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Belltown Real Estate Discussion: Rent or Buy?

I’ve been looking for a two bedroom to rent or buy in Belltown for the last couple months and I’ve noticed that rents have steadily been climbing. I’d guess that most buildings in Belltown have raised their prices about five hundred dollars per month. Even a lot of the less desirable buildings seem to be flush with demand and have jacked up their rates in a new found confidence.

Considering how the rental rates have steadily climbed, I’ve been doing some comparative analysis between renting vs buying. I came across this listing at the Parc on Western. It’s an awesome little condo, but check out the troubled sales history;

Jan 21, 2011 Price Changed $475,000 NWMLS #144825
Dec 09, 2010 Price Changed $525,000 NWMLS #144825
Oct 19, 2010 Listed (Active) $599,000 NWMLS #144825
May 29, 2009 Delisted Inactive NWMLS #1
Mar 14, 2009 Listed * Inactive NWMLS #1
Feb 11, 2008 Sold (Public Records)   $759,000 Public Records

Unbelievable right? Bought in 2008 for $759k and now on the market for $475k? That’s nearly a 40% drop in value – blows my mind.

The NYT created a useful rent vs. buy calculator where you can plug in scenarios to determine, from a financial perspective, the wisest decision. Let us assume, for the sake of example, that the hemorrhage in property values has completely stopped and home prices are optimistically holding steady. Lets also be aggressive and say that rents are going to increase 4% a year.

Unreal to see that it would take 14 years for buying to be a better financial move than renting isn’t it? Of course, a lot of variables go into this decision besides money – but I think it’s safe to say that the allure of the “American” dream of home ownership might be a costly decision for the next couple of years.

Tough times, tough decisions.

 


2 Comments on "Belltown Real Estate Discussion: Rent or Buy?"

  1. at 3rd and Blanchard is totally renovated and about to re-open on Feb. 1st. I have been shopping in the neighborhood and it is my favorite by far in my under $1,000 price range. If anyone is looking to rent in the neighborhood and wants vintage charm with 21st century convenience, I would recommend that you check it out. It’s gorgeous, some apartments have million dollar views, and it’s priced rather fairly.

  2. I’ve been aggressively shopping homes and condos recently as well, and I have used this calculator to plug in a couple scenarios, none of which really look fantastic.

    One thing I noticed though, is the annual home price change is static across the entire 30 years. This is pretty unrealistic, especially when you use numbers like 0%. I think it is probably better to use a small number like 3% to simulate that the pricing free-fall is basically at an end (which might be a serious assumption) and that a small improvement in the market can be expected for the following 5-10 years. I don’t think using this calculator beyond a 10 year horizon is really accurate.

    Also, our rent in Belltown DID go up on Jan 1, but it was only about 1.5%, and that is the first increase we have seen in 3 years.

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