The Decatur: Cheaper to Own than Renting?

We’ve recently received a study claiming that it’s now more cost-effective to own at The Decatur Condominiums than it is to rent in the popular First Hill neighborhood.  This study compares one and two bedroom homes in The Decatur to comparable properties offered at nearby apartment buildings.  It considers variable market dynamics including lower selling prices, FHA financing, historically low interest rates, rising rents and tax advantages for homebuyers.  The chart they provided contains two scenarios tallied over a period of five years aggregating the total housing costs for both renting and owning, and you can tap onto it here– The_Decatur_Chart.

The study also referred to a recent Puget Sound Business Journal article headlined “Ascent of Rent” , which takes a look at rental rate increases, plus the lack of new condominium projects scheduled for development.  This article also covers the number of rental properties slated for construction–subject, as always, to funding availability.    

More than 80% sold, The Decatur has 146-units comprised of one and two bedroom homes starting from just $187,500.  Built in 1950, the concrete and steel high-rise landmark was substantially renovated in 2006 and 2007, and converted to condominiums before the market corrected.  Prices are now up to 40% below the original sales prices.  Take a look at the links we’ve provided and if you’d like more information or to schedule a private tour, just contact us at urgent@stroupe.com.

Fixed Mortgage Rates Lowest Level In Nearly 60 Years

So what was happening in April 1951, the last time that 30-year, fixed-rate mortgages were this low?  Harry Truman was in office — 12 presidents ago!  All in all, it took nearly 60 years for rock-bottom mortgage rates to come full circle, but here we are.

The Freddie Mac Primary Mortgage Market Survey reported the average rate for a 30-year, fixed-rate mortgage was 4.19% with an average 0.8 origination point for the week ending Oct. 14, down from last week’s average of 4.27%. A year ago the average was 4.92%. This is the lowest rate the survey has recorded since its inception in 1971. Mortgage rates were last at this level in April 1951, according to Freddie Mac. 

Rates for 15-year, FRMs are falling steeply, setting a new low for Freddie Mac. The GSE said the rate was down to 3.62% with an average origination point of 0.8. The rate for a 15-year FRM was 4.37% a year earlier.  Further, Freddie Mac commented that the September employment report held no big surprises to the financial market, allowing long-term bond yields and fixed mortgage rates to continue easing.

Bankrate reported the average rate for a 5-year, ARM fell last week to 3.62% from 3.64% previously. The one-year Treasury-indexed ARM averaged 3.43% with an average 0.7 point up slightly from 3.4%. At this time last year, the one-year ARM averaged 4.6%.

Coincidentally, Seattle-based Dupre + Scott Apartment Advisors’ latest report predicts that based on historic rents and incomes over the last 30 years, Puget Sound-area rents could climb almost 25 percent by 2015 and 50 percent by 2020.  They also discovered that while rent rates fell during the last two recessions, it wasn’t by that much.  AND, when the economy rebounded, so did rent rates.  Add historically low interest rates to low apartment construction levels forecasted for 2011 and 2012 and  we’re telling you, the time is ripe for buying!  Contact us at this Stroupe Group link and let’s talk some more.

A Bulletin from Bellevue: The Bravern’s North Tower Goes Rental

It’s been one of the hottest rumors around and now sources have confirmed that developer Schnitzer West is converting The Bravern’s second tower in downtown Bellevue from condominiums to luxury apartments. Its North Tower is 33 stories high and will have 211 apartments available. Units range from 600 to over 2,000 square feet, and rents will start at $1,550.

Schnitzer acknowledged that while the North Tower received conditional mortgage financing approval through Fannie Mae and FHA, sales demand simply wasn’t there. All purchase agreements have been terminated, and earnest money deposits are being returned. The Bravern’s first residential complex, its South Tower, also started out as luxury condominium building. Lack of demand caused Schnitzer to convert it to apartments in April 2010. Also 33 stories high, 65 percent of its 236 apartments are currently leased.

The Bravern isn’t the only complex experiencing slow sales. Units in two other downtown Bellevue high-rise condo projects aren’t doing big business either. However, the Bellevue apartment scene is a different picture. Demand for in-town living is increasing across the Seattle area, causing rents to rise and vacancies to shrink. In addition to The Bravern, Schnitzer converted its 204-unit Equinox condo complex in Seattle’s Eastlake neighborhood to apartments in 2009. At least four recently built Seattle projects have converted from condominiums to apartments.

Why is this a silver lining for the Bellevue condo community?  Conversions to apartments means more inventory is off the table, further solidifying its condo market. And, Schnitzer sees its actions as a temporary situation. Its press release states that “…a structural shift has occurred in residential demand from owned to rental housing. Over time, we expect the pendulum to shift back to more normalized market conditions and The Bravern Residences will be positioned to capture ownership demand when market conditions warrant.”  

We can’t emphasize enough how good a time it is to buy. With apartments approaching historical highs, plus home pricing and interest rates at historical lows, maybe it’s time to take a second look at sticking your rent money into an investment, and a place, to call your own. Contact us at this link and let’s get you started!