Also, this is totally a hunch, but I think inflation/recession will cause homes to go into foreclosure and they could get a deal if they waited. Ours was a foreclosure in 1990 and is now worth 10x what we paid. I know interest rates are scary to kids these days, but they are still a deal compared to our first one. In fact, we refinanced to a rate still higher than they are now.
4 Likes
My sister lives in Seattle. They rented for a couple of years to figure out what area they liked best.
1 Like
However, selling and buying houses has significant transaction costs and hassles (including moving), so it may be worth considering whether the starter house is at least acceptable in foreseeable future scenarios (for example, if schools are a consideration, is it in a non-bad school area, or are there good alternatives like public magnet / charter schools or affordable private schools available?).
2 Likes
What do they say, perfect is the enemy of good. If you keep looking for the perfect house, you may never find that perfectly acceptable house.
I think it’s really hard to buy in this market. Especially at the entry level.
And the OP’s kids may not be looking for the perfect solution either. They may have problems finding any solutions.
My kid bought a townhouse. It’s very nice, I wouldn’t love a 4 story house but it works for them. Probably not their forever house. So maybe right now, it helps to look at housing options other than stand alone homes and look for townhouses and condos. Gets a foot into the buying market.
I know someone who is holding out for the perfect house. Has to completely updated and in a certain area. Not too expensive. Has looked so long that interest rates have effectively doubled. Might have been better to have gone for the perfectly acceptable as there have been those on the market.
8 Likes
D1’s friend started looking ahead of D1. They had similar budget. D1 bought in 2020 in the midst of Covid. It wasn’t perfect because the bedrooms were on the smaller side, but it has since appreciated over 300k. Meanwhile her friend is still looking and is getting priced out because of the interest rate.
There is cost of buying/selling/moving - put that into the spreadsheet when doing rent/buy analysis.
3 Likes
Son and DIL found the rental market in Seattle to be even more competitive than the buying market. But they have dogs, which limited their search for a rental.
Amazing view!
I live nearby and my family takes the swan boats out on the lake a couple of times a year for celebrations. I always wondered what those apartments/condos were like.
Congrats to her — and I think the neighborhood will be fine.
3 Likes
I used to drive past them back in the '80s/'90s and thought they were an office building of some sort, like the Rand Building in Santa Monica!
To clarify when I spoke negatively about the neighborhood it was specifically the lack of walkable amenities (groceries, etc) - although there is the Friday farmer’s market at the lake. I remember the mom & pop shops on Alvarado and sadly they’re all shuttered. 
she and I both have always been attracted to both urban environments as well as more open space, but she chose this over a place that was more remote.
In all my years in LA I’ve never done the swan boats but you can bet I will soon! And I look forward to (along with her) discovering all the spots along Sunset and the vicinity that I’ve otherwise just driven by - she says she gets her hair cuts up there, and there are quite a few vegan spots (important to her). She’s gonna love being there I’m certain.
3 Likes
I agree with other posters that the housing market is cooling a little in the greater Seattle area. I’m watching a small house in Bothell that has undergone pretty significant price cuts (I am acquainted with the sellers), and now went off market, I’m guessing for a little sprucing up. (Maybe Unsellable Houses is taking it!) I also now see homes below a million, which we didn’t have for a while. In another month, there might be people really eager to sell before school begins, when sales and inventory usually drop. So, waiting a bit might be a good strategy here.
5 Likes
I live in Seattle. If they are willing to go just a bit outside Seattle proper to places like Burien,Kent, Lynnwood etc the prices go down and the commutes are modest compared to many other major metros.
4 Likes
I live in a suburb just north of Seattle. Yes, prices are falling a bit and houses are staying on the market longer, but the prices are still way above where they were even 3 years ago.
The 1973 split level next door to us was remodeled by the son of the original owner and sold 3 months ago for ~$1.3M.
