Buying vs. Renting in Seattle: Inflation-Proofing Your Future Through Smart Real Estate | Which Is RIGHT for YOU right NOW? | Expert Guidance and Myth-Busting Insights

Unlock the secrets to making the best financial decision for your future as Brian Laflamme, and I dissect the buying vs. renting conundrum with a clear-eyed analysis of the Seattle real estate market. You'll walk away with a deeper understanding of how a fixed mortgage can protect you from inflation, and the surprising amount of income both renters and homeowners allocate towards housing. Our conversation, brimming with live questions and myth-busting, will arm you with the knowledge to navigate your own path to homeownership—or validate your choice to keep renting.

In the undercurrents of King County's property scene, we chart a course through the murky waters of mortgages, insurance, and taxes, juxtaposing these against the rising tide of rent. Over a ten-year voyage, the cost comparison will either solidify your desire to set sail towards buying a home, or affirm your decision to stay anchored in the flexibility of renting. With the help of conservative number crunching, we detail how homeownership could potentially lead to long-term financial gains despite initially daunting costs.

Ever considered upgrading from a condo to a house, or maybe becoming a landlord? We wrap up with a real-world scenario, addressing a listener's dilemma with guidance from realtor and broker Jeff Thornton. Our discussion navigates everything from off-market opportunities to the essential need for comprehensive financial planning before making such a pivotal move. With insights into the exceptional service provided by seasoned real estate professionals, our episode empowers you with the confidence to make informed property decisions, whether you're buying, selling, or finding your footing in the housing market.

👋 Considering a move to Seattle, Washington or its dynamic suburbs like Tacoma, WA & Bellevue, WA? Dive deep into what living in Seattle and its neighboring areas truly feels like.

Explore through neighborhood vlog tours, and city pros and cons videos, and get unmatched insights into relocating to the Greater Seattle area! Transition confidently with guidance from a native Realtor® who's eager to help you settle in your perfect home! 🔑

Whether you are moving in 9 days or 9 months, give us a call ☎, shoot us a text 📝, or send us an email 📨 so we can help you make a smooth move to the greater Seattle, WA area!

Aaron Morrow Realtor Serving (King, Peirce, & Snohomish counties)
📱Call or Text: 206-451-3771
📨Email: aaronmorrow@livinginthegreaterseattlearea.com
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This is my Intro to every Podcast and YouTube video 

This is my Outro to every Podcast and YouTube video 

Transcript

Speaker 1: 0:06

Hey everyone. It's Aaron Maro and Brian Laflame, the Rilter and Lender Duo. Mortgage guy, washingtonian Rilter, greater Seattle area. We're back at it again with another YouTube live multi-cast, multi-stream platform in the greater social platform. Multi-verse streaming to you on everything anywhere clapper, tiktok, youtube, you name it. You've heard of it. I haven't figured out how to go on the lineable yet, but I'm sure if there's a way to go on the lineable, I'll be on there too soon. So we're everywhere. Oh, let's see here. Now we're on IG. We're live on IG.

Speaker 1: 0:48

So we are here to talk about buying versus renting and this is going to be NoBS. So this isn't one of those like super shockers where we're here to like sway you in one way or the other, or trash talk renting versus trash talk buying. We're here to look at the numbers conservatively and almost being unbiased on it. I know that sounds crazy because we're rotors in a lender here, but really we're here to look at this with you and we want to make sure we want to look at it from a stance of is buying a home or renting right now right for you right now, or when is it the right time for you to get into homeownership? That's what we're looking at today.

Speaker 1: 1:38

We're going to be breaking down the numbers and Brian numbers geek love it. He has been really good with these numbers, so he's been super harsh on, like on the home ownership side, to be fair with the numbers. So this isn't like skewing to make it look like, oh, look, how awesome home ownership is, you know, compared to, oh man, like renting seems like it's a no brainer. We should just rent the rest of our lives and give all of our money to all of these corporations that are just going to build these new construction properties for us to rent the rest of our lives, anything like that. So we are here to be able to approach this and help you guys. I know this is the longest intro ever. Let's just get into it. Brian, you have anything to add to that super long five minute intro, or?

Speaker 2: 2:27

I was going to keep you going forever.

Speaker 1: 2:29

Yeah, you're like it's gonna. I've been watching. I was like I've been going for three minutes. Buying is not for everybody and that's okay.

Speaker 2: 2:38

Yeah, it's definitely for you. This is not a value judgment. It could be maybe you're not financially ready to buy it, which scares a lot of people away from trying to buy it, and I wanted to suede that. First of all, if you think that buying a home is something that you want in your future, you should talk to a lender. Oh, aaron's got called me right when I said that earlier rather than later, because if it's for you, you want to be, you want to find out where you are on that path so that you can start making steps in the right direction.

