The seven paths to DC-area home ownership

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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

Now you're trying to buy something at the top of the market again. I'd wait.

Market bottom? Prices inside the beltway basically tripled over the 2000s, and in 2008/2009 they dropped like at most 10%...

Incomes didn't triple, so that 10% really didn't provide any help in affordability (and banks weren't lending, so good luck as first time home buyer).

Geez, OP, you should have expected the Fed would pump up housing and assets with QE, everyone knew that...

We're speaking about the last 8 years while OP has been renting. 2008 would be the bottom of the market for that 8 year stretch.

Note what you say: "Incomes didn't triple." Exactly. Except if you believe everyone on this board, prices are just going to keep going up and up and up.

They won't.

Again: Op, wait this out.

Horrible advice. I'm not a DC real estate hyper but over the long term, DC will continue to gentrify. Why would this trend stop now? It's like rolling boulder gaining more steam. DC prices suck, but it's kinda like double Dutch: at some point you gotta just jump in or accept it is not going to happen for you. And move back to your preferred place where homes are reasonably priced. No doubt there will be a little bubble bursting elsewhere when cheap money is less cheap but not in DC. You think it's going to become less safe and schools will become less good?

Ah, now that is a red flag. The whole 'this time is different' and. 'Prices may drop somewhere else but not here'. Everyone everywhere said that during the bubble.

And to answer your question , yes DC and it's metro could get a lot less safe and the schools worse. Look at Meng on capital hill and the cuts to fairfax school budget. If that continues, this area is not a place people will put down roots.

I'm the "wait this out poster." I'm sick of people like the one who responded to me saying crap like this. It CAN happen that the market will drop and it WILL happen. Markets go up and markets go down. Law of economics and DC is not immune. Get your head out of your ass. I assume when the market softens we won't see you in line trying to short sell your house? Watch rates go up and then watch house prices. I will revive this thread when that happens JUST TO PROVE YOU WRONG.

To the follow up red flag poster: Thank you. Exactly right. Thanks for being a level head here among the "Market is going to keep going up" bullshit artists who have been in their hole since 2004.

[Anonymous]

OP here.

11:23 and 11:33, thank you so much for that explanation regarding tax advantages. That was well articulated and the benefits are clearer to me now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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

Now you're trying to buy something at the top of the market again. I'd wait.

Market bottom? Prices inside the beltway basically tripled over the 2000s, and in 2008/2009 they dropped like at most 10%...

Incomes didn't triple, so that 10% really didn't provide any help in affordability (and banks weren't lending, so good luck as first time home buyer).

Geez, OP, you should have expected the Fed would pump up housing and assets with QE, everyone knew that...

We're speaking about the last 8 years while OP has been renting. 2008 would be the bottom of the market for that 8 year stretch.

Note what you say: "Incomes didn't triple." Exactly. Except if you believe everyone on this board, prices are just going to keep going up and up and up.

They won't.

Again: Op, wait this out.

Horrible advice. I'm not a DC real estate hyper but over the long term, DC will continue to gentrify. Why would this trend stop now? It's like rolling boulder gaining more steam. DC prices suck, but it's kinda like double Dutch: at some point you gotta just jump in or accept it is not going to happen for you. And move back to your preferred place where homes are reasonably priced. No doubt there will be a little bubble bursting elsewhere when cheap money is less cheap but not in DC. You think it's going to become less safe and schools will become less good?

Ah, now that is a red flag. The whole 'this time is different' and. 'Prices may drop somewhere else but not here'. Everyone everywhere said that during the bubble.

And to answer your question , yes DC and it's metro could get a lot less safe and the schools worse. Look at Meng on capital hill and the cuts to fairfax school budget. If that continues, this area is not a place people will put down roots.

I'm the "wait this out poster." I'm sick of people like the one who responded to me saying crap like this. It CAN happen that the market will drop and it WILL happen. Markets go up and markets go down. Law of economics and DC is not immune. Get your head out of your ass. I assume when the market softens we won't see you in line trying to short sell your house? Watch rates go up and then watch house prices. I will revive this thread when that happens JUST TO PROVE YOU WRONG.

To the follow up red flag poster: Thank you. Exactly right. Thanks for being a level head here among the "Market is going to keep going up" bullshit artists who have been in their hole since 2004.

You sound bitter and angry. Did the landlord raise your rent?

[Anonymous]

You [the wait it out poster] also don't seem like you know what you're talking about, mentioning a so-called "Law of Economics." (I'm not the previous poster(s) excoriating you, by the way. I'm the 11:33 poster.)

The bottom line is that prices fluctuate. They will do so in the future. But do not mistake this and think that it implies an absence of a trend line. It doesn't.

I don't know what the trend in DC will be. I believe that home prices will continue to increase, but not at the speed of the last decade. I don't think the last decade was a bubble in DC but, rather, the result of relatively cheap housing (for the incomes). DC housing was underpriced for a long, long time in my opinion. Last decade was simply getting prices to where they should have been for a while.

