The seven paths to DC-area home ownership

[Anonymous]

Anonymous wrote: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.

This is an entirely sensible plan - and I say that as someone who would never ever, do it. The commute would make me crazy, as would the maintenance of that large a house and yard (and we don't need it). So, we saved up, lived cheap in gentrifying areas, and purchased a large-ish condo in a now almost gentrified area. Almost the polar opposite of the the PP (except for the saving part).

[Anonymous]

We did #1 and #4.

We have a high income--but we're also married at 27 and waited 7-8 years to have first kids. We had 7 years of saving in relatively cheap rental.

We now have 2 homes.

Neither of us is comfortable accepting financial help--not that either of our families were in any position to help.

[Anonymous]

Anonymous wrote:We did #1 and #4.

We have a high income--but we're also married at 27 and waited 7-8 years to have first kids. We had 7 years of saving in relatively cheap rental.

We now have 2 homes.

Neither of us is comfortable accepting financial help--not that either of our families were in any position to help.

NW and Clarendon are where we ended up. We need to be near stuff.

I will say there were times early on when I didn't think we'd ever get what we wanted because I wasn't willing to compromise on location foremost. It took us over a year and many bids each time.

[Anonymous]

We are #1. We also sat patiently through the bubble in 2005-2007 and waited and bought at the bottom of the market. We didn't know for sure it was the bottom, but we knew it was a bubble in the years prior. Got a great deal on a house that is close-in and large enough for us to stay forever if we wanted to do so.

[Anonymous]

Anonymous wrote: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.

Not necessarily true - that fear is what made lots of people buy in the bubble years and then they lost 20% or more equity

[Anonymous]

We were #7. Timing is a big factor. House has over tripled in value.

[Anonymous]

others have pointed this out, but $375k is overly conservative on your HHI, unless you think one of you is likely to get fired or laid off. i am very risk-averse and conservative, but even i would feel fairly comfortable buying in the 500-550k range on your salary.

[Anonymous]

Anonymous wrote:others have pointed this out, but $375k is overly conservative on your HHI, unless you think one of you is likely to get fired or laid off. i am very risk-averse and conservative, but even i would feel fairly comfortable buying in the 500-550k range on your salary.

Maybe the calculators are saying a $375k mortgage? That sounds about right to me. Our HHI is $220k and our mortgage is $488k. We put 20% (122k) down on a $610k house. It is VERY comfortable for us, but we would have felt cash poor spending too much more.

[Anonymous]

I am number #8. We are buying in S. Arlington, although I know that is a third world country according to some posters on here. We make 200K a year. Our mortgage will be under 2700 a month.

[Anonymous]

I am #2 - except that my job is also "far out there" so my commute is nil. Also I have a townhouse rather than a single family.

[Anonymous]

OP here.

others have pointed this out, but $375k is overly conservative on your HHI, unless you think one of you is likely to get fired or laid off. i am very risk-averse and conservative, but even i would feel fairly comfortable buying in the 500-550k range on your salary.

First, slight clarification: we're at about $150k per year total, not $158k.

We came at $375k a few ways:
1. Many calculators recommend putting 20% down. $75k is the upper end that we'd be able to muster in a best-case scenario while factoring in closing costs. Also, we don't want to drain our emergency fund to come up with additional money and we may have another kid soon, in which case we'll need additional savings. Based on previous comments, I may consider putting less down and paying PMI but that will be a bitter pill that I'd rather not take if I can help it.
2. Many calculators recommend not going above 2.5x annual income. That may be conservative but it's what we're comfortable with.
3. Many calculators talk about 28-36% gross income for mortgage payment, but this seems really high, particularly since we'd only probably be able to afford a fixer upper (which will require additional money along the way). Right now our rent is much less than that and we'd like a mortgage that's close to our current rent. That way our cost of living will be predictable. And that's in addition to existing childcare costs, college savings, and retirement savings (let alone groceries, etc.)! Paying 28-36% toward a mortgage payment would substantially change our household expenditures picture.

All of these factors steer us in the vicinity of $375k. Evidently most folks are willing to stretch themselves further than this (hence the high prices). I can't think of any other way.

[Anonymous]

I think the 2.5 factor applies to different parts of the county / income ranges.

[Anonymous]

We were #7. We bought in the District in the mid-90s and every last one of our law firm coworkers laughed at us and bought in safecleanwellmanaged Arlington instead. Lots of Marion Barry jokes at the time, hardee har har.

Their homes have gone up in value, unquestionably. Our went up much, much more, both in absolute dollars and as a percentage of market value. The one and only thing they do have over us now is the prospect of UVA and other fine state schools. We always knew kids would attend independent k-12.

[Anonymous]

We always knew kids would attend independent k-12.

What does independent mean? Private?

[Anonymous]

Yeah