Speaker 2: 3:10

But buying is not for everybody, and so I don't know how long this show is going to go, because we're going to go through the scenarios that we have, or go through the math that we have, and we're going to talk about what we think is what we think the data tells us, and then I mean that's kind of what we're going to talk about. Let's let some people jump on and have some questions that we can go over as well. So I'm gonna share my screen.

Speaker 1: 3:35

Completely agree. I think this will be, and then talk about what I think of it. This will be all dependent on if we have any sort of comments coming in to pad the runtime on the end here.

Speaker 2: 3:50

Cause.

Speaker 1: 3:50

Usually we're like hey, usually we're like our shows, are we gonna have this be 20 minutes? It ends up going for 15 minutes. This one might be a quicker one if people aren't coming in with their questions. So we'll see if anyone comes in with their questions on any of the platforms. I'm watching the comment sections right now. By the way, just to let you guys know, for housekeeping items, I'm gonna drop all of our contact information in the comment section. Feel free to reach out to us, but we're gonna get into it right now. Brian, let me throw this on the screen for you.

Speaker 2: 4:27

So this is a static camera cross doing some research for a class to our business partners and it is one of the most sobering statistics I've seen. Regarding housing, and I want to start with, the best hedge against inflation is a 30 year fixed mortgage. Housing prices have gone up. If you are purchasing a house, housing prices have gone up. You know for whom they have not gone up people that purchased in 2020, 2021, 2022, 2018, 2015,. Their housing prices has stayed the same or it has gone down Because once you purchase a house, you have your interest rate and you have your housing payment.

Speaker 2: 5:01

Yes, taxes will go up at about 2% a year or so, but if you buy a $500,000 house in Pierce County, your taxes are gonna be about 4,800 bucks or so a year, so it'll go up 2% of that 4,800, which is just over $90 a year. That is how your housing price will keep increase, as opposed to your entire rental payment increases. So I wanna go over this. First, a stat that I ran across the share of people who spend 30% or more of their income on housing in just our greater Seattle area. So this should say 18 to 24, there's a typo there on the graph but from 18 to 24,. 64% of renters spend 30% or more of their income on housing only 44% of homeowners. Now, this is to be expected. If people are kind of entering the workforce, they're probably in more entry level jobs.

Speaker 2: 5:46

They haven't quite worked their way up through the job force into the higher paying jobs as they get older and you can see that here that's from 25 to 64, the numbers come way down, but the saddest thing in the world to me regarding this chart is people 65 and older.

Speaker 2: 6:04

Oh, that's 65 plus right there 61% of their income or 61% of them spend 30% of their income on housing when they rent, only 33% spent 30% on more into on housing as owners. And it's sad for a couple of reasons. 65 and up, either you're on a fixed income as you're retired and as your rental costs and your housing costs go up, your fixed income really doesn't go up to keep pace with that, so it just keeps eating in to your monthly income. Or you aren't allowed to retire yet and go on a fixed income because you have such expensive housing Right To your income. And then, third, they almost certainly don't have a nest egg to pass on to their loved ones, which a lot of us that's super important to. So this is what the big difference between renting and housing and why I say it's the greatest hedge against inflation a 30 year fixed mortgage, Because your interest rate will never go up. On a 30 year fixed mortgage. It can only stop the name or go down.

Speaker 2: 7:04

It's fixed right and your housing prices. Your housing gets more and more and more expensive. You don't get to. You still bought it at the price you bought it at and as housing goes up, it's gonna continue. You're gonna continue to keep your same relatively same payment. I was going over some stats in our first time home buyer classes and in this month, the case Schiller numbers are gonna come out and show that in 2023, housing rose 6.8% nationwide, and that's 6.8% in a time where sales dropped from over 5 million to under 4 million, from like 5, 5.1 to 3.8 million. That's a huge drop in sales.

Speaker 1: 7:44

Yeah.

Speaker 2: 7:45

Interest rates nearly doubled. They hit over 8% and even in that environment housing went up over 6%. And that's gonna make what? Is it 73 out of the last 82 years that housing prices have increased? In the past 82 years housing has gone up 72 times.

Speaker 2: 8:06

It has been flat once and it has gone down in price seven times Now because it went down in price for four consecutive years at the Great Recession that we got there about 15 years ago. That's in people's minds. So I think housing is gonna go down. Housing is gonna go down. Housing is gonna go down. Even for those people whose housing values went down, if they had a steady job and a 30 or fixed mortgage, their housing payment stayed the same, so their life didn't change because they still had to live in that house.

