Hi Wesley,
A few years ago my now wife and I were in the same situation. Would could afford something in the city but it would not have been the best house on the block by a long shot. We live in the Greenlake neighborhood where the prices have skyrocketed and wanted to say here. We made a choice to invest in a duplex in Edmonds and keep renting in the area we love. Since we could use part of the rent to qualify for the loan we actually we able to buy the duplex on just my wife's income. Now, two years later, rents on one side alone of the duplex are more than the rent we pay in Greenlake and the duplex has gone up in value almost 10% / year. We are extremely happy with our choice and have since purchased another rental house and still rent our primary residence.
There is nothing wrong with buying where it makes sense (cash flow) and renting where it makes sense for you (price, location, amenities etc) as long as your money is working for you somewhere. If you have to break the lease later on the fees/cost should be minimal as in Seattle the landlord/owner needs to make a good faith effort to re rent the space and as you know the market is crazy so that should be a problem. (they cannot legally collect rent for the same space in any month from two different parties).
I just wanted to chime in so you know you are not the only one in that situation.
Good luck with your decision.
Eddie
