The seven paths to DC-area home ownership

[Anonymous]

OP, we spent like we still lived on $50k for 3 years. At the end had that down payment and more.

[Anonymous]

We bought a house in a less desirable area (good old PG County) with help from my parents, but it's a house I would feel happy living in for the rest of my life and we are not financially stretching ourselves. I don't know what the future will bring but for now I really enjoy where I live. I feel safe, and I am ok with the elementary school here. We'll see.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$156K is a good salary for the region. $375k on that salary is too conservative. Even with a 5% mortgage and 0 down, 30 year fixed on that is $2k a month. Add in 350 for taxes and insurance and you are looking at only 18% debt to income ratio, *FAR* shy of the 28%-33% ratio that most people subscribe to. Using 28% as a ratio, your "affordability" figure jumps to about $580k, which can buy you a nice townhome in Fairfax, or even a single family in some of the older but still nice neighborhoods like Burk.

I am not a Realtor, just someone who has done enough of these types of calculations to know when people are over/under extending themselves.

you're out of your damn mind

Your calculations are confusing me - are you confusing gross and net? Because we make about what OP and spouse do, and after taxes/insurance etc. on our take-home, a mortgage of "only" $2350/month comes pretty damn close to being 33%.

Being conservative is really tough in this area, but it is definitely a positive thing and not one to necessarily advise against.

No I am not, mortgage plus tax plus insurance as part of gross income, not net, is the standard way to calculate debt to income ratios. You don't have to agree with me or this method, but it is what it is and is what's commonly used to gauge whether someone's income is able to afford a certain home.

DC area is not an area for the conservative, it's for those who are on an upward trajectory in life. This is where you strive to earn more and grow your career. If you just want to casually cruise through life at a leisurely pace, there are much better locations than DC for that.

[Anonymous]

Anonymous wrote:OP here.

I'm confused why you would rent for 8 years when we had a nice market bottom in 2008/2009. Why not buy then?

Yeah, cause I knew it would be a market bottom, right? "Hey, the roulette wheel came up 15. Why didn't you put all your chips on that number before the spin?"

Anon 12:43, thanks for the post. Very informative and enlightening. Maybe that is a viable path, and maybe I need to get more comfortable with the idea of PMI if we're gonna stay around here.

I saw it pretty clearly. Real estate is not like the stock market, you can literally see it changing and have weeks and months and sometimes years to act. The market was obviously starting to recover in 2010 and prices were still good. Anyone looking to buy but did not buy then have no excuses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Deciding you want a 15 yr mortgage for your first home is certainly your prerogative, but it might be contributing to the fact that you are renting while making a good salary.

We are 40 and don't want to be paying mortgage until we are 70. And even if we took 30yr mortgage, we would still be priced out of anything nice. And I just can't bear to work all day every day for decades in order to possess something I don't like. I would feel like one of those people who sold a house and a barn for a tulip. I am not saying it's a bubble, but for me, the value is just not there. Amazingly DH and I are on the same page there.

You are 40 years old and have only $200k saved up? You've got bigger problems than housing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here.

I'm confused why you would rent for 8 years when we had a nice market bottom in 2008/2009. Why not buy then?

Yeah, cause I knew it would be a market bottom, right? "Hey, the roulette wheel came up 15. Why didn't you put all your chips on that number before the spin?"

Anon 12:43, thanks for the post. Very informative and enlightening. Maybe that is a viable path, and maybe I need to get more comfortable with the idea of PMI if we're gonna stay around here.

I saw it pretty clearly. Real estate is not like the stock market, you can literally see it changing and have weeks and months and sometimes years to act. The market was obviously starting to recover in 2010 and prices were still good. Anyone looking to buy but did not buy then have no excuses.

Yup. I am in Glover Park. My neighbors tried to sell their place for $700K in fall 2010, no takers so they ended up renting it out. It just sold for more than $800K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Not PP. I too hate every house in this area. They're old (50s-70s) and not nice. I just want a normal 3 bedroom house with an open floor plan that isn't dated looking. We have 700k to spend and it's just all bad. Depressing that all we can afford is Pimmit Hills.