Speaker 2: 8:31

So this is the first thing I wanted to talk about. This is super sad to me. 61% of renters, 65 and over, spent 30% or more of their income on housing. The best case scenario is they spend 30% and that's gross income. So that's not counting taxes, health insurance, food, like all the stuff that they have to spend anyways. All right, so now let's look at some math. Shelley, we're gonna look at King County yeah, definitely. And we're gonna look at Pierce County. Hopefully you guys can see the screen. If not, aaron will put the YouTube link in the chat so that you guys can find the YouTube link and look at the screen as we go through it.

Speaker 1: 9:01

And again, before we look at these numbers, what we're gonna say. Any of you looking on a national level because I do have viewers that come all across the United States these numbers obviously vary in areas you're looking in, because I know some of you and I've chatted with other agents in some other areas. There are some areas that home ownership is actually, in some instances, makes a lot more sense than even renting. Like there are some areas that's actually a lot, even cheaper to get into home ownership than renting. So, like, just keep in mind that I always encourage to either reach out to us and we'll connect you with a great lender and mortgage sorry, lender Rolter team to look into your situation to make sure if this makes sense for you.

Speaker 1: 9:55

These numbers are gonna be different. But what we're looking at here locally, on a local level, for the greater Seattle area in Washington state, we are one of the I believe the fourth don't quote me on this I think we're like the fourth most expensive city or area in the United States to live in as far as housing goes. So these numbers some of you might look at this and you're gonna just be like, what am I looking at here? But that's the thing. It's just these numbers are crazy across the board, different across the.

Speaker 2: 10:32

US If you want them, we can do this for your area as well. We can give you yours. Thank, you.

Speaker 1: 10:37

Yeah, we'd be happy to go over it. So reach out to us and, yeah, we'd be happy to talk to you about it.

Speaker 2: 10:44

So let's explain what this is.

Speaker 1: 10:46

Yeah, let's look at this.

Speaker 2: 10:47

Yeah Well, what we did here is we have buying a house over the first 10 years versus renting a house in King County, and we're using a 6.75% interest rate on an FHA loan. So that means you have upfront mortgage insurance and monthly mortgage insurance trying to make it as conservative as possible and you have a low down payment not 20%, not 30% of it. And then you have a homeowner's insurance, which is 3.5% down payment. We're looking at your principal interest payment, your property taxes, home insurance and I'm even including $200 of maintenance and repairs which as a homeowner, you don't put. Almost nobody puts $200 a month into account for maintenance repairs.

Speaker 2: 11:21

What happens is you have homeowner's insurance, you have a home warranty, or you have a credit card that you have room on in order to make emergency repairs, or you have a savings account that you put and then you will take money from that. Of course, correct. I'm just going to assume you're putting $200 a month into this and I'm going to count that in your housing payment to make it as conservative as possible, so we can see what the monthly is from year one. And then for renting, I'm just going to have a normal annual increase of 6% in rent. That is standard for King County, washington, and we're going to start at $4,000, which is about what you pay for something like this in King County maybe three, maybe four, five, depending on where you are in King County. We're going to use $4,000 a month.

Speaker 1: 12:00

And we're going to have rent. And, Brian, let me just say I'm glad that you're audibly breaking down the numbers, because one for the podcasters, but two, a lot of people are watching these in a vertical format on screens that are smaller that they cannot actually see this so it's good that we're breaking down the numbers for visually, that people that can see it, but also explaining it audibly for the visual aid.

Speaker 2: 12:22

And if you want, if you want these assets, we'll send them to you as well.

Speaker 1: 12:26

Definitely so. Comment comment assets. Make sure you smell that right. Yeah, make sure you smell that right. Comment assets or just whatever. Just say what if you want it and we'll send it to you, but comment assets in the comment section and we'll send you our slide deck.

Speaker 2: 12:47

Yeah, yeah, all right, so we'll do it.

Speaker 1: 12:55

I think I lost Brian there, or maybe my connections not doing so well. So we'll see Increases. Oh, there we go. Oh, I think I lost you. I don't know if I we're back. Anyways, you're back. Okay, yeah, you keep going.

Speaker 2: 13:08

Through the first 10 years, every single year until year seven is going to be cheaper to purchase than it is to rent. That it is to purchase on a monthly cash flow basis. As you can see, year one is much lower. And then we don't eclipse the cost of rent by going up just the normal 6% until year eight. So over the first 10 years you're actually spending $46,821 more for your mortgage payment as a buyer than you are as a renter. And this is where most people stop.

