You might be surprised to find there are many affordable housing options close to downtown Bellevue. Apartments in the city are expensive and it’s likely the rent will increase each time the lease renews. The average monthly rent for a 2 bedroom apartment in downtown Bellevue is $3,250 or more per month (plus utilities). That’s a lot of money for housing with no return on investment.
Last year more than 100 one and two bedroom condos in or near downtown Bellevue that sold with median sales prices* under $475,000 (98004 & 98005 zip codes). Some of these homes were in communities walk-able to downtown, others were less than a 10 minute drive to Bellevue’s workplaces, shopping, dining, arts and entertainment events, parks and sought after Bellevue schools.
With a budget of $550,000, a lot of money but considered affordable in the Eastside real estate marketplace, if you were buying a condo what could you expect to pay for your monthly housing expense?
- A 2 bedroom condo priced at $550,000 with a 5% down payment ($27,500) would have a monthly mortgage expense (PITI) of about $2,850/month
- There are great loan programs available with 3%, 5% and 10% down, but if the down payment is less than 20% the lender will require PMI which will could add $300-$400/month to your mortgage payment. (Consult your lender for more information.)
- Budget $395-$495/month for homeowner’s dues, but that will include the water/sewer utility, garbage/recycle service, master insurance policy and sometimes even basic cable.
With a 5% down payment on a $550,000 purchase the monthly PITI + PMI would be approximately $3,240 – about the same as renting a 2 bedroom apartment downtown, except you would get the benefit of a tax deduction for some of the closing costs and the deduction for mortgage interest and real estate taxes every year.
Before you renew your lease, talk with your lender and Realtor®. This might be the right time to purchase a home and avoid the next rent increase. You would own your home, shelter income and start building equity and wealth. You may even reduce your commute.
* median sales price – half the homes sold for more, half sold for less
With real estate market activity picking up there will be more open houses to visit in the coming weeks. Are there rules of etiquette when visiting an open house? Common sense and courtesy should prevail, but it can be surprising what visitors think is acceptable when walking through someone else’s home.
So what is OK, and what isn’t when visiting an open house?
- If requested, remove your shoes or slip on shoe covers.
- It’s OK to open closet and kitchen or bath cabinets or take a peek at attic storage, but it’s not OK to open dresser or desk drawers. That’s private personal space and what’s inside has nothing to do with the features of the home.
- Do not use the bathroom – take care of that before you leave your house.
- If lights are on, leave them on.
- If you unlock/open a door, close and lock it.
- Never bring food or drink into a home.
- If you are visiting with your children keep an eye on them, or better yet, hold their hand while in the home. DO NOT let them wander freely through the home, run through the house, play with toys that are not theirs or turn on TVs or video games.
There’s no need to rush through an open house, but lounging on the family room sofa for 45 minutes to chat isn’t acceptable – move that conversation out to your car or your broker’s car. Be courteous when the end of an open house is approaching. The owners have vacated their home for several hours and they’re ready to come home. If you need more time have your broker schedule an appointment to see the home again.
The Golden Rule applies – try to put yourself in the shoes of the homeowner (you may be selling your own home soon). Think about how you’d feel if strangers went through your dresser drawers, pulled toys out or misplaced a TV remote.
- the median sales price was $900,000, up 2% over last year
- 20% of those homes sold above list price
- 45% of the homes sold in 15 days or less
- the Eastside currently has only 1.3 months of available inventory
- current inventory levels favor sellers
- continuing low interest rates favor buyers
Most of the Eastside condo sales activity was in downtown Bellevue and downtown Kirkland.
- $884,000 Downtown Bellevue median condo sales price in November
- there are currently only 20 condos for sale in downtown Bellevue; 35 in all Bellevue zip codes
- $617,500 Downtown Kirkland median condo sales price in November
- there are currently only 14 condos for sale in downtown Kirkland; 46 in all Kirkland zip codes
It’s a great time to buy a home. Low interest rates (under 4%) make it an ideal and affordable time to purchase a home. There are great loan program options for qualified buyers offering as little as 3% down for conventional or FHA financing.
It’s a great time to sell. With little inventory for buyers to choose from, January will be an ideal time for homeowners to put their homes on the market and stay ahead of the competitive spring market.
Condominiums are an important part of the housing market, especially for first time buyers. Often buyers have the income and credit score needed to purchase a home but lack a substantial down payment which can make entering the housing market prohibitive.
