The seven paths to DC-area home ownership

[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.

Not the PP, but the 28-33% recommendations are of gross income, not net.

I guess by your list we were house poor--we bought our house for $475k, with $50k down when our combined income was about $140K. Never had the slightest problem making the mortgage payment and still were putting money in savings each month. We had minimal student debt (scholarships and state schools)and no kids though, and since we were on upward income trajectories we were used to not spending large amounts of money. Interest rates were a lot higher then though--so we were paying more per month than you would be on an equivalent size mortgage now.

Some people would probably also sneer at our house (3 bedrooms, 1360 sq feet, very small yard) and/or our neighborhood (Alexandria City) but we can walk to tons of stuff, only need one car, are metro accessible, and like the local elementary school--so we feel pretty good about it even if others might consider it undesirable.

Fair enough. Everyone knows best what they can and cannot afford and what they are comfortable with given their other expenses. I certainly don't think your mortgage of 425k on a 140k income made you house poor. So much depends on the down payment, rate, other debt, etc. You do have to admit that the fact you didn't have childcare expenses - the OP does - is huge though. I actually do think the OP is being a *bit* conservative with his estimates but again, it all depends. Personally, I believe the PP who encouraged the OP that he can afford a $580k house without a sizeable down payment is crazy, but I am risk-averse.

I am definitely not a house snob - pretty impossible to be in this area on our income - and I love Alexandria. I bet your home is lovely.

[Anonymous]

Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

[Anonymous]

Anonymous wrote:Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

Oh please. We saved 200k+ on 160 HHi and still can't afford anything we like. We simply refuse to pay over 500k for the BS housing here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

Oh please. We saved 200k+ on 160 HHi and still can't afford anything we like. We simply refuse to pay over 500k for the BS housing here.

LOL good luck on that.

[Anonymous]

I agree with the 200k+ poster/160 HHi poster, don't pay more for a house than you can afford and what the market will bear in bad times.

My neighbors bought their house at the height of the market, couldn't sell it when they wanted to get out and are now foreclosing on the house. They tried to short sale the house but the bank wouldn't accept a low offer.

I am waiting for them to totally vacate the house, so I can contact the bank about cleaning it up. I am so pissed.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

Oh please. We saved 200k+ on 160 HHi and still can't afford anything we like. We simply refuse to pay over 500k for the BS housing here.

so you made an arbitrary decision that 500K was the most you wanted to spend - and when you can't find anything that fits the bill complain? "It gets really old when people make choices - and complain about the consequences."

[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?

1 & 7 for us.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

Oh please. We saved 200k+ on 160 HHi and still can't afford anything we like. We simply refuse to pay over 500k for the BS housing here.

You're not going to pay over $500k for any house in the DC area?

[Anonymous]

Anonymous wrote:I agree with the 200k+ poster/160 HHi poster, don't pay more for a house than you can afford and what the market will bear in bad times.

My neighbors bought their house at the height of the market, couldn't sell it when they wanted to get out and are now foreclosing on the house. They tried to short sale the house but the bank wouldn't accept a low offer.

I am waiting for them to totally vacate the house, so I can contact the bank about cleaning it up. I am so pissed.

why would the bank clean it up? I doubt they give a shit

[Anonymous]

1 and 7ish for me (ish being bought in 09 in a desireable Ward 3 neighborhood; appreciation has been nice thus far)

[Anonymous]

OP here.

Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

...

It gets really old when people make choices - and complain about the consequences.

Fair question. My wife and I are in our mid-30's with Masters degrees. Basically we each spent our 20's paying down college costs on low salaries and our 30's (with better salaries) for the rest of our debts, wedding, and kid. We each have moderately-good retirement and savings going. No debt now. Very good credit scores.