Speaker 2: 13:38

Aaron and I were watching somebody, someone's video, where this is one of the, the, the place where they stopped hey, if you buy or if you rent, you're going to pay this much in rent and this much as a buyer, and so it doesn't make sense to buy. And we thought well, what if we dug a little deeper? And yes, absolutely, and this is assuming also that nobody ever refinances from their 6.75% interest rate. So if you've been on any of these podcasts, you see where we think rates are going to go and why and how the data continues to bear that out. So this is also assuming during this 10 years, rates never get below 6.75. They stay here and nobody refinances.

Speaker 2: 14:12

Another another way that we're being super conservative, away from buying and toward renting, just to show, like, the real benefits and the costs of all of it. Everything has a cost and everything has a benefit. So we're going to look at it and you're the only one who can decide which one is more important to you. So the next thing we're going to look at is the appreciation gain. And man, I meant to have these come up separately, but that's fine, you can all look at them.

Speaker 1: 14:31

So, and Brian, again, not to not to slow you down, but for any of our listeners that want to understand can you define cash flow for people that?

Speaker 2: 14:43

have no real state speak. Yeah, cash flow is just the amount of money that you are spending every month or making every month. So what's going out or what's coming in?

Speaker 1: 14:52

how your?

Speaker 2: 14:53

cash flows in and out, and then that.

Speaker 1: 14:55

And to summarize our chart, because we went super conservative on the numbers on this chart that we made, based on the interest rates and this monthly payments that we broke down for these mortgage payments, for this house purchase price you would actually be, not your rental costs would be better for the first 10 years would be less. Yeah would be would be less for the first 10 years on the house Almost $50,000.

Speaker 2: 15:27

Like, that's a good yeah.

Speaker 1: 15:29

Yeah, that is a big and that's monthly yeah yeah, over the aggregate $50,000 more. Now I'm looking in here. Is that now? Let's see, here I'm I'm looking in here now. That's the cash flow, because that's not taking into account the appreciation on.

Speaker 2: 15:47

That's the next, that's next.

Speaker 1: 15:49

Yeah, that's next. Okay, I'm getting ahead myself.

Speaker 2: 15:51

Out of pocket is 685 739 for buying and 638 918 for renting. That number, awesome for you if you're listening. Just on the top of my head carry the one square root of pie $46,821 less in rental cost than mortgage cost. All right, so the thing that you don't get when you rent that everybody knows is appreciation. Now not many people know how much appreciation.

Speaker 2: 16:15

So we're taking the Historical appreciation of 5.31% in King County, washington. That is historical appreciation over the last 62 years. So we're not just counting the 18%, the 10%, the 6%, then nearly 7% that housing prices have gone up the past four years. We're taking the average, the highs and the lows. So with that average appreciation gain over the next 10 years, a $750,000 house is going to be worth 1.25 million. If that seems incredible to you and you're in Pierce, arkin County, this $750,000 house 10 years ago was about 350 375. That's that was the price of the house that is we talked about at the top of the show. Real estate has gone up now 72 of the past 83 years. It is 72 1 and 9.

Speaker 1: 17:04

Yeah, brian, by the way, we have a live comment from one of my tick-tockers, joe Smith. He's a, he's a regular. Hey, joe, Thanks for coming on. He mentioned interest rates are now close to 8%.

Speaker 2: 17:19

No. Interest rates on a down payment assistance loan in Washington state will be close to 8% if you take the 5% down payment assistance option. But interest rates right now we just quoted somebody on a 30 year fixed with 30% down at 6.99%.

Speaker 2: 17:33

Rates are in the high sixes to the low 7s. After this week's to pretty difficult inflation reports. We have a consumer price index that came out hotter than expected and inflation went up a bit. That was tampered on Wednesday and Thursday. One by retail sales coming in much lower than anticipated and the Fed coming out and saying, hey, we don't need interest Inflation to go down in a straight line. We understand that it's going to be bumpy, but then today we had the producer price index, which the consumer price index think of as the retail prices we pay as consumer producer right price index. Think of it as the wholesale prices, what it cost to manufacture and send things to you. That went up pretty dramatically. And we had another high, high, high print. So interest rates are currently at their 2024 highs, but 6.75% on FHA loan is 100% doable right now. Thanks, joe.

Speaker 1: 18:24

Awesome, joe. Thank you so much for the comment. Hey and Joe, any any other comments, please feed them to us, because we'd love to answer your questions as we go along.

Speaker 2: 18:31

And I need to say these rates that I quoted are not an offer to lend and there are specific scenarios with a whole lot of things that we can't get into right now, but FHA Parts 675 should be easy to get to.

