The seven paths to DC-area home ownership

[Anonymous]

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?

[Anonymous]

Preach.

It sucks, right?

[Anonymous]

Saved a 20% down payment and bought a house for half the amount we were approved for in SS, which is too "ghetto" for half the people on this board.

[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?

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

[Anonymous]

We were definitely a combination of 3, 5 and 7. However, for #3 it was really a matter of bad MS & HS options, not elementary and it's safe. We bought a relatively small (cosmetic) fixer-upper that price-wise was a bit of a stretch. However, we held firm to making sure we lived in a neighborhood that we loved. We're still here 13 year later and have been incredibly lucky to see great appreciation. As an added bonus, the schools are turning around and we will be able to get through public MS if not HS.

Try to find a place where value is to be had. We speculated but it was informed speculation -- location, location, location. That way we figured we could bail if the school thing didn't turn out.

Good luck!!

[Anonymous]

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).

[Anonymous]

We are 1 & 6 I guess, depending on your definition of "huge" salary.

How do you afford the rent in the West End? That's a pretty pricey part of town.

[Anonymous]

Hey! Stop whining. You chose the life and career path. Should have gone big law and married big law and you'd be able to afford it.

[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.)

This, combined with the savings, and willingness to be on the edge of house poor. Anyway OP, we just got into this gig, and home ownership suuuuuucks! I know you should probably do it eventually anyway, but it ain't all sunshine and roses.

[Anonymous]

We are 1 & 6 I guess, depending on your definition of "huge" salary.

How do you afford the rent in the West End? That's a pretty pricey part of town.

OP here.

Huge salary = any salary higher than us.

We can afford our current place because we have a great relationship with the owners and they've been very reasonable with rent increases over the years.

[Anonymous]

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

I guess this is what I do, but the place still cost $750 so I think a combination of "command a high salary" and "be house poor" still figure in.

[Anonymous]

I think almost everyone feels like they are compromising on something. Even richer people have to buy a slightly older house, house with fewer amenities, or a house in a less-than-prime location most of the time. Your #3 encompasses pretty much everyone, even those with family help, high incomes, and down payments.

[Anonymous]

Your list is good. We left the DC area for the reason that the cost of housing was not an obstacle we could overcome and we had a decent HHI also.

[Anonymous]

$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.

[Anonymous]

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