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Real Estate
Reply to "Who can afford 800K-1M homes? Genuine Curiosity!"
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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]One of the things that make me nervous about the DC real estate market is how many people are living in homes that they can afford only because they bought when prices were much lower (in other words, they couldn't afford to pay today's prices). That works fine as long as you don't have very many people leaving and/or you have a steady stream of new people arriving to buy. But without that, prices aren't sustainable. So if the job market in DC starts to slip, prices are going to drop. I'd be a lot more confident in the market here if everyone currently living here made enough money that even if they had to start over, they could still afford the same house.[/quote] The thing is, this is true for most of our parents and hasn't been a problem. My parents bought their house for 50, 100 or 150k, and it's worth a lot more than that now - but they couldn't afford to buy it now. They don't even work! Inflation.[/quote] My parents could very easily afford to buy their house now if they had to, and I think that's true of most people their age. Sure, it's worth 5 times what they paid for it (inflation, as you said), but their incomes are also much higher than they were back then (again, inflation). In a place where property values have just gone up gradually over time, most people would be able to afford their house if they had to start over -- their incomes will have gone up, too. But around here, it's not just a gradual rise. Real estate values are just vastly higher than they were 10 or 15 years ago, and incomes haven't gone up anywhere near as much.[/quote] It's a bubble. And around here (at least in DC and the close-in suburbs), it hasn't popped yet.[/quote]
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