As for the fluctuations, they shouldn't concern you much. You will have 20% equity to absorb downturns and negative shocks. Unless you're planning to flip, that buffer should be more than enough to enable you to ride out the bumps.

So, a belief that the trend is downward (or, perhaps, flat) may be cause for staying out of the housing market. May be because of the tax advantages. But if you believe the trend is downward, you should have reason for these beliefs. What are they? If we can evaluate your assumptions/beliefs, we can assess your claims. Otherwise you're just playing Chicken Little.

[Anonymous]

As for the fluctuations, they shouldn't concern you much. You will have 20% equity to absorb downturns and negative shocks. Unless you're planning to flip, that buffer should be more than enough to enable you to ride out the bumps.

What does this part mean? Could you explain further?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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

Now you're trying to buy something at the top of the market again. I'd wait.

Market bottom? Prices inside the beltway basically tripled over the 2000s, and in 2008/2009 they dropped like at most 10%...

Incomes didn't triple, so that 10% really didn't provide any help in affordability (and banks weren't lending, so good luck as first time home buyer).

Geez, OP, you should have expected the Fed would pump up housing and assets with QE, everyone knew that...

We're speaking about the last 8 years while OP has been renting. 2008 would be the bottom of the market for that 8 year stretch.

Note what you say: "Incomes didn't triple." Exactly. Except if you believe everyone on this board, prices are just going to keep going up and up and up.

They won't.

Again: Op, wait this out.

Horrible advice. I'm not a DC real estate hyper but over the long term, DC will continue to gentrify. Why would this trend stop now? It's like rolling boulder gaining more steam. DC prices suck, but it's kinda like double Dutch: at some point you gotta just jump in or accept it is not going to happen for you. And move back to your preferred place where homes are reasonably priced. No doubt there will be a little bubble bursting elsewhere when cheap money is less cheap but not in DC. You think it's going to become less safe and schools will become less good?

Ah, now that is a red flag. The whole 'this time is different' and. 'Prices may drop somewhere else but not here'. Everyone everywhere said that during the bubble.

And to answer your question , yes DC and it's metro could get a lot less safe and the schools worse. Look at Meng on capital hill and the cuts to fairfax school budget. If that continues, this area is not a place people will put down roots.

But this time doesn't need to be different. I am suggesting it will be more of the same. DC didn't experience any significant bubble bursting in 2008. You're the one suggesting things will be different. One anecdote about Meng doesn't prove anything. Are you actually suggesting Cap Hill has become less safe compared to say ten years ago? Can't speak to Fairfax budget cuts; I am talking about DC proper.

Look, I am certainly not saying that prices will continue to increase at this rate but increases over time will continue. When is the last time a major city's real estate got cheaper as the city's population got wealthier and whiter?

[Anonymous]

Anonymous wrote:We make $160k. We saved for 2.5 years at 50k a year to get a 125k down payment on a 650k home. It's possible and doable. Live within your means. We also spent 10k a year on fancy overseas trips and have paid off cars.

You must be kidding. Or you don't have children.

[Anonymous]

Anonymous wrote:Anonymous 11:19 wrote:

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

I wish, but I think that train left the station a while ago. Any houses, regardless of condition are snapped up in bidding wars if they are in good areas. In fact, the smaller they are the more voraciously they are sought because the starting price point is usually more affordable (and hence the bidding up).

agree. I would love 8 to still be an option.

[Anonymous]

Anonymous wrote:You [the wait it out poster] also don't seem like you know what you're talking about, mentioning a so-called "Law of Economics." (I'm not the previous poster(s) excoriating you, by the way. I'm the 11:33 poster.)

The bottom line is that prices fluctuate. They will do so in the future. But do not mistake this and think that it implies an absence of a trend line. It doesn't.

I don't know what the trend in DC will be. I believe that home prices will continue to increase, but not at the speed of the last decade. I don't think the last decade was a bubble in DC but, rather, the result of relatively cheap housing (for the incomes). DC housing was underpriced for a long, long time in my opinion. Last decade was simply getting prices to where they should have been for a while.

As for the fluctuations, they shouldn't concern you much. You will have 20% equity to absorb downturns and negative shocks. Unless you're planning to flip, that buffer should be more than enough to enable you to ride out the bumps.

So, a belief that the trend is downward (or, perhaps, flat) may be cause for staying out of the housing market. May be because of the tax advantages. But if you believe the trend is downward, you should have reason for these beliefs. What are they? If we can evaluate your assumptions/beliefs, we can assess your claims. Otherwise you're just playing Chicken Little.

Read the news. Read the housing economists and what they're saying. Check the trends. Watch the market. Read the people who have no vested interest in the news either way - they're the ones telling the truth. And the truth from where I sit? Houses are sitting longer despite the fact that most on this board are still citing bidding wars. I have contact with some 20 odd builders in the area. Every single one said sales are down. I'm in residential resale. Sales are slowing there as well and inventory is expected to rise (according to multiple sources) because rates will rise.

