First Time Buyer Dissapointed With Current Prices

[spohnj]

I recently graduated from Purdue University with a masters in aeronautical and astronautical engineering. I am originally from Michigan and am moving to Washington state (Seattle area) to work for Boeing as an aircraft structural analyst. I have always been very hopeful at what I will be able to afford with my income given I have a specialized degree. Although I am starting at a good income, 60K, I am flabergasted at the housing costs in the Seattle area as compared to Michigan.

If I were to stay in Michigan and make 50K, I could afford a 150K house without too much trouble. This would get me a nice house, 1500ft2+, 3 bed, 2 bath, modern/remodeled design; something I could be very happy with.

After investigating my options in the northern Seattle area (Everett/Mukilteo and surrounding suburbs), I am extremely dissapointed. A 60k income will get me a 180K "house". I put that in quotes because there are very few houses for that price that aren't -- 1. trailers, 2. cheap condos, 3. manufactured homes, 4. or in need of major repairs. I would be lucky to get 1000ft2, 2 bed, 1 bath, outdated design.

The difference between the two areas is rediculous. The worst problem of all is that if I don't buy now, I will be stuck with an even crappier choice of housing 3 years from now (after I save a downpayment). This is of course because housing appreciates in that area by 7% easily and my income will probably only increase at 4% (hoping). Thus reducing the quality of house I can afford the longer I wait.

I'm not sure how people afford to live in a nice place there.

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Any suggestions/comments?:(

[Chief Tutor]

The discrepency of housing in housing costs is indeed a barrier to entry. However, the key is to get into the market and trade up. What I would suggest is that you look at your first home as an investment, and not your final address.

Get a realtor who knows the market, find out the areas with the greatest growth potential, understand the market is going to be going through a stagnant period over the next 18-24 months with the rise in interest rates.

Be poised to find a house where the seller HAS to sell. Alot of people bought too much house on a short term fixed rate which will become an adjustable rate this year and they won't be able to afford the new payments.

This may allow you to purchase a property which needs work in an area with the greatest growth potential at below current market rates, say 85-90% of value.

This will allow you to get out of the property in 18-24 months with no loss and a potential upside if you were to lose your job or move over that time period.

These are just ideas and a local knowledgable realtor can better assist you with the logistics of such a purchase.

Good luck.

[OregonLO]

He does have some very good points. I still have my first home and I'm now working on remodeling it. It was more of an investment with the potential to invest it into a newer house.

[michael]

You need to get a leg in now. The market has softened just about everywhere, but not in Washington. It will boom for another 5 years. I suggest following the advice already given (get a leg in now). Check out thespillzone.com.
It was featured in Saturdays Seattle Times. It lists 60 million USA home and predicts what will happen in three years to the value of any given home. I cannot find a single zip code in seattle that does not reap great investment opportunities. The site is free, try it out.