I nearly stopped reading at “artsy, downtown job”. Want a bigger place to live in? Go get a better non “artsy” job.

• 3 EconE // Feb 19, 2007 at 1:20 pm

  HAHA.

  exactly Brian. They are only too pricy for people that weren’t smart enough to take advantage of the loans that were offered at the time.

  Boy…they sure did miss out…I don’t know what they were thinking???

  But hey…there’s still time…they should grab themselves a sweet loan…and then start buying because Real Estate never goes down..right?….RIGHT!

  In fact…what I recommend is that not only do they get that sweet loan…but they buy two condos instead of one….you know…yoou gotta play large if you want to win large.

  I figure that I could probably double my money every year…but I’m not so sure that I just want a bunch of dirty cash laying around…I’d rather just build my Condo portflipio.

  I’ll have a business that I can pass down to my children and one that they can pass down to theirs. EVERY YEAR I WILL DOUBLE MY CONDO HOLDINGS…in fact…in about sixty four years…when I’m 100 or so…I’ll bet that I’ll have a lot of condos.

  I’m not sure how many condo’s I’ll have…but I know it will be alot…something like 1,800,000,000,000,000,000,000 of em. But that’s all good…I’ll have EVERY one of them rented because Boeing and Microsoft are explanding.

• 4 EconE // Feb 19, 2007 at 1:33 pm

  Lets lay down some bets here Matt…I stick with the standard $1 bet…you know…like ‘Trading Places’.

  I’ll bet you a dollar that the two above posters are…

  1. in the “BIZ”…real estate/mortgage/whatever

  or

  2. Holding an extra condo.

  I may be wrong…but it’s only dollar…I can afford to lose that.

• 5 Brian // Feb 19, 2007 at 1:43 pm

  100% definitely wrong. Regardless of the possibility that they are ‘lucky’ (which, if they really are they don’t seem to feel so) to have not burdened themselves with a mortgage, that op-ed piece is out and out complaining from top to bottom. You can be a realtor, renter, buyer, seller, or a 12 year-old to get that.

  Pony up your $1 kiddo.

• 6 matthew // Feb 19, 2007 at 1:47 pm

  Don’t worry, the market will correct itself. It’s invevitable.

  And no, I didn’t move here from Boise, and no I don’t have an “artsy” job. I’m a 29 year old making 100K that can’t afford a first time house. I’m the type of person that is priced out of this market, not just the “artsy” guy that didn’t go to college.

  BTW, if you think that condos are the new first time home, you should really look at how condo prices are doing in most other major metro markets right now.

  But hey, Seattle is different right?!

• 7 Brian // Feb 19, 2007 at 1:50 pm

  You know I just re-read your post and you take all these shots at the bow base don assumptions and guess work towards me. I didn’t say anything about loans or investing or business or anything. And after re-reading her article, she writes like they got off the bus from Boise and expected to get their big shot in the big city.

  “How do normal people manage?”

  Obviously they don’t. I mean suicide rates are way up in the PNW, psychologists everywhere are cashing in on 300% new patient influxes, no one goes out to eat anymore, the Seahawks and Mariners can’t sell tickets, and most people just settle for a drip coffee lately instead of their usual latte…

• 8 David // Feb 19, 2007 at 2:08 pm

  I just don’t really get it. I make an average salary. My girlfriend, who I am purchasing with, is in law school and living off of student loans.

  Even with that being the case, we’ve managed to purchase a condo on First Hill. 620 square feet. We’ve budgeted, and won’t even have to struggle to make the payments.

  All it takes is making some sacrifices: I’ve sold my car. Living so close to downtown, a car is something I just don’t need. It’s more of a luxury than anything else. Owning in Seattle will also likely mean settling on something smaller than you’d ideally want. That being said, when you live in downtown: start thinking of local parks and green spaces as your “yard,” start thinking of cafes (or the library if you’re really tight on funds) as an extension of your study/ office/ living room. It’s not that tough.

