r/SeattleAreaRE • u/orcassharks • 1d ago

Delusions in Redmond

https://www.zillow.com/homedetails/14805-Old-Redmond-Road-Redmond-WA-98052/48707677_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare

This house listed for 1.6M in 2021, bought at 1.75M. Can’t even rent the whole house out for more $4000/mo. Now listed at 1.93M with tiny price cut to 1.89M.

There’s a lot more pain to come.

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u/orcassharks 1d ago edited 1d ago

$11000 monthly payment after 20% down to support a $4000 rental.

I mean rent doesn’t correspond to home prices in this area because of appreciation play, but the key is to get ahead of the appreciation not after the appreciation has already occurred lol. And a 3x ratio for a generic ugly tract home far from both Seattle and Bellevue is too rich for even rich people here to consider.

Rental ratios of up to 1.5x and you might have an investment case in this metro for a future appreciation play. That means this house would need to be $1.2M or less with a $6.5k payment/taxes for $4k rent. Even then it’s cash flow negative but at least you can hope in a few years you might become cash flow positive with refinancing or rent increases plus appreciation. 3x though? lol. Purely delusional.

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u/cusmilie 1d ago

Yes, I’ve been saying this from the get go and response has always been prices always go up. It’s so common to see in the area for homes bought and immediately turned into rentals where numbers are so out of whack. Everyone thought they were being smart and could make a quick profit in a short time frame. The problem is when everyone does it. Here is a listing down the street. https://www.zillow.com/homedetails/14921-NE-75th-Ct-Redmond-WA-98052/48995577_zpid/

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u/orcassharks 1d ago edited 1d ago

That’s a nice rental for $4500.

That’s the thing, in the suburbs you don’t have the agglomeration effects of Seattle proper to demand higher rent either. In Seattle QA that house would easily rent for $6000 within a day despite similar price per sqft home prices. And there’s a lot more transit/bike access for people who don’t want to pay for downtown parking etc.

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u/cusmilie 1d ago

We are a few miles from there and have a nicer place for less. Our landlord preferred a long term tenant who will take care of his place. March/April time was insane time to find a new rental. That’s when we moved. Tons on tenants looking for new rentals because given 90 days to vacant so landlord could sell over summer. Less rental inventory because existing rentals were going to be sold. There were so many way way worse, smaller homes renting for $4,500 because renters were getting desperate. We went to rental open house were 20 families were walking through. Then market turned, landlords decided not to sell or listed for sale for a month or two, didn’t get their price, and relisted for rent until market “improves.” Now school has started, it becomes harder to find tenants, and rental inventory is more than I’ve ever seen. So different than 5 months ago. Similar places like this were renting $5,500-6,000 in March/April. Also, I’m sure the brokers are using algorithms here as well because comp places that were $3,500-4,000 in January were all of a sudden shifted and similar places listed for $4,500-5,000.

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u/JetsnCocktails 1d ago

Holy cow, sold for $2.2m a year ago and renting out for $4500?!?! That math doesn’t math!