Speaker 2: 18:42

Yes, so this appreciation you have of about half a million dollars. So that means a 750,000 house is going to be worth about 1.25 million. What other people? What else people don't really realize is you have a Amortization game, so you have an organization of about a hundred thousand dollars that with you sell, this is also your money that's coming back to you. You also have a tax benefit. As you reach the higher tax brackets you may want to write off your taxes. So for I froze.

Speaker 1: 19:19

I'm sure that freezes on my end for my TikTok. So let's see Okay, hey, brian, we're back, we're back, yeah, we're back. I froze on my end. So, whatever you said, probably froze for my TikTokers.

Speaker 2: 19:30

So okay, I was talking about 10 seconds.

Speaker 1: 19:32

Yeah.

Speaker 2: 19:33

Yeah, not just the appreciation but also the amortization game. So this amortization game that you're going to have is just how much you've paid down the balance of your loan. When you're renting, you're only paying either down the balance of your landlord's loan or you're paying putting money into their bank account. So you have appreciation, you have amortization and you have tax benefits if you decide to write off your homeowner's insurance and your taxes. Now I made the assumption that you're not going to quite be in the tax bracket to write off your. You're going to probably take the standard deduction for the first few years and then maybe you get into an income tax bracket where you want to itemize your deductions, and so we didn't itemize every year for tax benefit, and all that itemization means that the tax benefit is you get to lower your taxable income, so you pay less in taxes.

Speaker 2: 20:18

I also wanted to include this cost to sell. This cost to sell is a big deal. So you're going to pay a realtor hopefully, because if I were selling a house, I would only ever use a realtor.

Speaker 1: 20:29

We also have someone, Jeff Thornton mentioning G1. Buy Down might also be a great option.

Speaker 2: 20:34

So yeah, I think we'll do a show on that one time what buy downs, what temporary buy downs.

Speaker 1: 20:39

Thanks, Jeff.

Speaker 2: 20:40

Yeah, so you're also going to pay excise tax in Washington, which is like 1.68%, and you're going to pay your owner's title insurance. So there are costs to sell the property as well. So we want to make sure that we put those into account as well. And then let's take a look at what the net gain is from buying a house, and you'll notice here if you're looking at a screen we have the cost to get into the house, your initial closing cost estimate. We have the cash flow difference where you're spending more in mortgage than you are in rent over the first 10 years, and we have the cost to sell estimates with your closing costs. Your realtor costs your taxes, and so we want to make sure we count all of those against buying versus selling, because those are very real costs and things that a lot of people will hide and just say, hey, look at this money you're going to make.

Speaker 1: 21:23

Well, yes, no, it's a great. You need to look at it holistically, to be fair. We can't do apples to oranges, we have to do apples to apples, even if we have to squeeze it down.

Speaker 2: 21:35

Look, if you're going to be in this house for three years and you don't want to ever be a landlord, you should probably be renting. Based off this math, Aaron and I say all the time to our clients it is not the right time for everybody to buy, but it is always the right time to look into buying. You just get all the data and make the choice that's best for you and that's what this show is hoping to help with. If you're in there for three years, I wouldn't do it. It's not worth it. The cost to buy, the cost to sell, the difference in how much less you're going to be paying in rent, I'd probably be renting. If you just want to be in this house for three years, maybe you're in the military or maybe you're jobless.

Speaker 1: 22:12

Especially if you know for sure like you know going into it like there's some people where it's an unforeseen circumstance that that wasn't the plan and it takes them out of it. But if you know going into it, that was your strategy like you can't go into it thinking, ooh, you're going to have a huge market burst like a boom 2020, 2021 appreciation. That's not going to have that again.

Speaker 2: 22:36

It's not about timing the market. It's about time in the market and that's true. Maybe you bought in 2018 and you're the genius because 2020 came along and your value went way up in 2020, 2021, and you're interested in what we're doing. That's awesome for you, but that's done well. So look at, the thing that I really love about real estate is a thing called compound amortization or compound appreciation, excuse me. So this 5.3% that King County real estate has gone up on average over the past 62 years is not 5.3% from the original price of 750. It's 750 times, you know, 105.3%, and then whatever that number is times 105.3%, and so you compound and you can see that as we get compounded appreciation each year. So this year you're making $50,000. This year you're making $60,000. This year is more. This year is more. This year is more. This year is more. This year is more because of the way the appreciation compounds. It's 5% of 800, the second year not 750, if that makes sense.

