Revenue Wanted to Purchase Your First House in Seattle

It’s approaching $200,000, among the many highest within the nation.

Seattle, WA, is understood for its pure magnificence, out of doors recreation, scrumptious delicacies, and tech-focused firms. Along with being an inexpensive and distinctive place to reside, Seattle can also be dwelling to a extremely aggressive actual property market that’s seen giant adjustments over the previous few years. 

For a lot of, shopping for a house in Seattle is a dream come true, nevertheless it’s additionally necessary to know the way it will affect your funds. From down funds to month-to-month mortgage funds, there’s lots to grasp earlier than shopping for your first dwelling 

So whether or not you already reside within the Emerald Metropolis or need to relocate to the world, right here’s a breakdown of the earnings you’ll must buy your first dwelling in Seattle.

Try our authentic report for an in depth nationwide evaluation.

How a lot earnings do it’s good to purchase a starter dwelling in Seattle?

The median sale worth of a starter dwelling in Seattle is $535,000. With a purpose to afford this, first-time homebuyers in Seattle ought to make $173,378 per yr, up 8.4% from 2023. The median earnings in Seattle is $126,647, which means the standard resident can’t afford a starter dwelling. 

Solely California metros require a better annual earnings to afford a starter dwelling. Anaheim, Los Angeles, Oakland, San Diego, San Francisco, and San Jose all high $175,000. 

As anticipated, starter houses in Seattle are extra inexpensive than the common dwelling (all worth brackets mixed; see methodology for particulars). With a purpose to afford any median-priced dwelling within the space, you’ll must make $214,904 (as of October 2023). 

Nationwide, you want an earnings of $75,849 to afford a typical starter dwelling, which prices a median of $240,000. The typical U.S. family earns an estimated $84,072.

First-time homebuyers’ information to the Seattle housing market

Seattle has skilled a rising however combined market over the previous few years. Home costs have risen by 12.5% since January 2021, however the metro additionally noticed sharp will increase and drops.

Like most different metros within the U.S., Seattle’s housing market exploded in early 2022, with costs rising 17.4% in simply three months (from $734,950 in January to $888,844 in March). They’ve settled again down somewhat however are nonetheless elevated above pre-pandemic costs.

The pandemic-driven housing migration growth additionally affected Seattle much like many different coastal metros; extra folks regarded to go away than keep, with patrons trying to find solar and affordability. Nevertheless, Seattle nonetheless grew by 17,750 folks from 2021-2022, a continuation of years of progress. Practically 9,000 folks left town from 2020-2021, however this turned out to be a blip.

If you happen to’re seeking to transfer to Seattle, the world is dwelling to loads of facilities and points of interest all through its distinctive neighborhoods. The Area Needle, Pike Place Market, and Washington Park Arboretum are a few of the most well-known spots, providing beautiful views and enjoyable experiences for folks of all ages.

Some widespread neighborhoods in Seattle embody Ballard, Columbia Metropolis, Inexperienced Lake, and West Seattle.

What does a typical down fee seem like for a starter dwelling in Seattle?

Listed below are some widespread down fee quantities for a typical $535,000 starter dwelling in Seattle:

Down funds can vary from 0% to 100% of the whole home worth, relying in your price range, mortgage kind, and long-term priorities. Whereas specialists have traditionally really helpful budgeting for a 20% down fee, the rising price of houses and continued sluggish wage will increase has led to a 15% down fee changing into extra widespread. 

Some mortgage sorts permit for decrease down fee quantities. For instance, a Federal Housing Administration (FHA) mortgage requires simply 3.5% down, whereas the bottom attainable down fee for a standard mortgage is 3%. These quantities usually rely in your credit score scores, so patrons with increased credit score scores might qualify for decrease down funds.

What’s the typical mortgage fee for a starter dwelling in Seattle?

The everyday month-to-month mortgage fee for a starter dwelling in Seattle is $4,334. This assumes you set 3.5% down and have round a 7% rate of interest.

If this fee sounds too excessive, you can think about renting an residence in Seattle. The median hire worth is $1,990, below half the standard mortgage fee. You can even use an affordability calculator to see what you possibly can afford primarily based in your earnings and down fee.

What must you do subsequent?

If you happen to’re out there on your first dwelling in Seattle, it’s necessary to grasp how a lot home you possibly can afford. Take your annual earnings, credit score rating, the present mortgage charges, and native market developments to decide that works finest for you.

From there, a Seattle agent may also help you navigate the complete dwelling shopping for course of and supply helpful native experience. To study extra about find out how to purchase a house, try Redfin’s First-Time Homebuyer’s Information.

Methodology

Redfin divides all U.S. properties into 5 buckets primarily based on Redfin Estimates of houses’ market values. There are three equal-sized tiers, in addition to tiers for the underside 5% and high 5% of the market. Redfin defines “starter houses” as houses whose sale worth fell into the Fifth-35th percentile of the Redfin Estimate tier. 

We calculated the annual earnings wanted to afford a starter dwelling by assuming a purchaser spends not more than 30% of their earnings on housing funds. Housing funds are calculated assuming the customer made a 3.5% down fee and likewise take a month’s median sale worth and common mortgage-interest price under consideration. 

The nationwide earnings knowledge is adjusted for inflation utilizing the Client Worth Index. 2024 earnings is estimated primarily based on projections from the U.S. Census Bureau’s (ACS) 2022 median family earnings utilizing the 12-month transferring common nominal wage progress price. The speed was compiled from the Present Inhabitants Survey and reported by the Federal Reserve Financial institution of Atlanta.

We assume housing funds embody the mortgage principal, curiosity, property taxes, owners insurance coverage, and mortgage insurance coverage (when relevant).

All knowledge sourced February 2024 except in any other case said.