Eugene Cho

to buy or not buy – (seattle) real estate

Some may misunderstand what I’m trying to say. I’m not suggesting that you have to purchase a home in order to demonstrate your commitment to community or your city. And I’m not arguing against the idea that home ownership can be an obsession in our culture – a false sign of success and another notch in the upward mobility lifestyle. Those are all legitimate conversations but I still believe that for most – owning a home is a great investment and a legitimate consideration for prayer and your stewardship philosophy.

Before our church merger, the average age in our census last year was 26 for men and 24 for women. My unscientific guess was that we had less than 5% home ownership within our congregation. We’ve had lots of turnover and my encouragement to the young folks at our church has been: “If Seattle is your city and you intend to live here, then buy a home…”

Well, we all know it’s not that easy. Housing prices have skyrocketed here in Seattle and frankly, it’s pushing people outside the city and it’s too bad. I’ve had numerous younger folks in our church community – single and married – trying to purchase in the city but they’re left with the choice of buying a 1000 sq. feet condo in the city for $350K or get into a single home way out in the burbs somewhere. Others simply can’t even come close to buying a home because of financial reasons. The median price now in Seattle recently topped $500K for the first time.

Now, let me explain what I was trying to say couple Sundays ago since I received several emails from irritated folks. My general statement was that it was my hope that the Seattle housing market would crash by about 30%. I don’t intend ill will or harm to your investments or home property. But seriously, something has to give regarding the housing market here. The Seattle city council is supposedly working towards making affordable housing and mid-level work force housing more available in the city but umm…we’ll see how that turns out. While we’ll be personally affected since we’re looking to sell our home in the next year, I really do hope that the housing market will crash in Seattle as it’ll provide a solid window for prospective buyers to purchase, root, and invest deep into their local neighbors and the city of Seattle. So, while we’re hearing reports that Seattle is a super-city that’s immune to the housing woes across the country…

Nationwide, home prices are falling, sales are sluggish and the number of foreclosures is mounting. Ask any economist and you’ll hear that things are bad, and likely to get worse.

Unless you live in Seattle, where the market is slowing but fundamentals remain strong.

The Emerald City has experienced strong price appreciation over the last six quarters, and that’s expected to continue in the new year, though at a slower pace.

…but more recent real estate numbers seem to indicate that Seattle is not immune to the nationwide woes. Time will tell if it’s simply a hiccup or a legitimate downturn.

Purchasing a home is good on many levels and it’s also a solid stewardship decision. We bought our first home in 2000 in a town called Snohomish, Washington – about 15 minutes from the church we were pastoring at in Lynnwood. We bought a brand new home – 1800 square feet with a huge back yard – for get this…$184,000. That home has since increased in value according to Zillow’s to about $380K+. Unfortunately, we sold the home in 2002 after taking a year to look for a place in Seattle. Building equity in our home has allowed me not only to honor my commitment to my family and children, but give generously to the missions of our church, and think creatively about other ways to live out our convictions and faith in Christ.

So, if you’re thinking about real estate some day, get ready because you may have an opportunity. I share this often with the young community at our church: Instead of buying new cars, going gadget crazy, buying the latest name brand purse, and eating out 4 nights/week, save your money and invest in your future home…

For those who are interested, we do have several real estate agents at our church. FYI, I don’t get any kickback for plugging them but do appreciate how they’ve partnered with our church’s mission.  Contact any one of them if you need an agent.

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22 Responses

  1. James says:

    The market may swoon a little but no way that the Seattle market will crash by 30%. It’s wishful thinking and I get what you’re saying. People who are looking would be lucky if the market corrected itself even by 10% by next summer. Also, as another option, I like the idea of several folks joining to purchase a home together. You can’t do it alone so do it with others.

  2. Brian Kim says:

    Let’s hope for a 50% drop!!!

  3. don says:

    Dear Gene; After owning a home in two midwestern states for about 20 years, I am bak in a parsonage living in California. I loved owning a home and what it meant to my wife and family. I do not like living in church-owned housing, but I am realizing that I carry about within me an unbiblical sense of entitlement to property that is wholly American, but not necessarily Christian. Living at the mercy of the church is a humbling, and therefore, pretty good experience. I still do not like it, but it’s probably the only way ministry can be conducted in high-value areas without busting the church budget. I invite you to play around with our unwritten expectations to own land. What other countries have it like we do?

