| Family Management

Home Sweet Home

After having their second child and watching seven years of rent money disappear into a bottomless black hole, Rick MacKenzie suggested to his wife, Lisa Marie, late in 2005 that it was time to find a house of their own. But she was a tough sell.

“To be honest,” Lisa Marie recalls, “I had basically given up. I just didn’t think there was a house out there that we could afford.”

But with Rick’s online house-hunting persistence and a mortgage program that worked in their favor, the MacKenzies found a 1928 Beacon Hill bungalow that fit their wish list: two stories, a basement, two bathrooms and, most importantly, three bedrooms. They moved in during the spring of 2006.

“The mortgage payment is twice as much as our rent, but we were seeing properties going quickly,” says Lisa Marie, who plans to refinance their interest-only loan once the five-year adjusted-rage mortgage expires. “While we bought at the absolute top of our price range, having your own house makes it all worth it.”

Prices on the rise

The MacKenzies may have lost out on more-affordable houses by waiting so long to buy. But the same can be said about someone who bought three years ago. Or six. Or a decade ago, for that matter.

While many of the nation’s largest cities have undergone housing slumps in the last year or two, home prices in the Puget Sound region continue to rise. Recent statistics indicated the median price for a single-family home in King County was nearly $455,000, with Pierce County’s median price at $280,000. Sure, experts say, we’ve leveled a little in appreciating values. But with our persisting strong economy and a greater ratio of buyers to sellers, Seattle shows no signs of slowing down.

 “I’ve been selling real estate since 1996, and the most expensive home I sold that first year was $200,000,” says Windermere agent Brent Sanders. “I haven’t seen a thing under that price in years, and that means people are having to lower their standards for a house. In order to find something, you have to be willing to make compromises, whether it’s being willing to live in a smaller house or in a different neighborhood.”

Out to the ‘burbs

Seattle’s neighborhoods, once demarcated by Ballard to the north and West Seattle and Beacon Hill to the south, have broadened as the migration has expanded to districts such as Shoreline, Broadview, Rainer Beach and Burien. The reason, says Edward Krigsman, is affordability.

“If you want to find something under $400,000 these days, that’s where you go,” says Krigsman, lead broker for ek Real Estate Group. “The prices for homes have gone up so disproportionately compared to incomes that it was inevitable. Many who live in homes they bought five years ago could never afford to buy the same homes now.”

Krigsman points to a study conducted by the Seattle Office of Housing, which indicates that while the city’s average wages rose 10 percent from 2000 to 2006, the price of a single-family home increased by 40 percent in that same period of time. In order for a family to afford a home priced between $465,000 and $700,000, it must have an annual income of $107,000 to $154,000.

Sanders, who teaches a first-time home-buying class through the Washington State Finance Commission, says that Ballard, once considered one of Seattle’s last affordable neighborhoods, is providing fewer and fewer options for buyers looking for single-family homes. One client, unable to find a ready-to-move-in single-family home in their $450,000 range, ended up in a townhouse.

South remains strong

Home prices are on the rise in the south end, as well, though Pierce County remains an affordable alternative to King County. In Tacoma, John L. Scott real estate agent Dan Showalter says a big gap remains between homes north of Sixth Avenue and those located south of Sixth. North Tacoma homes sell for $146 per square foot-roughly $25 more per foot than those in south Tacoma. His clients’ main criteria? Price, neighborhoods and schools.

“You get a larger house for smaller payments in places like south Tacoma and Puyallup, where if you’re looking on the north side, or in University Place or Gig Harbor, it will cost a bit more,” Showalter says. “But it’s become a popular alternative because the school districts in these areas are so good.”

Wherever you choose to live, as a real estate rule of thumb, there’s one question to ask yourself: Will this be your home for the next five or 10 years? “People tend to come in conservatively,” Krigsman says, “but they should know that it will be just as difficult, and probably more, to buy again later. It’s up to the agent to try to be respectful of the client’s budget, but many want to get as close to the edge as they can.”

How much should you spend?

In a quick-moving and often volatile market like Seattle, knowing how much you can afford is the first order of business. Get pre-qualified by a lender. Learn the dollar amount you can afford, and decide if you are comfortable with that price and the monthly mortgage payment it will bring.

“Every homebuyer feels like they may be stretching their budget, but it’s OK to stretch a little,” Sanders says. “With the information on what houses go for readily available on Web sites, it’s pretty easy to see what you can afford.”

The more you become educated as a consumer, the easier it is to make a decision on looking and buying. For instance, Sanders suggests, don’t believe that a house that was for sale for a certain price ended up selling for that amount.

“From a Realtor’s standpoint, you have to reel the buyer in a bit,” he says. “No, it didn’t sell for ‘X.’ It sold for ‘X’ plus $75,000. If a home is priced well, you can count on multiple offers and the final price going above the asking price.”

High prices might be chasing first-time buyers to the fringes of Seattle. But for those like the MacKenzies who are looking to upgrade to a larger house, Krigsman says the choice between buying up or adding on can be an emotional one.

“More and more people are choosing to make their own houses bigger, not only for financial reason, but personal,” he says. “They like their neighborhood. They like the schools. And they have the equity to pull out and use to pay for it.”

But, Krigsman cautions, the cost in time, energy and inconvenience -- especially with young kids involved -- may not be worth it. The price and construction time for a home remodel can be 20 percent higher than expected.

So whether you’re buying for the first time, moving up or adding on, be sure to plan ahead. Make plenty of lists. Never be afraid to ask questions. And don’t ever think that any time is better than the present.

“It makes sense that housing prices are what they are in Seattle,” Sanders says. “We have a great quality of life here, which makes people want to stay -- and move here. I don’t see that changing, and I don’t know of any market analyst who I trust who says that prices are going down.”

Scott Holter is in his 10th year as a freelance writer. He lives in Ballard with his wife, Karalyn, and son, Emmett.

House-hunting checklist

Know your neighborhood
How good are the schools and how long is the job commute?

Get pre-approved for a mortgage
Until you know what you can afford, searching can be futile.

Know the market
Understanding your price range allows you to look in the right areas.

Find a real estate agent
Ask for a meet-and-greet to see if the interest is mutual.

Find homes for sale
Look online and in the newspaper, but get out there and pound the pavement, too.

What do you really need?
Bring a list of your must-haves when you’re house hunting, to remember all the features you’re looking for.

Be comfortable
Combat long days with comfortable clothing and footwear.

Be ready
With the Seattle market, you might have to make an offer on the spot.

Take a deep breath
Your house is out there somewhere. And chances are, it will be exactly the house you’ve been looking for.


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