The light rail extension north has fueled prices, so finding something in the north end of King County and south Snohomish County for under $700k is close to impossible. The new townhomes are all going for $850K+ There’s usually a 1-car garage and no street parking.
For those of us who grew up here and raised our families here, it’s particularly sad that for the most part, our kids can’t afford to buy.
There are a lot of more affordable condos, but appreciation won’t be great.
Consideration should be given to where they’ll be working, if they need to use public transportation, if they want all the conveniences of shopping, restaurants, cafes, takeout, etc.
The rental markets are tight and there are a lot of scams and really bad management companies. My kids and their partners rent from independents, so they’ve done better than a lot of others WRT rent increases and so forth.
If they check Zillow for houses on the market and recently sold in the neighborhoods they’re considering they can see when the place was last sold and for how much.
My sister and I were talking the housing market and urban planning over a bottle of wine this evening and came to the realization that we’ve gotten old and cranky, lol.
7 Likes
The area where we just built has been hot for the past few years. We had to pay cash, sight unseen, and offer over asking to buy a just-listed house three years ago. I pushed our agent to be aggressive and to point out to the seller’s agent that while one other offer had been made the sellers had not yet signed to accept it. It’s not for the faint of heart or the tight of budget. I think it would only work for first time buyers if they have deep pockets or parents who are able to assist with the purchase.
My heart goes out to young adults who are priced out of the market, assuming they have modest expectations and aren’t like the typical HGTV buyers who want the house their parents worked and saved 30+ years to afford.
6 Likes
@JustaMom i agree your daughter did well. One of our kids bought a townhouse, and it probably isn’t the forever home…but then our first two houses were not our forever homes!
2 Likes
My daughter’s lab partner and traveling companion bought a house in Seattle when she got her first job, I think it was $900k, she rented out part of the house to somebody. She had some help from her parents but also she did save a lot of money through her internships. She’s now expending it. That was the price 5 years ago. I’m not sure I would want my kids to be tied down so early in life like that. But the house must have gone up. I did see pictures of it online, it was really nice.
Mortgage interest is the cheapest borrowing we will get. Instead of paying off mortgage interest, you can put it toward another investment and could possibly get a higher return.
A very simple example is they could have taken the cash you gave them and put it towards another investment property and possibly get good returns.
This is what I told my kids - a 100k home today, if it is to be sold at 120k later, the gain would still be 20k whether you put down 20k, 50k, or 100k. As a matter of fact, their return on investment would be higher if they were to put down 20k, and take the additional money to invest in other securities.
IMO.
3 Likes
Possibly being the operative word. In 2007 that advice was the fastest route to bankruptcy.
4 Likes
We were looking to buy in 2007. The market felt so frenzied that we decided to wait. Managed to get a nice house in a perpetually hot market in 2009 at the top end of our budget (under asking, crazy right?). To the OP, I would be inclined to wait. The market feels frenzied again. We never looked for a starter home. I hate moving, after having to do it too many times in my young adult life, and we looked for a home that would suit our young family’s needs. Rented up until that point, and were very lucky to have excellent landlords. Good luck with the house hunting!
3 Likes
I gave that as example because it is simple. Of course, what you should do is to look into what’s the best investment for you. If the real estate market is volatile then maybe stocks and bonds, and the main point is why let your cash be stuck some where giving you very little return.
Stocks can be just as volatile as real estate if not more so, depending on your time frame. Another factor is one’s comfort level with risk and ability to sleep easily after making whatever decision.
A home is not just an investment. In our case, we had to move multiple times and more often than not we lost money on the sale of our houses. We also had no interest in becoming landlords.
We knew that D wanted to remain in the same location permanently and that she’s far more risk adverse than her dad or I. We advised S to wait a while, which he did. However, his medical condition means that he may have to retire early - perhaps very early - and it gives him peace of mind to know that his house isn’t subject to a mortgage.
I don’t think there’s one right answer that applies to everyone. If leveraging your home works for you, that’s great.
3 Likes