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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Federal budget cuts will result in a significant loss of jobs in the area. The national economy will continue to improve, and interest rates will rise nationally. These two forces will pull down demand and increase the cost of buying, respectively. Housing prices will at minimum not go up as much as some may think and could actually go down locally.[/quote]

Back in the 90's same thing happen. Cut ton of federal jobs. The amount of work didn't change but fewer people. What happened...they hired contractors who tend to make more than federal works. Thus home prices went up and back then the interest rates were nearly double what they are now. The work has to be done one way or another. Let SS checks not get out, let the military not get paid, let the doctors working at the VA not get paid. Chaos will occur and then a sudden rush to hire.[/quote]

But that same starter house even with 10% interest rate was sold for $150,000.  Today it's selling for $600,000 at 4% interest. [b] Salaries have not increased proportionately.[/b]  So how to us middle class first time homebuyers even enter the market? [/quote]

Actually they have.  Also now most households are dual income.  Just because YOU can't afford to buy a home in your desired neighborhood doesn't mean others can't. [/quote]

The middle class and suburbs are really the easiest to examine. So what can a middle-class dual-income family earn? Well, in this area lets consider the following family profile:

Spouse 1: IT sector, unambitious, but not lazy, 30-35 years old; salary: $120k
Spouse 2: Teacher, 10 years of experience, masters degree, 30-35 years old; salary: 80k
Total annual income: $200k
2 children over 2 years old.

These are both very attainable numbers for the DC area with these profiles.  With the 3-1 ratio of mortgage to annual income, a mortgage of $600k is affordable. Let's range that to $450-$650k. Let's say that there is a down payment possible of $20k to $130k. Then the total range of affordability is $470k to $780k. And there you have. Homes for the middle class will cost between $470k and $780k. I would say that we are there and on target.[/quote]

+1.  dc was underpriced for years relative to salaries.  The city simply has been catching up.  I purchased in DC three years ago and was able to buy a home for less than 2x hhi.  Very few other cities would allow us to earn these incomes and have such a low housing expense. [/quote]

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