Buying on a budget

Many first-time buyers swiftly learn that if they want to get into a home they'll have to make accommodations.

Although there are several types — buying with friends or others, thinking smaller, driving farther — the most popular are buying fixers and finding cheaper neighborhoods.

For Julie Lowe, 33, and Chris Lowe, 35, buying a fixer in Maple Leaf was the best way to solve the affordability problem. The couple was approved last fall for a loan of up to $400,000, but they didn't want to borrow the full amount because they're paying off debt and plan to adopt a baby in a couple of years.

The couple liked Ravenna, where they rented, but knew they couldn't buy there. Online they found homes that fit their criteria — at least 1,500 square feet with two bedrooms, and, ideally, two bathrooms — on the Eastside, particularly in Bellevue, where they liked midcentury ramblers with character.

They also checked listings in Columbia City and the Central District — typical "bargain" areas — but grew nervous about crime rates and what they saw on the market.

They decided to focus on Maple Leaf, north of Ravenna, and look at for-sale-by-owner and fixer homes. The area was safe, affordable and a good compromise for their van-pool commutes. (She travels east to Microsoft, while he heads south to REI headquarters in Kent.)

They realized that aside from looking at fixers, they'd have to drop a few other items from their wish list. Once they stopped insisting on homes with gas stoves, the number of listings that met their other criteria doubled.

"We accepted the fact that we'd have to do the work," Julie Lowe said.

They knew once they focused on Maple Leaf that they wouldn't get a "perfect Craftsman," she said. In late fall, they found a $339,000 house for sale by owner.

While the house needed aesthetic work — it had a bathroom spray-painted silver, a dining room walled off as a bedroom, a lime-green master bedroom and an unfinished basement — the home was in good structural condition and had hardwood floors and a fireplace. With two bedrooms and two baths, a kitchen, dining room and deck, it was spacious. The Lowes offered $355,000 on the condition that the seller didn't entertain other bids, and the seller bit.

Then they persuaded the seller to do $20,000 worth of work, including repairing the sewer line, replacing the furnace and fixing the roof.

"We feel like, in terms of potential catastrophe expenses, we're safe," Chris Lowe said.

Where to shop now

Once upon a time, buyers on budgets looked in Columbia City, Shoreline, the Central District and parts of West Seattle. But while those neighborhoods remain attractive, they are, for many, now more of a fantasy.

Buyers must think about shopping farther north or farther south — in the farther reaches of Snohomish County; in White Center, Burien or areas farther into South King County; or in Puyallup or Tacoma in Pierce County.

One way to assess where middle-income buyers can afford to shop is to apply guidelines for safe borrowing to median incomes. The result shows that median-income buyers do have choices in the metro area — but they have more choices outside of it.

Here's a look at where buyers of different income levels might be able to shop:

$327,180: What a median-income family can afford

A household of four earning median income in King County can, conservatively, pay $327,180 for a home. But they won't have many options on the single-family home front except along the King County line, said Elizabeth Grebenschikoff, a real-estate agent with Quorum Real Estate Laurelhurst in Seattle.

Grebenschikoff said she tries to get buyers as close to their ideal neighborhoods as she can. She drives Shoreline shoppers north, for instance, or those interested in Columbia City south to Rainier Beach.

Grebenschikoff knows there are exceptions within King County. She hosted an open house on Easter for a $307,000 house in the Haller Lake area of North Seattle, and she says that at least 35 prospective buyers showed up. The location and price made the three-bedroom, two-bath house a rare find.

"It was because of the price point," she said.

Buyers who need at least two bedrooms may have more luck with a condominium or townhouse, Grebenschikoff said. Northgate, Shoreline, South Seattle, SeaTac and some parts of Greenwood still have offerings — but Greenwood, she said, is getting expensive.

Other agents say shoppers are heading into Pierce County.

Rose Johnson, an agent with Keller Williams Realty in Puyallup, said that area is popular particularly with families and those who want new homes.

Major builders bought large parcels over the past three years, Johnson said, so new homes are available. The area is only 35 minutes from Seattle-Tacoma International Airport.

"A new home is less expensive here than in King County or even in Thurston County," Johnson said. "A lot of parents want to send their children to schools here."

$265,104: What median-income couples can afford

A two-person household can afford to pay about $265,104 for a home, based on 2005 median incomes. That doesn't leave much room.

In Burien on a recent weekend, Tracy Hughes, an agent with Keller Williams Realty, was showing a two-bedroom home in the Cedarhurst neighborhood. The home, on Seventh Avenue South, is small but in good condition and is near an elementary school. The open house was mostly attended by parents of young children and friends of people in the neighborhood, she said.

Hughes repeated the mantra of many other agents: New buyers and buyers with median incomes or below have to head farther and farther north, or farther south.

$231,996: What median-income singles can afford

The days of the house for less than $250,000 are on the wane in King County, says Chee Yap, an agent with Skyline Properties in Bellevue.

"In the last two years, the number of homes in this range has gotten very small," Yap said.

It is still possible to find $200,000 homes that aren't total fixers, he said, but most are in South King County.

He has to work with clients to find neighborhoods that are realistic financially.

"If a buyer wanted to live on the Eastside, in Bellevue, [at this price], there would be nothing," he said. "Renton would be an ideal choice, though."

Some condos remain at this price point, too, such as a wave of new construction in the Delridge and Westwood Village areas of West Seattle or studios in other neighborhoods.

Jane Hodges (janehodges@hotmail.com) is a freelance writer in Seattle.