How much easier was it for baby boomers to buy a home in Seattle?
Jack Broom can tell you firsthand. The now-retired Seattle Times reporter had only been at the paper for a couple years in 1979 when he decided to take the plunge into homeownership.
“We paid $65,000, which seemed like a lot of money at the time. I found out the house had been listed a year and a half earlier for $47,000,” Broom said. “I thought, ‘oh man, we’re really getting ripped off.’ “
But, he says, it was considered a hot housing market, and there was a lot of competition.
Adjusting for inflation, the $65,000 Broom paid for the house — a 1920s Craftsman in the Phinney Ridge neighborhood — is roughly equivalent to $225,000 in today’s dollars.
Broom bought the home with his then-girlfriend, Judy, who was also working as a journalist at the time, and “making peanuts.” But the couple scraped together a down payment while renting. Neither received any help from their parents.
“We were living in sin,” Broom laughs. “I was a hippie.”
A decade later, in 1989, the now-married Brooms upgraded to a larger home in the Broadview neighborhood. They paid $145,000 for it, or about $300,000 in today’s dollars. The home, where the Brooms still reside, has an estimated value in the current market of about $850,000, according to the site realtor.com.
It’s hard to believe there was a time, and not really that long ago, when journalists — or teachers, or nurses — could go house hunting in the city of Seattle and actually buy something. And perhaps at this point, this column should include a trigger warning for any young couple traumatized by the current housing market around here.
Census data shows that the median home value in King County in 1980 was $71,400, which, in today’s dollars, is about $225,000. That’s well below half of what it is now.
Looking at the median home values in Seattle census tracts in 1980 really does seem surreal, even after adjusting for inflation.
Take, for example, the ritzy Madison Park/Denny-Blaine neighborhood. You’d be hard pressed to find a house for under a million these days. But in 1980, the median home value here — the highest in the city at that time — was the equivalent of $425,000 in today’s dollars. Values in other exclusive neighborhoods, like Laurelhurst ($384,000), Queen Anne ($362,000), and Magnolia ($316,000), were even lower.
In every Seattle neighborhood, the median values are startling. In Fremont and West Seattle’s Admiral, for example, values were below $200,000. Seward Park was just a bit above that.
Even so, for a lot of folks back then, it didn’t seem so cheap. Keep in mind that King County home values in 1980 were about 50% higher than the U.S. median.
Another mitigating factor: Mortgage interest rates were much higher in the past. In the early 1980s, they peaked at around 16%. They didn’t fall back down into the single digits until the early 1990s.
So for a lot of folks with middle-class incomes, buying a house in Seattle was still a stretch back then. Broom recalls thinking about his first home purchase, “How could houses ever be this expensive?”
Starting in the late 1990s, home values here began to soar at a much faster rate than inflation. Today, the typical sale price of an existing single-family home in the Seattle area is 5.7 times greater than the median household income, up from 2.5 times in 1988, according to the Harvard Joint Center for Housing Studies. We’re one of three metro areas where the price-to-income ratio more than doubled in this period.
A limited supply and historically low mortgage interest rates have contributed to the run-up in prices. But while home prices have risen incredibly fast here, the incomes for the highest earners have kept pace. These are the folks buying homes in Seattle, and they have transformed modest old neighborhoods into much fancier places.
For any couple without two high-paying salaries, though, Seattle has become out of reach. And Broom has a lot of sympathy.
“I think about young people who are trying to climb aboard the homeownership train by saving, while the home values are going up three times as fast as the rate of inflation,” he said. “How can you chase a train down the track that’s moving so much faster than you can run?”