Housing prices are nuts. Did you buy anyway?

[Anonymous]

Did you feel like the price of your house was insane, but you bought anyway? We have a small 2BR and 2 kids and we refuse to pay the $250k more that it would cost to upgrade to 3BRs in our area. Let's say we could probably do it, but I just don't think its going to improve our lives all that much to justify the cost.

So it got me thinking -just wondering how many people buying houses in this area are resigned to the cost feeling like 'too much' for what you get and buying anyway vs. you feel like these prices are fully reasonable to pay.

[Anonymous]

I think you have to get beyond "what is reasonable" to "this is reality" to buy in this area. I just read that the DMV population is expected to grow by 1.5 million people over the next 15 years or so, most of whom are expected to live in D.C. or close in areas i.e. not the exburbs. So where will they live and what will happen to property values?

[Anonymous]

That's the thing. The population in this area is due to increase and no one doubts that. So supply and demand -- these people need to live somewhere.

Anyway, if you plan to live in your house for 10+ years, then capital appreciation isn't such a big concern. You're getting value and enjoyment from living in that house during that time, and it also means you're not paying to rent then.

[Anonymous]

Our house is similar to my parents' house in another state, but it cost 2-3x what theirs is worth. It was worth it for us, because we live in DC, not where they live.

Rather than thinking too much about whether housing prices were reasonable here, we thought about what was reasonable to spend given our income and savings. So we weren't paying "too much" for us, even if the price is expensive (relative to other places) for what we got here in DC.

[Anonymous]

We're in the process of buying a townhouse right now for a LOT of money. The exact same house would cost 500k less in my hometown. The thing is, our other option is renting, which would also cost a lot of money. By buying this house, we're locking in our payment on an space that we can live in for at least the next 10 years, hopefully, since we've factored in room and cost for a second child and bought into a place with good schools through high school.

Also, it's very close to transit options and the city itself and will allow us to have 30 min or less commutes. Honestly, this is the main thing we are paying for because we are essentially buying more free time for our family. This is the lifestyle we want and we are willing to pay a lot for it!

[Anonymous]

I think we are in a bubble. In 2007 I'm sure everyone was using the same reasoning- the area is growing, people are highly paid, it's worth it to live here, etc. My own house, in PG county, has grown over 100k in value in 3 short years. This is nonsense. Nothing about my house or the area it is in justifies it. But I'm not going to pretend I have a crystal ball. Just buy what you can afford and hope for the best.

[Anonymous]

I think that one way that people get around the issue you're facing is to add on to their existing house and stay put. Ultimately, you're increasing the value of your home, making it work for your family and not having to spend money to move/pay a realtor.

[Anonymous]

Anonymous wrote:Our house is similar to my parents' house in another state, but it cost 2-3x what theirs is worth. It was worth it for us, because we live in DC, not where they live.

Rather than thinking too much about whether housing prices were reasonable here, we thought about what was reasonable to spend given our income and savings. So we weren't paying "too much" for us, even if the price is expensive (relative to other places) for what we got here in DC.

OP here. Yes, this is a good point. For some, the cost is a lot relative to earnings and they simply can't afford; for some the cost is a lot relative to earnings and they buy anyway; and for others, the cost is on par with earnings so it doesn't matter.

[Anonymous]

Anonymous wrote:I think that one way that people get around the issue you're facing is to add on to their existing house and stay put. Ultimately, you're increasing the value of your home, making it work for your family and not having to spend money to move/pay a realtor.

Our lot isn't big enough to add on- otherwise, we'd definitely consider. It makes us think creatively to stay where we are and its working for now.

[Anonymous]

While you pay a lot inside the beltway, you are also a bit more inoculated against market shifts too. This area is very steady with housing. People are always moving and buying and selling here. Especially with good commutes downtown. This helps a good amount of housing keep it's value, even when other areas have bubbles and crash. Yes, during the 2008 madness, people are here lost value too. The further out you were, the worse it was. Some of those areas are still recovering. But inside the Beltway recovered much much faster.

You pay for that kind of security too. If another recession hits, people who live in beautiful colonial SFH that cost $300k will be much more effected than those who live in $800k colonial in this area.

So it's not just a straight "this much money buys this much house" calculation.

[Anonymous]

I purchased my house in 2006 and am still underwater-thus it impacts refinancing options.

It was worth it, but there are no guarantees.

[Anonymous]

We have bought and sold four houses in different parts of NOVA and made significant money each time by making smart buying decisions. Proximity to demand areas (not just DC) is a big part of this. Buy a house for what you want but never lose sight of what the market wants and you will be fine. We are in our likely permanent spot now but we got here by being smart about our decisions along the way.

[Anonymous]

Anonymous wrote:While you pay a lot inside the beltway, you are also a bit more inoculated against market shifts too. This area is very steady with housing. People are always moving and buying and selling here. Especially with good commutes downtown. This helps a good amount of housing keep it's value, even when other areas have bubbles and crash. Yes, during the 2008 madness, people are here lost value too. The further out you were, the worse it was. Some of those areas are still recovering. But inside the Beltway recovered much much faster.

You pay for that kind of security too. If another recession hits, people who live in beautiful colonial SFH that cost $300k will be much more effected than those who live in $800k colonial in this area.

So it's not just a straight "this much money buys this much house" calculation.

Um, no. The high end is what falls first in a recessionary environment. There's, you know, less people with that kind of money.

[Anonymous]

Anonymous wrote:Did you feel like the price of your house was insane, but you bought anyway? We have a small 2BR and 2 kids and we refuse to pay the $250k more that it would cost to upgrade to 3BRs in our area. Let's say we could probably do it, but I just don't think its going to improve our lives all that much to justify the cost.

So it got me thinking -just wondering how many people buying houses in this area are resigned to the cost feeling like 'too much' for what you get and buying anyway vs. you feel like these prices are fully reasonable to pay.

How many multiples is your mortgage to income? I think some people here have an unreasonable expectation as to how cheap housing prices should be. We purchased a home for 2x our hhi. There are a lot of households making 300k which means a normal house will be around a million.

Also people really do keep moving here and the area is expected to grow.

[Anonymous]

Anonymous wrote:

Anonymous wrote:While you pay a lot inside the beltway, you are also a bit more inoculated against market shifts too. This area is very steady with housing. People are always moving and buying and selling here. Especially with good commutes downtown. This helps a good amount of housing keep it's value, even when other areas have bubbles and crash. Yes, during the 2008 madness, people are here lost value too. The further out you were, the worse it was. Some of those areas are still recovering. But inside the Beltway recovered much much faster.

You pay for that kind of security too. If another recession hits, people who live in beautiful colonial SFH that cost $300k will be much more effected than those who live in $800k colonial in this area.

So it's not just a straight "this much money buys this much house" calculation.

Um, no. The high end is what falls first in a recessionary environment. There's, you know, less people with that kind of money.

Nope. The exurbs fall first.