Your manor awaits
http://www.redfin.com/VA/Falls-Church/7422-Howard-Ct-22043/home/9471953

You mean McManor.

For 700K and good schools/decent commute, that's a great house.

Absolutely. That doesn't change the fact that it's a McMansion.

Not big enough to be a McMan.

Also, it was built in 1953. I didn't think older homes qualified as McMansions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$156K is a good salary for the region. $375k on that salary is too conservative. Even with a 5% mortgage and 0 down, 30 year fixed on that is $2k a month. Add in 350 for taxes and insurance and you are looking at only 18% debt to income ratio, *FAR* shy of the 28%-33% ratio that most people subscribe to. Using 28% as a ratio, your "affordability" figure jumps to about $580k, which can buy you a nice townhome in Fairfax, or even a single family in some of the older but still nice neighborhoods like Burk.

I am not a Realtor, just someone who has done enough of these types of calculations to know when people are over/under extending themselves.

you're out of your damn mind

Your calculations are confusing me - are you confusing gross and net? Because we make about what OP and spouse do, and after taxes/insurance etc. on our take-home, a mortgage of "only" $2350/month comes pretty damn close to being 33%.

Being conservative is really tough in this area, but it is definitely a positive thing and not one to necessarily advise against.

No I am not, mortgage plus tax plus insurance as part of gross income, not net, is the standard way to calculate debt to income ratios. You don't have to agree with me or this method, but it is what it is and is what's commonly used to gauge whether someone's income is able to afford a certain home.

DC area is not an area for the conservative, it's for those who are on an upward trajectory in life. This is where you strive to earn more and grow your career. If you just want to casually cruise through life at a leisurely pace, there are much better locations than DC for that.

you are so full of yourself.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Deciding you want a 15 yr mortgage for your first home is certainly your prerogative, but it might be contributing to the fact that you are renting while making a good salary.

We are 40 and don't want to be paying mortgage until we are 70. And even if we took 30yr mortgage, we would still be priced out of anything nice. And I just can't bear to work all day every day for decades in order to possess something I don't like. I would feel like one of those people who sold a house and a barn for a tulip. I am not saying it's a bubble, but for me, the value is just not there. Amazingly DH and I are on the same page there.

You are 40 years old and have only $200k saved up? You've got bigger problems than housing.

really? like what?

[Anonymous]

Anonymous wrote:

Anonymous wrote:My wife and I have rented in the West End for the past 8 years. Since that time we've had a child and hope to have another one in the not too distant future. In other words, we're outgrowing our apartment and are considering the need to live in a larger space.

We like the DC area and would like to stay, but we're pricing out houses in the area and it's clear that it's going to be tough if not impossible to do so. My wife and I make a combined income of approximately $158K, and according to most house-affordability calculations that results in being able to afford $375K houses. This figure, as you know, does not go far in the area.

We are still left wondering how people afford homes in this area. We thought about what others have done and eventually compiled a list which comprise what we've called 'the seven paths to DC-area home ownership' (in no particular order):
1. Command a massive dual-income salary
2. Willing to live far outside the beltway/endure a long commute
3. Willing to live in an undesirable area (poor housing stock, bad schools, no nearby amenities, high crime rate, etc.)
4. Have saved up a down payment over a very long time
5. Willing to be extremely 'house poor' (>35-40% of income going to mortgage service)
6. Get help from family (inheritance, or have gotten help from family for other costs (ex. parents paying for college) which allowed saving for down payment)
7. Bought pre-boom (and have since enjoyed incredible appreciation)

Of course, some folks have taken multiple and overlapping approaches, and there's also the chance we're missing some.

