Friday, June 14, 2013

Seattle Shows Dramatic Increase in Apartments As Baby Boomers ...

Building apartments is incredibly popular, with an unprecedented 6,796 new apartments coming onto the Seattle market in 2013. Some critics think overbuilding is a real threat, since that?s what happened in the condo market just a couple of years ago. An influx of apartments is great news for renters, but for developers and investors, nailing profits can get more challenging. At the moment, apartment demands are high, but there?s some worry that a revival of single-family homes might come out of nowhere.

According to Seattle economic researcher Dick Conway, there are hints that single-family homes might come back in high demand. Conway says it?s impossible to guess whether apartments or homes will be more in demand in a few years. However, rents are slated to increase 30 percent in the coming five years according to Dupre + Scott Apartment Advisors. On the other hand, salaries are increasing only three to four percent per year, making affording rent a challenge.

The 2013 Record-Breaking Year

In Seattle, 77 new apartment projects are in the works which equals nearly 7,000 new units in 2013 alone. They likely won?t all be built, but even making the 60 percent mark will make it a record-breaking year. Overall, there are over 9,000 units expected to be built in the coming three years. It?s a bull market for apartments in Seattle, one that hasn?t been seen since the 1980s. However, it mortgage rates remain low, it will be more affordable to own rather than rent?which means investment properties will be highly desirable.

It?s estimated that people spend about 12.4 percent of their income on mortgage payments in the Seattle area. Back during the housing boom, people were paying nearly 21 percent of their income. Even though rent is slated to skyrocket, experts don?t think that will turn off young people who just aren?t interested in owning property.

Why the Young Won?t Buy

Pulling together a down payment is challenging at best, especially since a minimum of 20 percent down often required. Just a few years ago, zero to five percent was required. Experts who are predicting a single-family boom couple that with easier mortgage financing. It?s allegedly the best time to buy an apartment in Seattle, and that news is catching the eyes of baby boomers. Right now renting is still cheaper than owning in Seattle, but with rents hovering at $1,400 for a small 650-square foot studio, that won?t remain for long.

The apartments might be small, but they?re often LEED-certified and luxurious (these aren?t the micro apartments popping up near Pike Place Market). The job growth in the area is strong, wages are relatively high and Seattle is a tech-rich city. Both young people and baby boomers are looking to live in smaller spaces while being close to downtown. However, as young people start thinking about families, they may be more inclined to give up city life for home ownership in the suburbs.

The surge in investment and banking is being taken advantage of by baby boomers. Whether they want to live in these swank apartment or snap them up and then rent them out (at 30 percent higher than the rental costs now), both are good moves. This will also benefit the economy as baby boomers aren?t retiring so much as changing how they?re impacting their communities. Going to Hard Money Lenders or other financial pros is a great way for boomers to learn new investment skills for their golden years.

Source: http://www.standardmadness.com/seattle-shows-dramatic-increase-in-apartments-as-baby-boomers-retire/

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