Building Long-Term Wealth with Seattle Real Estate

Home is definitely where the heart is, but over the last decade, it's also been where the money is for Seattle homeowners. Real estate is often the largest asset most people own, and building wealth with Seattle real estate has proven to be a savvy move in recent years. Here’s why:

Seattle Real Estate is an Investment that Grows Over Time

While there’s no guarantee the home you buy will appreciate, the data shows there’s a very good chance that it will. In West Seattle, not only has the median value more than DOUBLED since 2010, but it has also outperformed the Northwest Multiple Listing Service as a whole by almost 40%.

Home appreciation can be a valuable tool in building long-term wealth because it's different than just about any other asset you buy with a loan, since other purchases often depreciate over time. Just think about your car’s current value compared to when you bought it!

Not only do you get the instant satisfaction of living in Seattle–one of the most vibrant and unique areas in the country–but buying real estate in the Seattle area can also be an important part of your long-term financial plan.

As you pay down your mortgage every month, the increase in your home's value amplifies your home's equity, earning you money to tap into or increase what you net when you decide to sell. 

Think of Your Mortgage as Forced Savings

When it comes to investing in real estate, another way to think of your mortgage is to think of your payments as “forced savings.” Sure, no one likes paying bills, but what about one that went into your pocket? It's time to start thinking of bill day as payday! 

Essentially, that’s what a mortgage is—a "forced" savings account. Yes, you're paying out every month, but an important real estate tip to remember is that the equity you build in your home belongs to you. 

A savings cushion is an important aspect of building financial stability and wealth over time, and a lot of experts suggest saving 10% of your income. But that can be hard because of, well . . . life! A mortgage payment is something you'll pay no matter what, and investing in real estate can be a way to meet your financial goals.

As a renter, you can’t ask your landlord for a check when you want to consolidate some debt or want to move to a new place, but that IS possible when you own your home. Building your wealth instead of contributing to someone else's is a great reason to go ahead and get into the Seattle real estate market.

So, why NOW? Let’s talk about that next.

Locking in a low rate can mean building long-term wealth faster.

There has been a lot of interest about interest rates during the last year or so, and that’s because the prolonged period of low mortgage rates has given buyers more purchasing power. 

Paying a lower interest rate means contributing more to your loan's principal, building equity and long-term wealth faster! 

For example, the average rate in 2018—seems like a long time ago, right?—was 4.5%. If you took out a $400,000, 30-year fixed-rate loan, your monthly payment (without taxes and fees) would be $2,027. Using the 2020 average rate of 3.1%, you would pay just $108 more per month for a $500,000 loan. 

Now, let’s connect the dots: thinking back to the earlier data on how home values in West Seattle have increased historically, the difference in home value of a $400,000 home versus a $500,000 home over time is not “just” a $100,000 difference. As home values appreciate, it can mean a greater net worth that increases exponentially over time.

As the regional and national economies continue to recover, interest rates have a chance of starting to creep up to help fight inflation. Investing in Seattle real estate NOW locks in a mortgage payment that future interest rates won't affect. This allows you to keep your cost of living down and put more of your money toward savings and investments. 

By contrast, renters are subject to fluctuating rental prices (if you’ve rented in the Seattle area recently, you know this already!).

Your Starter Home Can Help You Reach Long-Term Financial Goals

For renters who’ve made the jump to becoming a homeowner, a starter home can be a solid investment by allowing you to save money and build home equity. Eventually, there comes a time when you may outgrow your first home. 

For those who currently own a home and are ready to upgrade, listing a home in this HOT Seattle real estate market could mean walking away with a high sale price. But before you do, know that there are other options! Hanging on to your first home as a rental can be a way to generate passive income and ongoing cash flow for your retirement while home values continue to appreciate. If you’re interested in that route, we have agents who are here to help.

Whatever Your Goals are, We’re Here

Building wealth through homeownership means taking steps toward financial stability and the freedom to make your financial goals a reality. 

Buying a home also allows you to put down roots, and we have to say–we’re pretty partial to Seattle as the place to do just that. 

If you’re ready to take your next step in buying a home in the Seattle area, message us today.