  4. Alan Klug says:

    The only times real estate markets drop significant amounts in value coincide with significant down turns in the economy, for example when socal got nailed by the failing aero industry in the 80’s. So then the problem becomes downward regression through all segments in the economy, and we all know that people at the bottom catch it worse than those in the top. People lose jobs, banks are reluctant to loan money, etc. Interest rates go up (remember our rates are still historically low), and so even though your house value goes down, new buyers wouldn’t see the same percentage decline in their mortgages. In fact, the only people that would potentially benefit from a real estate swoon would be wealthy people who are well invested in non real estate ventures, and that’s not exactly Quest’s demographic.

    Honestly right now, investing in real estate might be a bad idea financially for a lot of people regardless of how much income they have. However, one thing that can be taken advantage of still is our very reasonable renting market, even though so many condo conversions are going on. For a city of Seattle’s location, size and prestige, renting is pretty reasonable.

    Yep, I’m an engineer with a decent, but not amazing salary, but there are a lot of people who make a lot more money than me who complain that they can’t buy houses. People with good jobs need to quit bitching about home prices, save some money and then decide what they want to do. However, the important thing to remember is that at Quest your average 23 year old is single, paying school loans, and working a relatively low level job, and even with a 30% downturn, people in that situation aren’t buying homes in any major market.

    As long as the economy here is healthy, houses will be expensive. If the econonmy significantly falters, many of us will find ourselves in hot water that extends beyond home prices. I think if all of the externalities of a 30% price drop were factored in, it wouldn’t be wishful thinking, it’d be a disaster.

  5. e cho says:

    don: good thoughts. what r u saying is not biblical – owning property or the sense of entitlement?

    alan: i agree. 30% is a number i threw out there. not necessarily a random number since there are markets in other cities to my recollection that have experienced that kind of drop. we all know seattle that seattle is very unlikely to face that kind of drop unless there is a nation wide recession similar to the 80s as you mentioned.

    i like the asian philosophy…it is part of the parents’ privilege and “duty” to help with their children. my parents were able to help and i look forward to helping my children with their home IF they so choose. it isn’t so much the real estate entitlement as it is the duty of parents to ensure that their children have a solid foundational start to their adulthood.

    realistically, i can see a 10-12% drop and i do hope that some have saved wisely, have supportive family, and will consider buying into the city IF they see home ownership as something they want/can do.

  6. Kristi Beattie says:

    My thoughts…. A significant drop in housing prices would be preceded by, or coupled with, an even more significant decline in the economy. So if housing prices fall, the impact will be felt in lost jobs and, as we are starting to see – increased consumer prices due to inflation. We’ve already seen the fallout with company’s like WAMU, and the layoff of over 3K workers last week. So, it is difficult for me to foresee a situation in which a declining housing market creates ownership opportunities with these other factors in play. I would say that addressing the supply of homes through changes in local permitting (a hot topic right now) to preserve existing housing and create density would be more immediately valuable. I am not sure if goverment resources will ever be sufficient to take on the market forces that drive housing prices – particularly in light of the needs at the other end of the spectrum – homelessness. The City is making significant and focused investments into ending homelessness along with King County and United Way (http://www.cehkc.org), increasing moving towards permanent housing with wrap-around services to support the needs of the chronically homeless. Something I find encouraging is the number of communities taking on similar efforts to address homelessness in the next 10 years even as the homeownership crisis continues unsolved… (see http://www.ich.gov/slocal/index.html)

  7. capt Ralph says:

    eugene, I am seeing you/visualize you standing, with your pantlegs rolled up, in the water, at Golden Gardens, up to your knees. Arms upraised, holding (trying to anyway) the tide back. Literally, thousands (in my experience) have gone through the “revolving door” known as Interbay Covenant Church. It could be proximity to Seattle Pacific but there are many others who had “starter” homes in the vicinity and their families outgrew what they had. An answer to the dilemma is literally building a community – duh. Isn’t that what we are attempting????