  When it becomes tough is when you want everything, and will sacrifice nothing.

• 9 jo // Feb 19, 2007 at 2:11 pm

  If you’re making 100k here and can’t afford to buy a place something’s wrong with you.

  People don’t get it. Seattle is an educated city. There are thousands upon thousands of other people making 100k plus a year here. You’re not the only one. Yea so you can’t afford a 2500 sq ft house on the top of Queen Anne hill or a house two blocks away from Green Lake, big deal. Go buy a condo. Seattle is one of the most desirable places to live in the country and a lot of people want to live here. That’s why it’s so expsensive.

  For all the smart people there, there sure are a lot of idiots. Common sense people, c’mon.

  I was told there was a small town mentality here, and those people sure were right.

• 10 Brian // Feb 19, 2007 at 2:18 pm

  The comments section of the PI article is pretty good. I don’t usually read through all those. From -

  “Posted by nonstopjoe at 2/19/07 8:29 a.m.
  It’s interesting that people don’t associate overbreeding with escalating housing prices. Create more demand and prices go up - pretty simple concept.
  Solution: move to the suburbs which requires more roads. So, people trade commute time for housing opportunities, knowingly one would assume.
  And, when commute time becomes too burdensome former city dwellers return to the inner city - at great expense.
  What goes around, comes around.”

  To -
  “Posted by ColdBeerSoundsGood at 2/19/07 7:07 a.m.
  Sure, Christy, go back to Boise and earn half as much money. Go back to Boise and deal with traffic worse than Seattle, no transit, and very little in the way of dining, shopping, art, or entertainment.
  I recently moved here from the Boise area as well. Great place if you’re married, have kids, go to a Christian church every Sunday, and consider IHOP to be fine dining. Hell for anyone else.”

• 11 Bri in Seattle // Feb 19, 2007 at 3:39 pm

  First off, one would have to define normal. Normal is not making over 75K a year.(It may be to some people) Sure there are plenty of people here who do make that. But discounting the tech industry and looking at Boeing and a bunch of other regular trade jobs the average wage is not over 75K/year. In fact , if you make over 75K a year, I think you are already are in the top 25 percent of wage earners in the country, regardless of your location. Making over 90-100K a year puts you in the top 10 percent. So the op-ed is right, for the 75 percent of people that are making less money than 75K a year, buying a house in this city is a futile excercise. And anyone who is stretched financially making 75-100K a year needs to seriously take a good hard look at where their money is going, but thats just my two cents.
  But if the market has gotten to a point where people who are making 75-100K a year feel like they can’t afford something comfortably than the market is truly out of whack.

• 12 Matthew // Feb 19, 2007 at 5:33 pm

  Jo,

  Since when did the entry point in the Seattle housing market become a condo? Since maybe 3-4 years ago? Perhaps at the same point interest rates were at ridiculously low historical points and banks were lending money to anyone with a FICO score over 400?

  Are you saying that the current housing prices are based on strong fundamentals? That the entry point in this market is now a 500 sq ft condo? If Seattle is a desirable place is irrelevant to this discussion. The only think that is relevant is affordability. If you think that the current median wage in Seattle can sustain the current median house price in Seattle, then I guess the entry point does in fact become a condo.

  I’ve lived in NYC, Atlanta, Houston, and LA. Never before have I lived in a city in which the people think their city is some magical place in which EVERYONE in the US wants to live. Never once did I ever hear people in any of those cities tell me they wished they could move to Seattle. But hey, everyone wants to live here right? Everyone is dying to be mortgaged to the hilt so that they can live in Seattle WA.

  Give me a break. Before you start calling everyone on this message board an idiot, perhaps you should take a look at yourself in the mirror.

  And yes, I can afford a condo in downtown Seattle. But why bother to buy one in this overinflated market when I am currently renting one for half the price?

  As I said before, the market will correct itself, it always does.