To be fair, saving for a down payment has not been high on our priority list given these other considerations. Obviously, that's an issue now, but money can only be spread so thin. We don't live extravagantly if that's what your asking. No cable, limited eating out, few vacations, one car, bike to work (everyday).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

Oh please. We saved 200k+ on 160 HHi and still can't afford anything we like. We simply refuse to pay over 500k for the BS housing here.

so you made an arbitrary decision that 500K was the most you wanted to spend - and when you can't find anything that fits the bill complain? "It gets really old when people make choices - and complain about the consequences."

Its not arbitrary - we don't want to sink all of our savings into a home and we want 15y mortgage. if we could spend 1.5 mil we would buy. I think around 500k is a reasonable budget - less conservative than OP's.

I am personally not complaining about "consequences" - I am bitching occasionally for having to rent while making a decent salary. But 500k is a lot of money and I want to buy something I like. I don't like anything here. This is not a consequence of our choice not to spend more than we can afford (would you really advocate that?) it's a matter of living in an architecturally deprived area undergoing housing boom.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

Oh please. We saved 200k+ on 160 HHi and still can't afford anything we like. We simply refuse to pay over 500k for the BS housing here.

so you made an arbitrary decision that 500K was the most you wanted to spend - and when you can't find anything that fits the bill complain? "It gets really old when people make choices - and complain about the consequences."

Its not arbitrary - we don't want to sink all of our savings into a home and we want 15y mortgage. if we could spend 1.5 mil we would buy. I think around 500k is a reasonable budget - less conservative than OP's.

I am personally not complaining about "consequences" - I am bitching occasionally for having to rent while making a decent salary. But 500k is a lot of money and I want to buy something I like. I don't like anything here. This is not a consequence of our choice not to spend more than we can afford (would you really advocate that?) it's a matter of living in an architecturally deprived area undergoing housing boom.

500k is barely above the average price and much lower than average in most places. It seems like a lot but it doesn't buy you anything above average unless you move way out.

http://www.zillow.com/local-info/DC-Washington-home-value/r_41568/

[Anonymous]

Its not arbitrary - we don't want to sink all of our savings into a home and we want 15y mortgage. if we could spend 1.5 mil we would buy. I think around 500k is a reasonable budget - less conservative than OP's.

I am personally not complaining about "consequences" - I am bitching occasionally for having to rent while making a decent salary. But 500k is a lot of money and I want to buy something I like. I don't like anything here. This is not a consequence of our choice not to spend more than we can afford (would you really advocate that?) it's a matter of living in an architecturally deprived area undergoing housing boom.

That's pretty much the definition of arbitrary. But, I'll bite. What kind of housing style do you like?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Question: For 8 years you rented and had a great landlord that did not increase your rent. So how much did you save?

I did not have a designer wadrobe during my 20s. I did not have any debt either. Some of my friends jetted all over the world for fancy vacations - I visited family. When it came time to purchasing my 1st place, I had $90K saved for a down payment. (I paid my way through undergrad and grad school so there was a lot of loans to pay off).

It gets really old when people make choices - and complain about the consequences.

Oh please. We saved 200k+ on 160 HHi and still can't afford anything we like. We simply refuse to pay over 500k for the BS housing here.

so you made an arbitrary decision that 500K was the most you wanted to spend - and when you can't find anything that fits the bill complain? "It gets really old when people make choices - and complain about the consequences."

Its not arbitrary - we don't want to sink all of our savings into a home and we want 15y mortgage. if we could spend 1.5 mil we would buy. I think around 500k is a reasonable budget - less conservative than OP's.

I am personally not complaining about "consequences" - I am bitching occasionally for having to rent while making a decent salary. But 500k is a lot of money and I want to buy something I like. I don't like anything here. This is not a consequence of our choice not to spend more than we can afford (would you really advocate that?) it's a matter of living in an architecturally deprived area undergoing housing boom.

500k is barely above the average price and much lower than average in most places. It seems like a lot but it doesn't buy you anything above average unless you move way out.

http://www.zillow.com/local-info/DC-Washington-home-value/r_41568/

Yes, we are aware of that. We are in a situation similar to OPs and I agree with his analysis.