Redmond has firmly established itself as a highly sought after place to live in the Greater Seattle metro area. Home to the primary Microsoft campus, as well as numerous other high tech companies, Redmond boasts impressive employment opportunities, a relatively high median household income, high median home values, and other eye-catching features. In the not-too-distant past, the real estate market in Redmond was very much a seller’s market: the median home value was climbing, and buyers often engaged in bidding wars for a property. Now, the tables have shifted, and we’re seeing a much cooler, more buyer-friendly marketplace. This should compel many buyers to reconsider Redmond as an option for their home.
In this post, we will take a look at the latest numbers on the real estate market in Redmond from Zillow. We will also look at some numbers on the renter market. Looking at the state of the buyer market and the renter market, side by side, should make many renters rethink the decision to rent rather than purchase.
Data on the Buyer Market
According to Zillow, the city of Redmond has a healthy median home value of roughly $834,600. This is quite a bit above the current median for Seattle. Zillow classifies the Redmond buyer market as “cool” at the moment, which indicates a favorable situation for buyers. Fewer buyers are interested in forking over the kind of money which is necessary to break in, and so that means less competition and a better situation for those buyers who still want to purchase in this area. Over the past 12 months, the median home value in Redmond has declined by approximately 0.8%; Zillow predicts another decline of around 0.9% over the coming 12 months. The buyer market in Redmond will likely remain cool for at least the next 12 months. These data, and predictions, are current through August 31, 2019.
Data on the Renter Market
According to Rent Jungle, as of April, 2019, the average rent for a 1 bedroom apartment in Redmond is $1,892. The average rent for a 2 bedroom apartment in Redmond is $2,373. Collectively, these figures mean that the average rent for an apartment in Redmond, irrespective of whether it be 1 or 2 bedroom, is $2,160. Both of these averages for 1 bedroom apartments and 2 bedroom apartments represent increases from the averages from the previous year. When we compare these averages with the kind of payments a person will be making on a purchase, the comparison can make a strong case in favor of buying over renting. True, these data on average rents are a bit old, but there’s no reason to think that the current averages as of October, 2019, would be lower; in fact, they are likely to be significantly higher.
Buyer Market Favors Buyers
If a person were to put down 20% on a median value home in Redmond, then that person would need to make a payment of $166,920. If a person put down 20%, this would mean that a loan of $667,680 would be required to finance the remainder. Assuming a 4% interest rate, the new homeowner would be looking at monthly payments of around $3,188. What if a person were to put down a larger down payment? Let’s suppose a buyer puts down 33.3%. This would mean a payment of $278,200, and a loan of $556,400 to finance the remainder. This would translate into a monthly payment of around $2,656. This is also assuming an interest rate of 4%. Both of these projections assume a 30 year fixed-rate mortgage.
Again, even though homeownership comes with other associated costs – such as maintenance, repairs, property taxes, and so forth – the option to buy becomes attractive when you consider the fact that rents are quite high in the Redmond area. If someone can put down a significant down payment, buying in Redmond seems like the better choice. If someone simply rents a 2 bedroom apartment at an average price in Redmond, that’s not too much lower than the monthly mortgage payment on a loan which finances 2/3rds of the purchase price on a median value home. And it’s a buyer’s market, as we’ve discussed, and so that means that buyers will likely be able to negotiate a final purchase price for below the initial asking price in many cases. In any case, the option to buy in Redmond should certainly be something to think about with seriousness under the current market conditions.
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