In an effort to promote affordable homeownership for credit worthy buyers, the Federal Housing Administration (FHA) has issued new guidelines that make FHA condo financing an easier, more streamline process. Once a huge part of the first time buyer market, FHA’s strict guidelines made financing a condo difficult, at best. FHA updated its condominium financing rules, effective October 15th, which will loosen requirements for financing condos.
- Low Down Payment Still Available. Buyers can still purchase a home with as little as a 3.5% down payment.
- FHA Loan Limit. In King County the maximum FHA loan amount is $726,525.
- Single Unit Approvals (“spot loans”) Return. If a condo community wasn’t on the approved FHA list, it was difficult, at best, to obtain FHA financing. New guidelines now make it easier for an individual unit to be approved for FHA “spot loan” financing in a community that doesn’t have current FHA approval.
- FHA Certification and Recertification. Many condo communities have applied for and maintained their FHA certification. Having FHA certification makes a community more desirable to buyers and FHA financing much easier. The FHA condo certification now lasts 3 years vs. 2 and the recertification process has been streamlined.
- Owner/Occupancy Requirements Eased. FHA now requires a condo community be just 50% owner occupied.
- Commercial/Non-residential Space. The amount of permitted non-residential space (retail, commercial, parking, etc.) has been increased from 25% to 35%
These updated FHA loan guidelines will now allow thousands more condominium units to qualify for FHA financing, opening homeownership opportunities to many more qualified buyers. Opening the window to homeownership will encourage more owners to buy and occupy homes resulting in fewer investor owned/rented units, higher owner occupancy levels and stronger communities.
Condominiums are an important part of the housing market for first time buyers. Too often buyers have the income and credit score needed to purchase a home but lack an adequate down payment which can make entering the housing market prohibitive.
In an effort to promote affordable and sustainable homeownership, especially among credit-worthy first time buyers, the Federal Housing Administration (FHA) has recently issued new guidelines making obtaining FHA financing for condominiums an easier and more streamline process. FHA has issued an update to its condo rules, effective October 15th, that will loosen requirements for financing condominiums. Here are some of the more important changes effective this month:
- Low Down Payments Still Available. Buyers can still purchase a house or condominium with as little as a 3.5% down payment
- FHA Certification and Recertification. FHA requires a condominium community to have obtained FHA certification. It is a detailed process and there is an expense to the HOA involved, but once complete, having FHA certification makes a community more desirable to buyers and FHA financing much easier. The FHA condo certification now lasts 3 years vs. two and the recertification process has been streamlined.
- Single Unit Approvals (spot loans) Permitted. In the past, if a condominium community wasn’t on the approved FHA list, it was difficult, at best, to obtain FHA financing. The new guidelines now make it easier for an individual unit to be approved for FHA “spot loan” financing in a community that isn’t FHA approved as long as no more than 10% of the units in the community are FHA insured. (A buyer must use a FHA approved lender.)
- Owner Occupancy Requirements Eased. FHA now requires that a condo community be just 50% owner occupied.
- Commercial/Non-Residential Space. The amount of permitted non-residential space (retail, commercial, parking) has been increased from 25% to 35%.
These updated FHA loan guidelines will now allow thousands more condominium units to qualify for FHA financing, opening homeownership opportunities to many buyers. Homeowner associations are encouraged to obtain and maintain FHA certification. Opening the window to homeownership will encourage more people to buy and occupy homes resulting in fewer investor owned units, higher owner/occupancy levels and stronger communities.
Seafair, vacations, weddings, sunny weather, back-to-school shopping – the month of August is filled with distractions that cause buyers to take a break from their summer home search. Local condominium and house inventory is up (though there’s hardly a glut of available inventory), making this a great time to take advantage of having more homes to choose from, less competition from other buyers and the benefit of very favorable interest rates.
Searching for a home always comes with a list of needs/wants. An important thought to keep in mind . . . if a particular neighborhood or manageable distance to work or schools is important, that should be your priority and always at the top of your list, even if inside it isn’t your dream home. Location is everything, and it can’t be changed once you realize your commute is too long. Buyers should be open to making compromises on cosmetic finishes and fixtures. White appliances, a boring back splash or tired bath fixtures are easily updated. The “perfect” home may already have those sexy finishes and fixtures, but they will come at an added expense which may mean compromising on location to stay within your budget.