  8. e cho says:

    alan/kristi:

    really good thoughts. clearly, you can see i’m not an economist. i didn’t want to make it seem like a simplistic thought that one thing wouldn’t have ramifications on other elements. so your thoughts are really good in the dialogue.

    growing up in san francisco, i saw real estate go to crazy levels that had an impact on so many levels…

    kristi wrote: “I would say that addressing the supply of homes through changes in local permitting (a hot topic right now) to preserve existing housing and create density would be more immediately valuable.”

    good points. another i’d like to learn more about is policies that would allow for a more accurate supply and demand. you have companies or individuals buying multiple homes and creating an unbalanced supply/demand. i was chatting with someone last week who bought a home from someone who owns the bulk of the homes on that block. again, prices fluctuate dependent on supply and demand and we seem to have a skewed balance. i’d love to learn more if others have resources they can point to regarding seattle’s policies.

    on a similiar note, i’ve been reading this blog resource called “seattle bubble”…

    http://seattlebubble.com/blog/

  9. Jennifer says:

    PE

    I think you hit the nail on the head about the importance of parents helping. Everyone about my age that I know in Seattle who owns a home got it because their parents helped. Which is fantastic if your parents are able…of course many are not.

    In our family, we have to make a choice between renting in the city where we can be close to work/school/church….or buying in the suburbs which means taking on a big commute, changing schools for our son, changing churches, etc. In other words, we rent because we ARE rooting here.

    Would I like to own a home? Sure. But renting is a much better use of our resources at this stage of life.

  10. yung says:

    I started looking at homes a year ago and did some research. If you look at the historical context, housing prices all across America appreciated at unsustainable levels. It’s no a coincidence that this started with historic low interest rates and loose lending practices. Easy money allows more buyers and speculators to purchase homes they have no busy buying. Thus creating this artificial inflation of housing prices without any discernible wage inflation to support it.

    The average household income is around $55,000 in King County. You cannot afford a $500K home in Seattle.

    I remember when I was growing up, families in sitcoms would talk about getting a 2nd mortgage as the financial death knell. Now families are getting 2nd mortgages to buy cars and plasma tvs. What the heck?! Personal finance should be required education next to english.

  11. James says:

    I think I read that the average household income was around $80K+. No?

    Regardless, it’s nearly impossible for someone to do it alone without some sort of assistance with the government, good rates, and support from extended family. And Eugene, I agree with you: One of the main problems with Seattle is that they have very loose policies about multiple home ownership. I’m not talking about owing 2 or 3 homes…we have people that own several homes and jack up the supply demand. In some ways, they become slum lords because they don’t really do much to take care of their homes but benefit from a strong rental market.

  12. Andy says:

    IMHO, I’m not sure if folks truly ran the numbers that buying is a wise investment choice, it is rather a purchase decision like buying a car or attending a sonics game. Generally housing prices on average rise is real terms (minus inflation) 1-2% a year, factor in real estate fees, maintenence, loss of return on initial down payment etc, it comes out worse (in general) than renting. Homeowners in the past few years were fortunate in the housing bubble to see unprecedented rises in property values and for those who bought at the top with high leveraged instruments, they are facing some difficult times. If one owns property and the value moves up, count it a blessing, it doesn’t always happen (see taiwan, japan in the late 80’s early 90’s). Like PE, being connected and rooted doesn’t necessarily equal buying property, being committed does. My take is, if you’re renting – not a bad deal!

  13. JB says:

    My financial advice to the young people starting out:

    Save some money every single month and learn to live on less than your whole paycheck. Don’t wait to save until you get that next raise. Your spending always increases to absorb that raise! Get used to socking money away now. Learn about how you want to invest it but above all, diversify!

    Buy insurance! If you don’t have health insurance, get some. That is, if you have any assets at all. One major illness can wipe you out. I have a very healthy friend in his 30s who got pneumonia during the two weeks he was not covered by insurance. Cost him $15 grand with all the tests and 2 nights in the hospital. Imagine what a longer illness could do to your savings.

    If you have people depending on your income (e.g. kids) buy life insurance.

    If you work for a company that matches your money in a 401K, put in as much as they will match, even if it means giving up a lot of things you like to consume.

    Acquire NO debt, unless you are buying a house (or an affordable car, if necessary) that is within your means. No other debt, no matter what. That is a hole that is easy to dig and then it grows on you. Eat beans 6 nights a week if you have to…and one day you’ll be eating great food and remembering the good old days.

    Cap’n Ralph, what about living on a boat?🙂 Seriously, I visited a friend who lives with her husband and two kids in a 750 square foot house in the heart of Wallingford. It’s very cute and organized, and very warm and welcoming. Sometimes you have to choose. City living in a 750 sq. foot home or in suburbia with a 750 sq foot master suite and a commute. We are city folk but I do sometimes envy that suburban closet space!

