By the end of October I expected home prices in Seattle to stabilize. Two things have happened that will stall that.
First is the mess of the bank moratorium on foreclosures due to an inability to provide proper documentation. I’ll write another article about that when it’s more clear. The second thing is a very real concern about rental income, or if we have a scarcity of rental housing.
At the price of foreclosure now a housing unit, either single, or multiple cash flows if the interest rate is low enough. Mortgage rates are certainly low enough. So a property may cash flow for thirty years at that mortgage payment, but it may be difficult to build equity in that time.
In the past, if you cash flowed a property you could count on appreciation to build your equity. In a case like today, when pricing is going down, and is expected to go down in the future, a property is treading water to lose equity.
A smarter move today is to build housing units that are at a price point of cash flow, positive cash flow, that already factor in a loss of equity.
In the 1970s builders built apartment buildings that were considered to be paid off within 15 years. The numbers, the return on investment was based on owning the property free, and clear. If we return to that today, which we should, the downward pressure on rental income will further depress the price of housing.
About David Losh
In 1984 I got my Real Estate license and worked in a small company called Advance Properties. The owner was extremely interested in Real Estate, building, and land development. Most of his work was concentrated North of Seattle. Since the 1970s I had worked for Real Estate agents in Seattle as a contractor, mostly preparing properties for rent, and sale.
After a few years my skill level increased considerably concerning land use, building code, and development practices. Escrow, and lending offices were housed at the Advance Properties building so it was easy to get involved in all aspects of Real Estate. It was very much a family owned, and operated business.
Over the years my Real Estate license has been at a variety of Real Estate companies, and offices. Nothing compares to those early years, or that sense of family. Real Estate has gotten to be corporate owned.
My hope with this blog is to share with you some of the things I've learned. If you have Real Estate needs, or want contractor help, I refer freely to what best suits you. If you should choose to work with me you'll find a great resource.
My Real Estate license is at Skyline Properties in Northgate. Skyline is a locally owned company that is a desk fee office. There is a wide variety of diverse agents. It helps me with some of the other projects that I have, and mentoring that I do, to be able to work with people from other cultures.
Here in Seattle we are close to Vancouver BC and are the gateway to China. Boeing has a great trade relationship with China, as does Microsoft have with all of Asia. We are a culturally diverse community, and it helps me to be invlolved.