• 13 Matthew // Feb 19, 2007 at 5:36 pm

  and BTW, I am totally debt free, no car payment, student loans totally paid off. I choose to rent because it makes sense considering buying in Seattle right now means you are paying approximately 2.2 X what it costs to rent.

• 14 Mike // Feb 19, 2007 at 7:51 pm

  The attraction of the city has everything to do with housing prices. I wouldn’t have dreamed of moving to Boise after graduating, but I couldn’t wait to move here because of all the technology marketing jobs. Hell, I couldn’t even find an easy gas station to refuel in Boise on the way to Seattle.

  This is almost like listening to a debate on globalization. How people thought GM were terrible for laying off some janitor who was only making $50k a year because they had been emptying trash for 25 years.

  People with union jobs or fixed incomes are not normal - at least in the most desirable Seattle neighborhoods.

• 15 Matthew // Feb 19, 2007 at 7:52 pm

  And you can look forward to being upside down on your IO loan even with your 20% down. Good luck!

• 16 EconE // Feb 19, 2007 at 8:11 pm

  “2.2x what it costs to rent…that is a skewed figure, everyone has a different situation.”

  True…but I think that 2.2 is not highly overstated…probably more accurate…and being that most of the stuff that is coming on the market soon is high end…I think that it might even notch up a bit…2.4…2.5.

  ‘It is actualy more affordable for me to live in my brand new condo(20% down, IO) on capitol hill than rent a studio at one of the newer apartment communities on Capital hill/South Lake Union plus I get the tax benefits, live in nicer unit, and I live amongst home owners vs. renters….renters can look forward to rising rents, less availability, and the elimination of rent concessions in the next couple of years as the apartment market continues to tighten….”

  sorry…you lost your “affordability” argument there as soon as you stated an I/O loan…and try watching craiglist…the mls…rental services and the like. Rents aren’t getting tighter. If they were…people would not be offering specials…and all I’m seeing is it getting looser.

  oh…yeah…and best of luck when it comes time to refi that I/O loan…I hear they are getting a little “tighter” with their money…eh?

• 17 EconE // Feb 19, 2007 at 10:02 pm

  “dupre and scott”…sorry…too petty…not worth my time…let them spin whatever they want.

  I’d rather pay more attention to the larger global economic picture. You can learn quite a bit that way. But I guess the half dozen or so global newspapers that I read aren’t nearly as informative as “dupre and scott”. Your view of “supply and demand” is a little myopic…but I guess economics isn’t your forte.

  I have no need to argue with you about whether you made a sound financial decision or not….hope it works out well.

• 18 EconE // Feb 19, 2007 at 11:08 pm

  “a degree in econ, finance, real estate, and risk mgt”

  That is a pretty vague statement

  would you care to elaborate? What degrees…from where? Specifically?

  Throw your cards on the table.

  Oh…and I’m not the only person reading on this end…but we both have the same conclusions…so we’ll be adding up our credentials if you don’t mind…you know the saying…two heads are better than one. And I won’t have to try to “upsell” anything.

• 19 Matthew // Feb 20, 2007 at 8:42 am

  Mike,

  It doesn’t matter if 1 million plus people want to live in Seattle, what matters is if those 1 million plus people can afford houses in Seattle.

  If MS hires a bunch of people out of college that are making 40K-50K, does that sustain current housing prices? I tend to think not.

  As the subprime market implodes, and more and more first time buyers are priced out of the market, inventory will grow and grow, until it finally takes its toll on pricing.

  You can look at the latest FATREPORT to see that condos are not selling nearly as fast as they were a year ago, and this is just the beginning.

• 20 Matthew // Feb 20, 2007 at 8:46 am

  Downtown aka FinanceGuru,

  You want to tout your myriad of financial degrees and when someone wants you to produce proof you sound a little scared?

  That being said, yes the Seattle rental market has been undergoing some tightening. But it still has a LOOOOONG way to go before it becomes favorable to buyers vs. renters at this point.

  Have fun with that IO loan!

