Amanda's View: The market for millennials
By Amanda Knox
I grew up within walking distance of almost my entire extended family. Oma and Opa, aunts and uncles, Mom and Dad—all were within reach, settled between SW 106th St and the Alaska Junction. This arrangement left a lasting impression on me: my notion of family is not limited to the nuclear unit; interaction is abundant and interdependence is instinctual. I suppose this is equivalent to small town mentality: it may not be much, but here are my people, here is my place.
As such, I’d always imagined I’d stay in West Seattle. I’d travel for sure, live in other cities, other countries even, but I was sure I’d eventually settle close to home, and raise my own kids within walking distance of my mom, sisters, and cousins. Why would I deny my children the great gift I received from my parents and adult relatives: shared time and resources, a formidable network of support to fall back on, unconditional love from so many directions in close proximity? Of course, it never occurred to me that when the time came, I might not be able to afford to do this.
When my mom bought her home in Arbor Heights in 1989, the nearly 10,000 ft2 property (and the little 800 ft2 two-bedroom house which stood upon it) cost $88,000. She was able to afford the down payment and mortgage as a 27-year-old single mother of two on a teacher’s salary. Calculating for inflation, $88,000 in 1989 had the value of $172,731 today. But as my realtor friend Will Sears points out, “You’d be hard-pressed to find a house in West Seattle for $400K these days. You’re more likely to spend between $500-750K, and even then, you should expect to make compromises—accessibility, square footage, laminate countertops, etc.” Zillow puts the current median home value in Seattle proper at $612,000, or $415 per ft2. How am I—and millennials like me—supposed to stay close to home?
This isn’t the same issue as millennials’ dwindling hopes of achieving the American Dream, a.k.a. earning more money than our parents. It’s a problem of supply and demand. According to Redfin, there are a couple of factors that are determining the rise in price of property in Seattle proper: (1) our economy is increasingly strong, but Seattle remains (for now) the most affordable major city on the west coast, so (2) it’s attractive to students, investors, the tech industry, and international buyers alike. (3) Sellers are hesitant to cash in because they’re worried about finding and affording a new place to live, and in the meantime, (4) renters are finding themselves compelled to look into buying a home simply because mortgage payments are becoming less expensive than rising rent prices.
“The inventory is just not there,” Will explained to me. “Nor is the geographic layout for new homes.”
Phil Greely, a realtor for Realogics Sothby’s International Realty, suggests millennials should reset our expectations. It used to be that you graduated from college, settled into your career, got married, bought a car, bought a house, got a dog. At least, that’s what many of our parents did. But according to Greely, millennials make the mistake of thinking that our first home has to be our forever home. He says, “Unless you have tons of money, that’s not the case. You will be sacrificing, settling for something smaller—a starter home.”
If that sounds a lot like renting, but with more hassle and legal fees attached, you’re right, sort of. Except, “by owning, you’ll at least be reaping the benefit of the appreciating marketplace,” says Greely. “By renting, you’re just buying patience.”
Both Will Sears and Phil Greely assured me it’s not all doom and gloom. A young family with good credit and financial stability, who shops around for financial options and makes strong relationships with their realtor and mortgage loan professionals, and who starts planning three to six months in advance of viewing homes, will still be able to afford to buy a decent house. It just might not be their first choice. Or check all their boxes. And it will be difficult.
I don’t know. It sure sounds a lot like it’s damned if you do, damned if you don’t.