The Seattle Buyer Mentality/Ability
I've been thinking about the mentality of the current Seattle buyer and the buyer from 2007. I tend to agree with everyone when it is said that a buyer wants a good deal. Of course they do, but then I look at the figures I wonder if they know one when they see one.
||Principle and Interest/mo
||Total over 30 yrs
Granted, there may be differences between the actual home that represented the median price in 2007 verses the median priced home sold today, but I think they would have more similarities than differences. I've read articles that claim wages here have not kept up with the cost of living here, but has anyone with a secure job taken a pay cut of over 25%. And I know from personal experience that rents have not gone down significantly in the past 4 years to accommodate lost wages.
Recently, there was an article in the Seattle Times which I wrote about and it claimed builders are going gaga about developing apartments because the current 20-35 year olds are not interested in buying homes. They don't see the up-side, so they will opt to rent. I look at the chart above and see an upside of $350,000 with the added benefit of a home interest tax deduction. Add in to that the fact that rents will go up while the above 30 year fixed rate will not. What are they thinking?
I can't imagine that they feel they don't have the ability to buy now. These are the same people that were buying 4 years ago, screaming to buy, had to buy, had to get in the market. Yes, I know. The big factor was that they could get the 80% loan coupled with a 20% second and get into the house for no-money-down. Your friends did that and now they're suffering the consequences. You don't want to go there? Where then, my young friend, do you want to go? Where do you want to be when you are 60?
3 Homes that sold in 2007 for the median price of $465,00
3 Homes in Dec 2010 that sold for the median price of $352,000