• 21 Dan Ji // Feb 20, 2007 at 10:04 am

  Matthew, I’m interested in hearing your views on why IO loans are so bad. I currently have a IO on a SLU condo, and a 30-year conventional (fixed) loan (

• 22 Dan Ji // Feb 20, 2007 at 10:06 am

  Not sure what happened up there, but most of the message got cut off:

  Matthew, I’m interested in hearing your views on why IO loans are so bad. I currently have a IO on a SLU condo, and a 30-year conventional (fixed) loan… looking at the amortization schedule of the principle paydown for that conventional, I’m actually not netting all that much every year.

  From what I gather, I’d see an acceleration of principle paydown towards the later part of my loan schedule - but if I don’t plan to live there for more than a 3-5 years, I’m not quite sure what the benefits are?

  Are you down on IO loans in general, or people who misuse them? Just trying to get a feel other views…

• 23 Matthew // Feb 20, 2007 at 10:14 am

  Dan Ji,

  I guess I am more biased against the people that misuse an IO loan to get into property that they otherwise couldn’t afford. An IO loan is a great tool when the market is undergoing tremendous growth like we have seen the last few years.

  If you intend to live in a place for a short time period, than it may not be a bad option. The risk however, is that if you bought at the peak of a speculative run up, what if you have to sell your condo at a loss? Maybe you will decide to stay in your residence another few years to ride out the market. Refinancing may not be as cheap as you think.

  Condo markets tend to be much more volatile than SFH. I’ve seen plenty of my co-workers in our San Diego office that thought “Hey I’ll just buy a condo with an IO loan to get into the market. Then I’ll make a bunch of cash and get into a house”. Guess what? Many of those people are now upside down in their loans, many of which are now refinancing at a huge penalty. But hey Seattle is different.

• 24 Matt // Feb 20, 2007 at 10:49 am

  I too am puzzled by the anti-IO sentiments.

  I agree that neg am is bad and I’m definitely staying away from them but I don’t feel the same way about an IO which is what I’m doing for my mortgage at The Meritage. Personally, I’d much rather invest the difference between a non-IO payment and a IO payment in the market then in paying down my mortgage and building equity. I of course understand that many people are steered into neg-AM or IO products to buy more than I can afford but as a more sophisticated buyer I certainly appreciate that products like an IO product is available to me.

  As for going upside down, it can happen with a neg-AM, it can happen with an IO, it can even happen with 5% or 10% down if the market really reverses direction. No mortgage product is going to prevent you from losing your shirt if things go south.

• 25 Cameron // Feb 20, 2007 at 10:57 am

  I tend to believe that if apartment living suits your personal financial requirements and living desires then great! Why argue as there are good reasons for both owning and renting? Many of these rest on personal, unmeasurable, feelings towards financial risk and the responsibilities and costs of home owning.

  IO loans have been huge in the Bay Area for years and while Downtown might be correct that it is very difficult to go ‘technically’ upside down on on IO, that is not the real issue. IO loans are often used to get into the housing market. But, take the situation where the market stagnates or even worse…YOUR part of the market stagnates and rates go up. It is possible that an IO loan cannot be refinanced when it comes due at rates the owner can afford. If the value of the property did not go up very much the owner might not be any further along in their dream of home ownership (or becoming a real estate mogul) than when the purchased 3, 5, or 10 years prior. Several articles have been in the Bay Area press recently detailing owners that bought in 2000 and 2001 that now find themselves in this position.

  But obviously these loans do work for many. As in anything to do with real estate, research and listen to your gut. If it doesn’t ‘feel’ right for you then it probably isn’t.

• 26 Ben // Feb 20, 2007 at 11:08 am

  It’s all relative. I’m from Honolulu…Seattle’s housing is cheap.

• 27 Ben // Feb 20, 2007 at 11:08 am

  It’s all relative. I’m from Honolulu…Seattle’s housing is very affordable compared to other places.