Speaker 2: 23:37

So if we're looking at the initial costs and we're looking at the appreciation, amortization, tax benefits, you're going to come out on top almost half a million dollars over the first 10 years, and this is assuming, again, that you've never refinanced. So let's take a look at Pierce County and we're going to do the same same sort of thing. I won't spend so much time explaining all this because it is the exact same as King County, but we're using the lower rental increase in Pierce County, we're using the lower price point in Pierce County and we're going to end up using a lower appreciation rate in Pierce County too. So the cash flow difference over the first nine years in Pierce County, buying a $525,000 house using the same maintenance or repairs numbers as well, same interest rate, never refinancing You're going to be paying about $53,500 more in more. You can see you don't get more in Pierce County.

Speaker 2: 24:26

Yeah, pierce County is worse. It is worse. Yeah, it's worse because we have a lower annual rental increase in Pierce County because of a few people, so rents doesn't go up quite as quickly, right, and we have a lower appreciation rate too in King County as opposed to.

Speaker 1: 24:43

Yeah, okay, that makes sense when you shift the paradigm that way.

Speaker 2: 24:48

Yeah, which is why it's important to know where you're looking and what it looks like because, as Aaron said, there's some places in America where it makes much more sense to rent than it does to buy, and that's okay. That's the case if you live in Nevada and or Wyoming or wherever it might be, if you live in.

Speaker 2: 25:03

Wyoming. How do you have internet? How are you watching this? That doesn't make any sense. So you're going to make about $53,400 less on your cash flow. So you're going to spend that much more by getting a mortgage.

Speaker 2: 25:15

Your amortization gain excuse me, your amortization gain over the first 10 years and your appreciation gain I flipped these over here so you're going to make about $292,000 in appreciation at a 4.53% average appreciation gain. Your cost to sell is going to be a little bit less in King County because the price of the house is going to be a little bit less. The tax benefit will be a little less because the price of the house and the mortgage amount is a little bit less. Your amortization gain is going to be a little bit less because you have a little bit lower loan amount. But, as you can see the cost and the credit still.

Speaker 2: 25:47

Bear out that if you're going to be in there for three or four years and you don't want to be a landlord, if you just adjust your three-year plan, if you're buying a house to start your real estate portfolio, gain some equity and then move to the next place absolutely 100%. Do this. Just stay there for five or six years or rent it out and then move again or buy a duplex in house. Hacking, but what we wanted to do with this?

Speaker 1: 26:11

Which was a previous episode of ours.

Speaker 2: 26:14

What we wanted to do with all this is we wanted to show you guys what the math looks like Renting versus buying in the two counties that are the most populated here in Washington. And then I wanted to show you this Harvard business study that shows that, while rental markets are softening, half still of US tenants spend more than they can afford from a high. We can split this article on the assets of this episode as well. And what is really really really horrible about this? Can you see this article or no? Or you just see NetGain, by the way?

Speaker 1: 26:49

No, I'm still seeing the NetGain by buying home, so why don't? You share, and then I'll throw it back up. Here we share. There we go. Perfect Okay, adding it to the stage. All right, here we go.

Speaker 2: 27:09

So this Harvard study shows that half of US tenants are still spending more than they can afford on rent, and the thing about this is it is not going to get better. Rent is going to go up or stay the same, and if rent goes down, it is not going to go down for long. And so if you already have half the people spending more than they can afford to pay reasonably in rent. Already we talked about how 30-year fixed mortgage is the best defense and best hedge against inflation because your costs stay relatively the same.

Speaker 2: 27:46

Taxes, of course, go up, but they go up so much more nominally as opposed to rental prices and mortgages. As housing prices go up. The math that we did before $500,000 house in Pierce County save up $4,800 a year in taxes, about a 2% increase in taxes. We'll say, which is right around a little bit less normally than that, but that's only a $96 increase per year. That is less than $9 per month that your housing price will go up, that your mortgage will go up. As opposed to a 6% or 4.5% increase in rent, 4.5% of $2,000 is a lot more than $9 a month.

Speaker 1: 28:28

Absolutely Anybody else in the comments.

Speaker 2: 28:30

I like that 2-1 buy down option. We're going to do a whole show on that, so tune in for that if you guys are.

Speaker 1: 28:37

So Jeff Thornton's interesting not to give him a full-on plug, but Jeff's a good guy so I met him off of TikTok, I believe, and YouTube, but he's a roulter and broker at the same time.

Speaker 2: 28:51

All right, yeah, in our area that's great. He's in the business and he's watching.

