This summer brings a fresh batch of recent graduates to not only the workforce, but also the new housing market. As they close the chapter on their school days and start the notorious chapter entitled, “How to Adult,” more than one life-changing question emerges. First and foremost: “where the heck will I live?” For many Americans, adulthood means venturing out and having your own place to call home. However, in hot real estate markets like the Seattle-area, many recent grads are left wondering if they’re equipped to break into the world of home ownership–but perhaps a better question they should be asking themselves is, “should I?”
The idea of buying a home can be daunting for everyone, especially when you’re a new college graduate, and Seattle has a particular set of challenges all its own. In fact, The Seattle Times recently reported Seattle topped the list for price gains in the U.S. for the seventh month in a row—that’ll get some brows sweating. What’s more, Redfin found that a whopping 90 percent of houses for sale resulted in an-all out bidding war – the highest rate of bidding wars of any city Redfin tracks. Biting any fingernails yet?
While these odds aren’t exactly encouraging, there are still ways to smoothly navigate the Emerald City’s housing market. Before millennials get too spooked, here are some key insights to keep in mind when asking that big question: To buy, or not to buy?
The Lay of the Land
Millennials just starting out in the housing market have likely been told they should consider a “starter home.” Aka, that affordable, single story-one bedroom where their parents began their journey of homeownership–however, while starter homes used to be a viable, mandatory first step, nowadays even what’s considered a starter home can be out of reach for many. The nation’s lack of inventory has caused a strain on many homebuyers, especially the young-adult age group. Starter homes now eat up half of buyers’ income, a huge jump from even five years ago when it was a third of a person’s income—which is much more reasonable. As for condos, the median sale price this year is around $615,900, which is up 8.4 percent compared to this time last year.
Because of this, millennials have continuously been boxed out of the Seattle market, with only 29 percent owning homes in the area. So, while they’ve been told that investing in a home is a wise option, it is not necessarily a feasible one for most. Many have therefore stuck to renting, since the traditional steps to homeownership are not attainable any longer. Renting, while still expensive, is a more accessible option, since millennials aren’t tied to an expensive mortgage with little room to budge in the market.
Be Suburb Savvy
Whether purchasing a starter home is on the immediate horizon or not, it’s important to note there is still hope for a more reasonably priced residence in Seattle. While it may not be the hustle and bustle of downtown, Puget Ridge, Kenmore and South Newcastle are prime real estate options within reach for financially strapped millennials.
Final Tips and Tricks
Regardless of when you decide to buy, there are several standard tips for finding a home that will help to differentiate yourself in the competitive market:
· Be aware of all costs associated with buying a home. In addition to the listing price, the cost of owning a home can include insurance, homeowner’s fees, and more.
· Familiarize yourself with your local market. Do some research to have a good understanding of how long houses last in the market in each neighborhood, and the average home price.
· Learn more about your mortgage options before you begin to look at homes. There are plenty of options when it comes to down payments and loans.
Navigating the Seattle housing market can be daunting, but it is doable. When it comes to being a competitive buyer, knowledge is power. Be sure to know as much as you can about the best location for your budget and lifestyle, and don’t be afraid to lean on the expertise of an agent to help set you apart. Happy house hunting!
Kris Miller is the president of NexTitle, a title and escrow company