The Numbers for Down Payments on a Bellevue Home
Bellevue is among the more desirable places to stay in the Seattle-Tacoma-Bellevue metropolitan triplex. Bellevue has a vibrant, upscale downtown area which offers all the amenities and attractions of an urban environment. But Bellevue’s appeal goes well beyond that. Multiple important companies have established their headquarters in Bellevue, and many others have branches or campuses in Bellevue. When you stroll through Bellevue, you become infused with a sense of possibility, a sense that you’re in a place which is truly up-and-coming. And that sense has driven a lot of newcomers to the area. And it’s also something which has led to a significant increase in the median home value in Bellevue. The median home value has grown so high, in fact, that it’s made entrance into the Bellevue real estate market something of a fantasy for a great many people. Many a native Washingtonian wishes that the Bellevue market were accessible.
When someone be able to enter the Bellevue market, what do the numbers really look like? What kind of down payment and monthly payments would someone be looking at if they were to buy a Bellevue home? In this post, we will continue our series on the financials of purchasing a home in the Seattle-Tacoma-Bellevue triplex and focus on a median value home in the city of Bellevue. Let’s look at the current data on the Bellevue market and then see what sort of financial capabilities a person will need to afford a median value Bellevue home.
Current Data on the Bellevue Market
As of September 30, 2019, the median home value in the city of Bellevue was a very impressive $903,500. That’s almost $200,000 more than the median value home in the city of Seattle! The temperature of the market has gone down a bit recently, however, and Zillow classifies Bellevue as a “cool” market at the present moment. This means that Bellevue is a buyers’ market. Of course, this only applies to those buyers who can enter the market, which is a fairly rare group of people to begin with. But, if a person does enter this market, they’re not likely to encounter a bidding war at the present time. Over the past 12 months, Bellevue has seen a decline in home values of 3.0%, and Zillow predicts a further decline of 2.2% over the next 12 months.
The Numbers for a 20% Down Payment
If a buyer puts down 20% on a median value home in Bellevue, this means that the buyer will transfer a sum of $180,700 to the seller. That’s a very sizable sum. Given the size of the loan which would be taken out in this case – a loan of $722,800 – it’s very easy to contemplate a buyer putting down much more than 20%. But for the sake of this article we’ll just focus on 20%. What sort of requirement would this place on a family earning a median household income in Bellevue? As of 2017, the median household income in Bellevue was $105,402. Using the paycheck calculator from Smart Asset, this means that the typical Bellevue household can expect to bring in around $6,600 per month after taxes (rounded down). On a yearly basis, therefore, the typical Bellevue household will bring in about $79,200. If we assume that a typical family can expect to save around 20% of their after tax household income and still maintain a quality lifestyle in Bellevue, then it would take the typical family at least 11 years to save up for a 20% down payment on a median value Bellevue home. This is assuming a start point at zero and no outside assistance. That’s a long time! A typical family will need to toil away for over a decade in order to come up with a 20% down payment.
What sort of monthly payment would a person be looking at with a 20% down payment on a median value home? If we include homeowner’s insurance, property taxes, and an interest rate of 4%, then the monthly payment on a loan of $722,800 would be around $4,497. When we consider that the typical Bellevue household is earning a bit more than $6,600 per month after taxes, we can see that the financial demands placed by a median value home are pretty severe. That leaves just roughly $2,000 per month after the monthly payment is made. What these numbers mean is that homeownership will be difficult to achieve for the typical Bellevue household, assuming that the typical household intends to buy a home at either the median or above the median. Homeownership may be possible if a buyer looks at homes below the median, but that raises other issues, such as suitability for a family, investment potential, and so forth. Simply put, if you’re looking to enter the Bellevue market for a median value home, you’re going to want to be earning well above the median income level. Or, you’ll want to wait until the median value drops a bit, and buying at the median level becomes a more financially reasonable proposition.
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