Speaker 1: 28:56

So, way to go. Cheers, jeff. Yeah, thanks, Jeff. Or was watching Peace out? Yeah, no, but yeah, no, it looks like I don't. I don't see anyone having any more comments or questions on it. But yeah, I mean, I think we really did hone in on what. I think you were really good with the numbers there. I think, um, I mean, if anything, I think we that that gentleman that we watched his video, oh, come on, let's see here. Joe's got another question. So Joe asked and, by the way, anyone that's watching this like on YouTube and LinkedIn and Facebook, I use a multi-stream platform called Streamyard TikTok is the one platform that doesn't get along well with it, so I can't throw the questions up on the screen like any other platform, but I will read them off to you. So Joe asked how, about? How, about how? How? Should I sell my condo to buy a house or or wait? How should I sell my condo to buy a house or wait?

Speaker 1: 30:06

Should so basically, like Joe, you're asking should you sell your condo to buy a house right now or wait Well, um.

Speaker 2: 30:15

That is, unfortunately, with the information we have, unanswerable. It depends on your goals. I would say let's set up a zoom to talk about Do you want to continue to build equity in both places and build your nest egg? Do you have an equity to take out of the condo to purchase the new house, either via home equity on a credit or a cash out refinance to get the money? Do you not want the burden of being a landlord and you want to sell it and buy a new house? And then how do we time that in a market like this? There's a whole lot of if thens in that same, but it is absolutely possible and we'll just hone in on what your actual goals are so we can make sure that you're served that best way.

Speaker 1: 30:49

Yeah, that'd be great. I know, joe, you and I have chatted a little bit about what you told me your budget was and what you were looking for on the east side, and I was even looking. I sent you like I I could send you an off market list If you're interested on some. I looked into like some expired and canceled listings that could possibly work for your situation, which that could be a good option. Joe, by the way, if I sent you that list of off market properties and you liked one of them, this doesn't work out for everyone, so I don't want to like I'm not trying to promise you into something that works for most people, but I do every year get one or two clients into a house this way. So if I send you this list of off market properties that I that I actually comb through for you when we were chatting on Tik Tok and you liked any of them, what I can do is reach out to the original owner, because I actually pre scan them for you and I made sure I checked the tax record to make sure the homeowner still owns the home, that was trying to sell it up to two years ago and I made sure it was still within the budget that you gave me and the parameters that you gave me, joe. So what we could do is I'd send you that list if you liked. Any of them I could see. Let's see here.

Speaker 1: 32:15

Oh yeah, Joe, I'd have to double check if any of the off market had, I think, in that list, or a couple in Bellevue. Yeah, so let me double check in that list if any of them were in Bellevue. I think there are a couple in Bellevue in your price range that you gave us. But we could also at 950 K that you said. Let me double check the off market list because it was up to two years ago that you gave me. So, um, but yeah, let's, let's chat through a tick tock. Okay, and what you could do, joe, when you ran that budget number, are you running that based on what you believe you can sell your con for, how much you're going to pull out of it to put towards a home? And have you kind of ran your own numbers on figuring out the monthly mortgage payments? Like, have you used like any online mortgage calculators or have you talked into a lender yet to really hone in on what your true budget is? He said yes, so okay, good, You're on the right track.

Speaker 1: 33:20

So there are realtors.

Speaker 2: 33:22

And then there is Aaron. You just went through off the cuff. Oh hey, we met on tick tock and we talked, and these off market listings that I sent to you and the ones that were within your budget and I know that the owner still live there and I know that they have a can sell at a price point that fits for you I can't tell you we work with hundreds of real estate agents every year and that is not common Like what Aaron just spouted off, as if it were just him doing his job. The way he thinks that this is just part of my responsibility and my role as a realtor is not common in this job and it is really difficult for a lay person to know what to expect, what to not expect. They meet a realtor at an open house or from referral and there are differences in like in every walk of life. There are differences in realtor competency and ethics and professionalism and Aaron is at the top. So way to go, way to go, guys.

Speaker 1: 34:21

Thanks for the plug brain. Well, joe, I will double check the list and get back to you. Joe, on tick tock, so fantastic. Thanks, joe for the comments and I'll get back to you. Yeah, fantastic. So, and, joe, what we could, what we could do, joe will chat more because I would love to double-check everything just to make sure the numbers are good for you, because Sometimes you'd be surprised when, when you have a second opinion, when you have a second look at what you could sell your condo for and you have a second look at what, what, the, what the loan would look like. Maybe there's some more Room there in the budget or there's some, you know, who knows what we'll find, but let you know, let's chat more. So, fantastic, good. Well, yeah, I think this is great.

