What’s a millennial to do?
Seattle’s housing market is smokin’ hot.
So hot, that many would-be homebuyers — especially first-timers — can come away, burned.
Millennial Jeremy Verke is one of them. Out of college for three years, Jeremy lives rent-free in a fixer-upper in the popular Capitol Hill neighborhood of Seattle, exchanging handy-man skills for a room. While he’s able to sock away much of what he earns, he’s also got a few school loans to pay off. That’s a bummer, but also a tough reality for many students graduating college today. And while he appreciates living rent-free in someone else’s home, he carries a torch for the American Dream.
A home of his own
He wants a home of his own. A tall order in today’s market.
With the average price of a house in Seattle reaching nearly $820,000* in March, those entering the fray of hopeful homebuyers must be hardy, patient souls with either deep pockets or equity in a current home. Which puts young people like Jeremy in a bind, if they have neither money nor a home they are looking to sell. And many won’t, because typically, this is the time of life when they work on establishing their careers and paying off school loans, while still trying to save for that massive down payment on a house.
The mixed blessing of a robust local job market, is part of the reason home prices here are skyrocketing. Jobs are plentiful, with tech giants like Amazon and Microsoft drawing scores of workers and wannabe homebuyers to the city. But the number of available homes isn’t so plentiful. In fact, there is a shortage, especially in the price range that first-time buyers can afford. Many homeowners of lower to mid-range priced-homes are opting to stay put rather than bust the bank with a nicer, costlier house.
Jeremy has a battle on his hands. Competition for homes in the Emerald City is fierce. The shortage of available homes is driving up prices and spurring competitive bidding wars.
So, he does something he probably never thought he’d do. He asks his brother to buy a house with him.
Finding himself unable to afford a traditional home loan on his own, Jeremy taps his younger brother, Noah, a new California transplant hired by Amazon, to go in with him. It could work. Two brothers together. Two incomes. And if two were good, wouldn’t four be better? He asks two friends to also join in. Originally agreeable, the two friends eventually drop out due to the messy logistics of four-way ownership.
Disappointed, but still determined, the Verke brothers develop what they hope is a winning strategy.
First, they will look for a home outside the more popular areas, probably in South Seattle, historically a more affordable option.
Second, they agree to go small and decrepit. Nothing hard work, a hammer and paintbrush can’t fix.
Third, they’ll have their loan-preapproval wrapped and ready to go.
With high hearts, low standards and strategy in place, the two set out to look at a house, a 1920’s craftsman in South Seattle. The peeling paint, weathered exterior and single-pane windows don’t phase them. Neither do the un-grounded outlets, burnt orange carpet, grease-stained linoleum and faux wood panel walls. Even the small size — 1,000 square feet on a half lot — doesn’t make them pause. It is the towering pile of realtor cards on the kitchen counter that makes their hearts sink. Though the small, forlorn home has been on the market only a day, it has already been viewed by a swarm of prospective buyers.
In the end, the house goes for $150,000 over the asking price. Way more than the two brothers can afford at $700,000. Paid in cash.
A few good tips
It’s not impossible to buy a house in Seattle. But it’s not easy either. Having a plan and developing a few key qualities will boost your chances of success.
· A plan (Do you have a budget? Have you prioritized your wants? Are you pre-approved for a loan? Have you researched home prices in various areas?)
· Ability to move quickly (With competitive bidding, there’s little time to mull things over.)
· A thick skin (Expect multiple rejections.)
· Flexibility (Are you willing to consider a different neighborhood or different home features?)
Never give up
The Verke brothers haven’t given up. They still want their own home. But they’ve come up with a slightly different way to achieve the American Dream. They’ve scrapped the plan of buying a home outright for buying a plot of land and then building on that land, as time and money permit.
Keep trying, Verke brothers.
*Northwest Multiple Listing Service
Advisory services are offered by Joslin Capital Advisors, LLC, an SEC Registered Investment Advisor.