Doesn't matter to me. I'm not here to educate idiots and know-it-alls. Go on and buy at inflated prices. I'll pick your properties up at a steal when you have to fire-sell them in a few years like I have my others because I know what I'm doing. I can't wait to laugh so hard when you guys are wrong.

And to other PP, no rent increases here because I don't rent.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You [the wait it out poster] also don't seem like you know what you're talking about, mentioning a so-called "Law of Economics." (I'm not the previous poster(s) excoriating you, by the way. I'm the 11:33 poster.)

The bottom line is that prices fluctuate. They will do so in the future. But do not mistake this and think that it implies an absence of a trend line. It doesn't.

I don't know what the trend in DC will be. I believe that home prices will continue to increase, but not at the speed of the last decade. I don't think the last decade was a bubble in DC but, rather, the result of relatively cheap housing (for the incomes). DC housing was underpriced for a long, long time in my opinion. Last decade was simply getting prices to where they should have been for a while.

As for the fluctuations, they shouldn't concern you much. You will have 20% equity to absorb downturns and negative shocks. Unless you're planning to flip, that buffer should be more than enough to enable you to ride out the bumps.

So, a belief that the trend is downward (or, perhaps, flat) may be cause for staying out of the housing market. May be because of the tax advantages. But if you believe the trend is downward, you should have reason for these beliefs. What are they? If we can evaluate your assumptions/beliefs, we can assess your claims. Otherwise you're just playing Chicken Little.

Read the news. Read the housing economists and what they're saying. Check the trends. Watch the market. Read the people who have no vested interest in the news either way - they're the ones telling the truth. And the truth from where I sit? Houses are sitting longer despite the fact that most on this board are still citing bidding wars. I have contact with some 20 odd builders in the area. Every single one said sales are down. I'm in residential resale. Sales are slowing there as well and inventory is expected to rise (according to multiple sources) because rates will rise.

Doesn't matter to me. I'm not here to educate idiots and know-it-alls. Go on and buy at inflated prices. I'll pick your properties up at a steal when you have to fire-sell them in a few years like I have my others because I know what I'm doing. I can't wait to laugh so hard when you guys are wrong.

And to other PP, no rent increases here because I don't rent.

Yo, you should look at this graph for DC. Notice the bubble and how we are now on the historic appreciation trend?

This is from the company that predicted the bubble and crash

http://us.spindices.com/indices/real-estate/sp-case-shiller-dc-washington-home-price-index

[Anonymous]

OP, if you can afford to rent in a neighborhood you like why not just stay there. Sounds like home ownership would involve hardships on many levels and the end result would just be a house. There is value in quality of life. If you rent in a neighborhood you like, that has good schools for your children and allows you to maintain a work schedule and career path that makes you happy forget buying for now and continue to live your life.

[Anonymous]

Interest rates will rise at some point, though the new fed chair is dovish, so not anytime soon. Higher interest rates will have a negative effect on housing Nationwide.

But the fundamental changes in DC proper are too hard to ignore. If you are on the ground level of gentrifying neighborhood, the changes are startling. It happens SO FAST.

The stats may show a historical bubble, but do they also factor in how the infrastructure of the city has improved and how educated/ affluent people are flocking to the area? Prices are rising, but there is a reason for it. And when neighborhoods get too expensive, more affordable areas suddenly become popular.

It's seems crazy, but there are rational reasons for the price increases.

[Anonymous]

OP, this advice most likely won't be helpful but just to let you know our story. We bought before the boom but we bought in a poor neighborhood that later gentrified. Back then it wasn't so hard to get into a good school out of boundary but we also started out in-boundary for a good school (renting) and then dd was able to stay in school OOB once we bought a house and moved. We made a point to buy a house on the bus line over to the school and dd later continued on through middle school OOB. She attended a magnet school in high school.

Now it's much harder to get into good schools OOB but OTOH there are better elementary schools now in my neighborhood and a slew of charter schools that people like. Yes, it's tough to find a situation that has everything you need today and is affordable but it's not like it was easy for us back in 2002. You just have to work your way through it and figure out what your priorities are. Good luck!

[Anonymous]

I think what a lot of people on this thread fail to understand is that for current first time home-buyers in this area, it's hard. Yes, there are still some "transitioning" areas to consider but for the most part it's not as easy and the relative bounty that it was for those who were lucky enough to have bought in the early 2000s and rode out the market. Starting from scratch now is really tough, even with a 150k salary.

[Anonymous]

I think what a lot of people on this thread fail to understand is that for current first time home-buyers in this area, it's hard. Yes, there are still some "transitioning" areas to consider but for the most part it's not as easy and the relative bounty that it was for those who were lucky enough to have bought in the early 2000s and rode out the market. Starting from scratch now is really tough, even with a 150k salary.

I feel like I absolutely do understand that, but on the other hand, if OP doesn't want to do the things that people in his income bracket have done to be able to buy homes, given the current environment, the solution is that the family will have to keep renting. There is no magical answer. A lot of ideas have been presented but shot down.