Speaker 1: 35:18

Anyone that's watching this Definitely look back on it If you guys have any questions on this. I mean, here's, here's the thing. Now I will mention this, though, like we just mentioned, a Super conservative, like most of the time, it doesn't make sense, cash flow wise, to Do this right to to basically to buy a house if you're gonna, if you're gonna, turn around and sell it within three years. On the flip side, I mean, I'm just to play devil's advocate here. I'm just throwing this out here. I I always share this client client story that bought up right. So I had a client that they have bought and sold through me three times within a matter of it was like a five-year, yeah, they, um, so they. They started out with a condo and then a townhouse and then a single-family house and when we started their journey, year one you know of their five-year period they wanted the single-family home, of course, but they couldn't get there and they couldn't get there with their income and there was gonna be no job change. There was no plans for any job change or significant increase in job pay or anything like that, just incremental, you know, improvements on on the pay raises. So, without a significant change in Income, the way to do it was to use the down payment assistance program. Get on a condo that worked for it, get them into that condo. We honed in on an area that we felt like the looking at the numbers, the appreciation Would be there, and we hedged our bets and it was good and it paid off because two years or a year and a half to two years later they were able to pull out just enough to use as the down payment towards the townhouse, and then the townhouse they pulled out two and a half years later as much better equity To use towards the actual single-family home that they finally got into. Every time the margins were super thick. So I'm not talking about like crazy scenarios where they made mad money each time, you know, but we were able to Get them into that house on a five-year plan through the power of letting each house Work as a you know, work as an asset to use the money and pull out of it in the next one.

Speaker 1: 37:56

Now I Every time talk to them about the idea of what if you stayed, what if you looked at the possibility of renting the previous one versus Selling it? And then, but they just did not want to be a landlord, so that was never an option for them to hold on to the asset and buy the next one, you know. But it's something that I always Recommend clients look into if they're gonna buy their next home is double check to see if it makes sense to rent. And, joe, this is something that you could look into too, if you're still listening is what? What would your condo rent out for? And I don't know if you looked at that, that angle yet Can. Is there enough there for rental income to offset Towards home ownership with your income to buy what you're looking for?

Speaker 1: 38:54

I don't know if you looked at that angle yet or not, if you're still listening or not, but, um, if so, great, um, looking to that, that's an option for some people. Um, that's a route that a lot of people just don't look into and it's it's worked out for a lot of my clients Once they've looked into it. And then a lot of people look into and they're like nope, never mind, but it's good to at least rule out. Right, you want to rule out every possibility To make sure that you've looked into all the options and you're well informed. So I feel like I've been blabbering, but you know this is part of the heart of an educator. So, um, but, yeah, okay, so if anyone uh else doesn't have any questions, I'm glad that tick tock finally through all of the viewers at the very last minute and everyone's just hopped on at the very end. Thanks for that tick tock algorithm. But, um, everyone on, uh, hold on, let's see. Uh, uh, doesn't help in the amount, yeah and joe, uh, most of the time it, most of the time it went in for a condo. So I totally get it. I just thought I'd bring it up just to see if you've looked into it. So, um, I totally understand. I'm glad that you looked into it, though, um, and we'll chat again.

Speaker 1: 40:07

But anyone that's on tick tock, that's watching this uh, what I've been You'll either be able to Go watch the full video Of this on my youtube channel. I have this in podcast form, and then I also have been working on cutting it up to uh Start um Making these in nice bite sized trunks on uh, tick tock as well, for the good content that you need. So anyone that Didn't get to watch this, let me know. I'll send you the link. Um, again, as a reminder for anyone that came on and have no idea who we are since we're kind of Wrapping this all up, since no one else has any questions my name is Eremaro, local roulter here in the greater seattle area. I've been serving clients here in the greater seattle area for over 10 years now. Brian the mortgage guy he's been doing this for 40 000 years. Um, washingtonian, it looks very useful for doing it for 40 000 years.

Speaker 1: 41:06

No he covers all of washington and parts of oregon too, because, um enough of his clients have been complaining for him to do Oregon as well, um, there's really no difference between washington and oregon. Yeah, I mean. I mean I was there is, but like you know, if you're in one state or the other.

Speaker 1: 41:20

I primarily work with clients in king pierce, in snowmush counties, but you know, I have clients that take me, um, like I just had a client I just threw a video up on tick talking youtube of a client that client journey and scadget so, like, I have clients that take me a little bit north or south, depending on what they need. So reach out to us, we're happy to help and if you're all across the us, again We'd love to help connect you with the right people. Um, other than that, reach out to us, we're happy to help and, um, until next time, stay tuned. Uh, we're still figuring out where we're going to talk about next time, but, uh, other than that, um, I think that's it. You have anything else, brian?

Speaker 2: 42:04

Nope, it's a pleasure. As always, this is super data deep. So please, please, please, if you're watching this on just audio format, reach out for the assets and we will send them to you, or go over to Aaron's youtube channel so you can follow along you want to make sure All right sounds good.

Speaker 1: 42:21

See you guys.