    Joani

  14. david says:

    while i’m all for more responsible lending practices, there are some who did benefit from the combination of easily attainable low documentation loans and the recent housing boom. thankfully, some careful research and creative financing (and perhaps providence) allowed chris and i to buy our first home in seattle without any help from our parents (and hence no money down) and a below-median income. after a year, we were able to sell and cash out enough equity to put money down on our current home that we never would have been able to save otherwise (in such a short time). all that’s to say there are options for younger buyers looking in seattle- it’s hard but not impossible.

    what i’d personally love to see in seattle is more support for co-housing models that create a synthesis of urban density and shared common space. please, no more luxury high-rise condo towers, and let’s place zoning restrictions on gated mega-mcmansions that hog the land use in residential areas. new urbanism is a great alternative to the illusion of the suburban dream!

  15. e cho says:

    jason the intern: if you’re reading this, use this thread as an inspiration for that depth class we’ve been talking about.

  16. capt Ralph says:

    My son, Anders, is the resident expert on “living on a boat”. While it seems I am on a boat 8 days a week, I have never “lived” on a boat. I have been on a boat for 2 months, without getting off – but never lived on a boat. I am a “collector”. Just ask my wife. The basement on a boat is not big enough, for my stuff. Living on a boat takes an entire mindset. I think what you are asking is a possibility, but not a very wise investment. RE has and will appreciate. Any boat will depreciate – and you need to pay a significant rent/moorage. My advice is scrimp and save and buy land/RE.

  17. Rebecca says:

    I agree with a lot of the financial advice that JB gives, as well as the economic perspective given by Kristi and Alan.

    Having worked in banking for the past five years, I have seen people come in and consolidate their credit card debt with 2nd mortgages, apply for loans to buy boats (not for a home, but just for play) people with 70% debt to income ratios, and other horrible evidences of the plague of debt in this nation. It’s such a horrible conversation to have with a customer when you tell them that they can’t afford the life they are living, that you can’t even help them afford it by reconsolidating because they have screwed their credit score. I had to help a guy (not too much older than myself) who had reached 80% debt to income due to a combination of school debt, car loans, and credit cards. That was scary.

    People tell me I should move out and get a place of my own and all that, but living with my family frees me financially and gives me an amazing support system. Parents don’t necessarily have to give their kids money to support them. My parents were never able to help with cash for college or cars or rent or down payments, but they have always been there with food, laundry service, short-term loans, advice, and a lot of love.

    I might have to drive farther than most to be in community at Quest, living outside the city as I do, but it is worth it. I think you can strike a balance and be committed even if you don’t live five minutes from Quest. You have to weigh the pros and cons. I probably will move up to the city sometime, but as for buying a home, I’ll wait until I have a nice fat down payment so I don’t end up being one of these subprime borrowers falling into default.

  18. […] to buy or not buy – (seattle) real estate Some may misunderstand what I’m trying to say. I’m not suggesting that you have to purchase a home in order […] […]

  19. patlo says:

    Here’s a positive outcome of the city’s housing being so ghastly expensive: the immigration of people into my neighborhood (eastside ‘burbs in Snoqualmie Valley) has provided the community much more ethnic and cultural (though not economic) diversity than it’s had in the 10 years I’ve been here. For my community, that’s a great thing.

    For Seattle, that’s much more debatable.

    I’m a Bakke Graduate Univerisity student, and BGU focuses on global, urban, missional theology. Ray Bakke challenges us to think about whether the current population migrations from rural to urban might just be God-engineered. I’m starting to wonder if suburban flight may actually be God-engineered as well.

  20. Brent says:

    http://money.cnn.com/2007/12/26/real_estate/Case_Shiller_down/index.htm?eref=rss_topstories

    Per the article: “Miami was hit with a 12.4 percent decline in the month, the most of any area. Tampa fell 11.8 percent and Detroit, 11.2 percent. Sun Belt cities have suffered deep losses with San Diego down 11.1 percent in the past year, Phoenix off 10.6 percent and Las Vegas 10.7 percent. In Los Angeles, a huge market, home prices have fallen 8.8 percent.

