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
- 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.
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
Condominiums offer a great opportunity for first time buyers to enter homeownership and begin to build wealth, equity and credit. FHA (Federal Housing Administration) loans were a popuilar option for financing as they often offered more favorable interest rates and down payment options than conventional loans. In recent years FHA has placed significant restrictions on the purchase and sale of condominiums, preventing buyers from purchasing condos, harming homeowners who want to sell and limiting the ability of condominium communities to attract buyers. In order to obtain FHA financing on a condominium, the community must meet a strict list of requirements and obtain FHA certification (a labor intensive process and expensive for the HOA) and recertification is required every several years. As a result, communities have let their certification lapse and FHA insured condo mortgages have plummeted in recent years.
Lawmakers are urging FHA to review these guidelines and ease restrictions on condominium community certification requirements in an effort to make FHA financing an easier process and promote affordable home ownership opportunities. The National Association of Realtors® (NAR) has also been pushing FHA on many of these proposed changes for over three years.
Condos are a critical part of the natural progression of home ownership. Reducing the current restrictions impacting FHA condo financing will go a long way in assisting first time buyers who are entering the market, current condo owners who are ready to sell and move up to a larger home and seasoned homeowners who are ready to downsize to a lower maintenance lifestyle.