At the end of the day we recognize that we are much better off than most and count our lucky stars each day that we have what we do. We recognize we are truly fortunate. And we don't want this post to be construed as a 'woe is us' lament. However, it's disheartening that mid-career professional families can scarcely afford the area.

I would like to hear about those of you who want to buy in the area eventually and face similar circumstances as us. Which path to home ownership are you planning to take?

8. Tolerate living in an older/smaller/shabbier home in an otherwise good location. (This is a subset of #3, I guess.)

We are a mix of 6,7, and 8.
1) We both graduated fromcollefe without any loans. Parents, scholarship and working along the way.
2) We bought post 80's boom in '90 and saw prices stagnate and sold for a small loss in 1997- did not recouperate updating. Bought a bigger house 3 miles away in 1997 for $275k have put in ~$200k along the way and now is worth ~$850k if current comps are correct.
3) It is getting close to teardown status in the area. Older, yes 1965. Smaller -yes. shabbier-no as we have updated nearly everything.

[Anonymous]

Anonymous wrote:My wife and I have rented in the West End for the past 8 years. Since that time we've had a child and hope to have another one in the not too distant future. In other words, we're outgrowing our apartment and are considering the need to live in a larger space.

We like the DC area and would like to stay, but we're pricing out houses in the area and it's clear that it's going to be tough if not impossible to do so. My wife and I make a combined income of approximately $158K, and according to most house-affordability calculations that results in being able to afford $375K houses. This figure, as you know, does not go far in the area.

We are still left wondering how people afford homes in this area. We thought about what others have done and eventually compiled a list which comprise what we've called 'the seven paths to DC-area home ownership' (in no particular order):
1. Command a massive dual-income salary
2. Willing to live far outside the beltway/endure a long commute
3. Willing to live in an undesirable area (poor housing stock, bad schools, no nearby amenities, high crime rate, etc.)
4. Have saved up a down payment over a very long time
5. Willing to be extremely 'house poor' (>35-40% of income going to mortgage service)
6. Get help from family (inheritance, or have gotten help from family for other costs (ex. parents paying for college) which allowed saving for down payment)
7. Bought pre-boom (and have since enjoyed incredible appreciation)

Of course, some folks have taken multiple and overlapping approaches, and there's also the chance we're missing some.

At the end of the day we recognize that we are much better off than most and count our lucky stars each day that we have what we do. We recognize we are truly fortunate. And we don't want this post to be construed as a 'woe is us' lament. However, it's disheartening that mid-career professional families can scarcely afford the area.

I would like to hear about those of you who want to buy in the area eventually and face similar circumstances as us. Which path to home ownership are you planning to take?

Bought a fixer upper duplex in a transitional neighborhood with a 3% down FHA loan. And we are doing fabulously. Rent is up 30% and home value is up 40% since we bought 5 yrs ago.

[Anonymous]

We bought pre-boom, with family help and have a high HHI. Our house is in a great neighborhood, but is neither big nor fancy (nor well decorated), yet we still wouldn't be able to afford it if we were paying today's dollars.

[Anonymous]

#7, and we live in a $2 million house with lots of equity.

However, you'll be enjoying the latest electronics from South Korea while we're long dead.

[Anonymous]

Yes, you can get a townhouse in Burke and drive to the Springfield metro station.

By the time you save 20% down, the price will be 20% higher and your interest rate increase will be more than PMI.

[Anonymous]

I am happy with our path to homeownership. We rented cheap apartments in great areas for the first 6 years of our marriage, drove crappy, old cars, and lived very no frills, while saving up a huge downpayment. We had no family help at all. We bought as first time homebuyers a $1 million house in the suburbs in 2011.

Our thought was that we had no interest in buying the intermediary condo or townhouse before buying a house, so we just skipped that part and rented for a long time while saving up the downpayment. We didn't want to be stuck underwater in a condo that we would have outgrown just to be home owners sooner. We also did not want an older, small house, so we looked further out than Arlington and Falls Church. The commute downtown was an acceptable trade off for a huge yard and house.