• 28 matthew // Feb 20, 2007 at 11:13 am

  If you are going to own a property for 1-5 years, an IO loan is could be the loan for you. Any longer than that, and chances are you are going to wish you had opted for something fixed. With interest rates still at historic lows, I would opt for the peace of mind knowing I am locked into a low rate.

• 29 Dan Ji // Feb 20, 2007 at 11:19 am

  downtown-

  not sure if you meant that I don’t seem to understand IO loans… but maybe I wasn’t clear. I tend to agree with your view on IO loans. (Oh, and I’ve had experience with neg amortization loans in the past, including those “option arm” products… and now stay far far away).

  So, to clarify… in looking at the amortization schedule of the P&I loan on my SFH, it doesn’t seem like the benefits are very great OVER an IO loan - granted, one that I stay in for 2-5 years. And that’s partly why I chose an IO for my condo.

• 30 Bob // Feb 20, 2007 at 11:31 am

  Don’t discount the fact that many rich folks will help their children buy their first homes. Handing the kids $30k, $50k is not a big deal to these families. Those kids probably aren’t slaving away at a $15/hr job in the first place. Lumping every buyer of $500k condo with those who use IO loans is silly.

• 31 Matthew // Feb 20, 2007 at 12:20 pm

  Ben,

  You are right. Seattle is cheap compared to about 5 other cities. Honolulu, NYC, DC, and Cali, other than that, this place is not really that great of a bargain.

  Bob,

  Who is lumping every 500K condo owner as someone who is financing with an IO loan? I live in a condo building, I see plenty of people with all different sorts of backgrounds and jobs. I am merely saying that if you are using an IO loan to afford more house than you would normally be able to purchase using conventional methods, you are going to be in for a rude awakening. Downtown and Matt do not seem to me, to be the common IO loan user. An IO loan is a sophisticated loan, and in the wrong hands, can have terrible consequences. Up until recently, the IO loan was only used by a select buyer and was not widespread.

  Again, being aware of what type of loan you are using is the key. It is amazing the amount of people that have had their loan reset and are clueless as to why they are suddenly paying so much extra every month.

• 32 EconE // Feb 20, 2007 at 12:37 pm

  Pac 10?

  Sorry Business…an fact…I wouldn’t have wasted my time if I knew that you were also Financeguru.

  But sorry…puffery over a school because of it’s SPORTS doesn’t cut it.

  Now…you want to tell me what your degree was in…sounds to me that you were a BUSINESS major that took the required econ courses and risk management was part of your degree.

  But…then…when you state a “Degree” in RE…that is what really made me laugh.

  Had you said RE LAW then you might have a leg to stand on…however…it looks like you couldn’t hack it with a Business Degree and had to go into RE and now you are the bitter one.

  I’m done with you because frankly…you are not very educated and I wish you luck with all of your endeavors.

  Oh…yeah…and you’re RIGHT…global economics has NOTHING to do with our housing market…sheesh.

• 33 Mike // Feb 20, 2007 at 3:18 pm

  I know MSFT doesn’t pay college grads enough to purchase houses. Besides, college grads would rather rent in Belltown then rent a house in Redmond. My 2 first-year Microsofty friends both own condos in Lower Queen Anne, quite easily by all appearances.

  I’m well aware that condo inventory turnover is slowing. I’m also not sure that it’s time yet to run around in circles with my hands in the air screaming, “the sky is falling!”.

  However, I am concerned enough that I’m considering cashing out of my short-term conversion condo investment (up 20% in 13 months) and into a new construction unit that I’m willing to stick with and live in for the long-term. In other words, I am worried about the next couple years, but not enough to deter me from plopping 5% down to reserve a place I see myself living happily in for the next 5-10 years.

• 34 Matt // Feb 20, 2007 at 3:48 pm

  A new grad at Microsoft/Amazon makes ~$60-80k/year in base compensation.

• 35 Kate // Mar 7, 2007 at 11:44 am

  Move to Portland then drive to Seattle visit :) !

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