    Only Charlotte, N.C. (4.3 percent), Portland, Ore. (1.1 percent), and Seattle (3.3 percent) showed positive price growth.”

  21. […] Weird but they grouped me in the Religion/Politics/Great Pumpkin category.   I’m now soliticing your vote because I want to save face.  After couple days [voting ends on Sunday], everyone in the group is […]

  22. […] Like many of you, the financial crisis is also affecting our family.  We are still trying to sell our home – in probably the worst real estate landscape in a long long time.  We’ve lowered the price significantly and may need to do so again.  We’ve caught the eye of the storm – even when I predicted a housing market crash a year ago. […]

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It appears I brought a little Seattle to the NYC. Drizzle fest. 24 hour gathering with a small group of leaders from around the country. Learning. Listening. Asking hard questions. Head exploding. Heart trying to have hope. As I soaked in this breathtaking sunrise this morning above the clouds, I felt compelled to pray for so my places in America and around the world that are experiencing such pain, heartache, injustice, and violence. At times, it feels so overwhelming but in prayer, I was reminded of these words from John 16:33. As we keep striving, working, hoping, preaching, loving, truthtelling, reconciling, repenting, forgiving, dismantling, peacemaking, Kingdom building...may we fix our eyes on Christ: “I have told you these things, so that in me you may have peace. In this world you will have trouble. But take heart! I have overcome the world.” - John 16:33 Grateful for a very full weekend of ministry and preaching in Toronto, Canada (GTA). Such a privilege to partner with @worldvisioncan @wvcollective to advocate for the most vulnerable around the world. God is so gracious. A true honor to meet and encourage local pastors, lecture at Tyndale University & Seminary (photo), and preach at Richmond Hills Community Church, Compass Point Bible Church, and New City Church. Thank you, Lord, that you use broken and imperfect people like me to speak of Your love. Today, Minhee and I dropped off our eldest child at her college. We have been thinking and praying about this day for many years. On some days, we hoped it would never come. On other days, we couldn't wait for it to come. On some days, we prayed for time to stop and other days, we prayed with anticipation. 
After an entire summer of laughing it off, it hit us...hard...this week. Seeing all of her stuff laid out on the basement floor was the catalyst to a load of emotions.

After unloading the car and taking her stuff to her new home for this year and mindful that she might never live with us again; helping sort out her stuff, saying hello to her roommates...I wasn't sure what to do or say.

A flood of thoughts rushed my mind.

Is she ready?
Have we done enough?
Have we taught her enough? 
What if this? What if that?

And so we shared what we have shared with her the moment she began to understand words: "Remember who you are. Remember WHO you belong to. Remember what you're about. God loves you so much. Please hold God's Word and His promises close and dear to your heart. We love you so much and we are so proud of you." And with that, we said goodbye. Even if she may not be thousands of miles away, this is a new chapter for her and even for us. I kept it composed. Her roommate was staring at me. I didn't want to be that father. I have street cred to uphold. Another final hug. 
And I came home.
And I wept.
Forget my street cred.
I miss her. I love her.
She will always be my little baby.

I'm no parenting guru. I just laughed as I wrote that line. No, I'm stumbling and bumbling along but I'd love to share an ephiphany I learned not that long ago. Coming to this realization was incredibly painful but simultaneously, liberating. To be honest, it was the ultimate game-changer in my understanding as a parent seeking after the heart of God.

While there are many methods, tools, philosophies, and biblical principles to parenting, there is – in my opinion – only one purpose or destination.

Our purpose as parents is to eventually…release them. Send forth. For His glory. Met a friend and fellow pastor who I haven't seen in over 20 years. In him, I saw a glimpse of my future. While only 10 years older, his kids are married and he's now a grandfather of 3. His love for his wife and family were so evident and his passion for the Gospel has not wavered. It was so good to see someone a bit older still passionately serving the Lord with such joy and faithfulness. Lord, help me to keep running the race for your Glory. Happy wife.
Happy life. - Eugenius 3:16

I still remember that time, many years ago, when Minhee was pregnant with our first child. She had left her family and friends in Korea just two years before. Her morning sickness was horrible and when she finally had an appetite, she craved her favorite Korean food from certain restaurants in her neighborhood in Seoul, Korea. I had no way of getting that food from those restaurants so I actually said, "How about a Whopper? Big Mac?" Sorry honey. Eat away. You deserve it.

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