BiggerPockets Seattle/Bellevue! Thoughts about appreciation rate?

Question

What do you think the appreciation rates will look like in this area for the next 3-4 years? Personally I don't think they'll keep going as high as last few years, but who knows. I'm currently considering doing a single-payment PMI on a hold-and-wait property. Not planning to perform home upgrades that increase the property value any time soon. Thoughts?

Adrian Chu · Answer

Probably not as high as last few years but still an upward trend. Strong economics, lots of high paying jobs. Home prices are a fraction of what they are in the SF Bay Area.  Rent to price ratios are way more favorable here as well.

It depends how much that one time fee is but when home values go up, it's generally not worth doing a single payment PMI.  Chances are you can just refi later when the V in your LTV goes up thru appreciation.

See example for $500,000 purchase price.

Percent Down

Appreciation Needed to Reach 80 LTV

Home needs to be worth this much

3.50%

20.63%

$603,125.00

5.00%

18.75%

$593,750.00

10.00%

12.50%

$562,500.00

15.00%

6.25%

$531,250.00

Also, when you refinance now, there is a decent chance of getting an appraisal waiver from Fannie Mae or Freddie Mac.

Sure, there is a risk of interest rates going up.  But if rates stay the same or go down, it's almost the same as paying points right now to lock in a rate.

Andres Pico · Answer

Thanks a lot! That was a very informative example and way of seeing things. I've decided to not make the single payment PMI and just go with the month-to-month alternative. I understand there's no way for me to know what the market will do but even if the home appreciated at a bare 3% rate the PMI would go away rather soon :)

Dave Skow · Answer

Is property primary residence or rental? Ltv ? Loan amt ? Amount of upfront mi you are considering paying ?