Keep location and condition (not updates) as your top home search priorities. If you start with the right location, and the home is well maintained (an inspection is always recommended), you’ll be way ahead of the game. Simple compromises on finishes and fixtures (easily be replaced) and maintaining the focus on location and access to amenities and services, will gain you more value and ultimately a better return on your investment. Don’t stretch your budget for stainless appliances, a glass tile back splash or cool pendant light fixtures. That boring white refrigerator will keep food, milk, beer and wine just as cool as a sexy stainless refrigerator and will serve its purpose until you can upgrade appliances, fixtures, etc. to fit your decor and your budget.
Robin Myers is a broker with Windermere Real Estate/East, Inc., specializing in condominium residences.
In this fast paced, competitive real estate market, it’s common, in an effort to “win”, for buyers to waive contract conditions such as inspection, financing, appraisal, neighborhood review, etc. Buying a condominium is different than buying a house. With condominiums perhaps the most important contract condition in place to protect a buyer is the homeowner association (HOA) resale disclosure documents. The State of Washington requires a seller to provide the HOA resale disclosure to a buyer upon mutual acceptance and the buyer has the right to review and approve or disapprove based on the information contained in the package.
What is a resale certificate? It is a set of documents typically assembled by the condominium’s association manager that includes the summary “resale certificate” which discloses information about the HOA, delinquencies, pending special assessments, HOA reserve account balance, owner occupied vs. rental units, pending lawsuits, etc. Supporting documents will include detailed information about the HOA’s budget and financial statements, reserve study, meeting minutes, rules and regulations, recorded Bylaws and Declaration and insurance.
This is a large package of detailed information which too often buyers glance at briefly or ignore totally. It’s important to understand the health of the HOA and how well it is functioning, how well funded the reserve account is, and what conditions or community rules and regulations could impact a buyer’s planned use of the property.
What should you look for? The recorded Declarations can be hundreds of pages, which is overwhelming. There are major pieces you should review, but it’s wise to spend some time going through all the documents to understand how the HOA is governed and how owner’s monthly assessment dollars are being spent.
Resale Certificate – A 5-7 page document highlighting the major elements of the HOA (owner occupancy, delinquencies, reserve balance, special assessments, lawsuits, etc.).
Budget and financial statements – Review the annual financial statements and current operating budget to see the line-by-line operating expenses. Is the HOA staying within budget? Is the HOA building adequate reserves? Is the HOA financially healthy? Continue reading
The info-graphic above provides a quick look at 2017 King County real estate market statistics.
- nearly 3% more homes (condos and houses) sold in 2017 vs. 2016
- the median sales price was up nearly 15% county-wide
- at the end of 2017 there was less than a one month supply of available homes
- a 4 – 6 month supply is considered normal – we haven’t sen a “normal” level of supply for 2+ years
Six weeks into 2018 the stats haven’t changed much. Homes are coming on the market slowly and are selling quickly. Inventory still can’t meet buyer demand. The “spring” market generally opens up in mid-to-late February. Hopefully there will be more condos and houses available as the weather begins to warm.
The take away . . .
- Planning to sell? Buyer demand is high but condition and location are still important selling factors.
- Ready to buy? Position yourself to be a strong buyer. Meet with your lender and obtain a current loan pre-approval . Work with your Realtor® to educate yourself on neighborhoods, schools, recent sales prices and list vs. sold statistics, commute times, etc.
- Expand your options – maybe the home that fits your lifestyle isn’t a house. Don’t rule out a condo or townhouse which can offer a single family lifestyle with lower maintenance responsibility, a great alternative if you don’t want a lot of yard or exterior home maintenance.
2018 is expected to be another challenging real estate market for buyers and sellers. Be patient. Be flexible. Be ready to move quickly.
Robin is a Realtor® with Windermere Real Estate/East. She lives and works in Bellevue and specializes in the Eastside’s condo and townhome communities.
It’s a common misconception that a minimum 20% down payment is required to purchase a home. Buyers, saving to put 20% down on a home purchase, could be missing the opportunity to buy a home, and instead are watching prices continue to escalate.
There are excellent loan programs available with 5% or 10% down (even as little as 3.5%), requiring less cash out-of-pocket for buyers. A lower down payment may likely result in a somewhat higher monthly payment, but when you consider that houses and condos in the Seattle/Bellevue area have increased in value 14% or more so far this year, and expected to continue to increase in value next year, waiting to buy could prove to be more costly. With rents also on the rise, it could make more sense to buy this year and start putting money toward building equity rather than toward another rent increase next year. Continue reading