They had equity on some other place they bought years ago and could go up several notches in the market, particularly with combined income.

Anonymous wrote:

Anonymous wrote:It isn't all family money, though. Sometimes it's just plain old savings. Hard to do around here but possible.

I'm sorry. Savings is ludicrous for a 1.2M house. Assuming it just went up 4% a year, you would need to save 50k/year after taxes just to tread water.

So 1.2M houses are everywhere, from Chevy chase, Nw, Bethesda, to Bluemont. There are that many law partners and tech entrepreneurs? 'Dougt it. Just lots of pre-bubble buyers.

Sure, there are many pre-bubble buyers. But there are also tons and tons of law partners, lobbyist, doctors, real estate developers, etc. who bought post-bubble. Some have family money, but many do not. On our block in Chevy Chase, the majority are younger families. The neighborhood preschools have long waiting lists to accommodate all of the neighborhood children who live there and have parents in their 30s who bought post-bubble.

And take a look at all of the private schools in NW and close-in MoCo that cost $30K+/year per child and have long waiting lists every year. The fact that these schools can so easily fill all their spots speaks to the amount of money in the area. It takes a high income to afford $60K per year to send your two kids to school, yet thousands of families in the area manage it just fine and many more would love to do it if Jr. would get off the waitlist!

Anonymous wrote:Looking at DC metro real estate and can't figure it out. How does an economy that is primarily supported by the federal government (losing jobs every year, no pay raises, etc.) manage to sustain housing that is so outrageously expensive. Putting aside that it's mostly ugly and poorly constructed, I genuinely don't understand how the area keeps it all afloat. Understand that there are some lobbyists/lawyers that are financed by the private sector and some lavish foreign governments, but are there really that many? Enough to sustain oodles of houses at $1.5 and up? And my inexpert, anecdotal searching shows that even $1.5 has become modest in many, many metro areas. Even if the average joint fed household brings in a 180-200K pre-tax and has saved like crazy to make the downpayment, how can they keep up with that huge a mortgage? And if it's not fed households, what industry are the people who buy these homes in?

I'm with you, OP. People here in DC pay a fortune to live in some of the worst housing I've ever seen. It is amazing how many can plunk down $1.5 million for a house.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Looking at DC metro real estate and can't figure it out. How does an economy that is primarily supported by the federal government (losing jobs every year, no pay raises, etc.) manage to sustain housing that is so outrageously expensive. Putting aside that it's mostly ugly and poorly constructed, I genuinely don't understand how the area keeps it all afloat. Understand that there are some lobbyists/lawyers that are financed by the private sector and some lavish foreign governments, but are there really that many? Enough to sustain oodles of houses at $1.5 and up? And my inexpert, anecdotal searching shows that even $1.5 has become modest in many, many metro areas. Even if the average joint fed household brings in a 180-200K pre-tax and has saved like crazy to make the downpayment, how can they keep up with that huge a mortgage? And if it's not fed households, what industry are the people who buy these homes in?

Actually in DC Fed households tend to be dual GS15s making more like 310,000 a year combined....

But to afford a 1.2M house you need $400k a year and when it is reached by dual earner you really should discount 40k for daycare camps etc.

Honestly most people buying expensive homes bought before the bubble; they sold to folks making not enough so took risky loans from bank, banks failed and were bailed out by US govt.

So you could say a lot of those homes were paid by taxpayers via the bank bailouts.

People just starting out at, how much can you affords

40k for daycare and camps?!? We were paying around that for a private nanny, but our costs will drop significantly now that we are only using daycare.

I assume your comment about needing 400k a year is based on the "3 times income" heuristic. This has rule of thumb has never made any sense, and people really to let it go. Our HHI is 80k right now and we could buy a 2m place without issue. Why? Because we would be paying cash for it, and none of that money would be coming from real estate appreciation in the DC metro. We are not alone, especially in this area. Many people downshift out of high paying careers after making significant amounts of money into semi-retirement jobs that are more enjoyable but less lucrative.

The only way to know how much someone can "afford" is to look at their complete financial picture. And in this market, a lot of household's financial situations are very complicated.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Looking at DC metro real estate and can't figure it out. How does an economy that is primarily supported by the federal government (losing jobs every year, no pay raises, etc.) manage to sustain housing that is so outrageously expensive. Putting aside that it's mostly ugly and poorly constructed, I genuinely don't understand how the area keeps it all afloat. Understand that there are some lobbyists/lawyers that are financed by the private sector and some lavish foreign governments, but are there really that many? Enough to sustain oodles of houses at $1.5 and up? And my inexpert, anecdotal searching shows that even $1.5 has become modest in many, many metro areas. Even if the average joint fed household brings in a 180-200K pre-tax and has saved like crazy to make the downpayment, how can they keep up with that huge a mortgage? And if it's not fed households, what industry are the people who buy these homes in?

Actually in DC Fed households tend to be dual GS15s making more like 310,000 a year combined....

But to afford a 1.2M house you need $400k a year and when it is reached by dual earner you really should discount 40k for daycare camps etc.

Honestly most people buying expensive homes bought before the bubble; they sold to folks making not enough so took risky loans from bank, banks failed and were bailed out by US govt.

So you could say a lot of those homes were paid by taxpayers via the bank bailouts.

People just starting out at, how much can you affords

Anonymous wrote:It's called FAMILY MONEY, OP, and most people in NWDC have it. Many people in the best NWDC neighborhoods, in the super nice houses that start at $1.5 (and that's really the very bottom), have parents who have tons of money and grandparents who had tons of money. Lots of trust funds and down payments as gifts, and money begets money so most have at least one adult making a high salary in banking, law, commercial real estate, tech, etc... All very normal in these neighborhoods. Plus, on top of a expensive home, most of us she'll out 30-40,000 per child annually for private school and lots of families around here have 3, 4, and even 5 kids! It's enough to make ones head spin off but it is just how it is.

This is definitely the case for the 1.5 million and up houses being bought by 30 something families in NW DC. I can think of at least 25 such families that I know well. They're all single income families with a decent job (making $250K or whatever) but not enough to be able to save $900K or a million for a downpayment to be able to afford a $1.8 or 1.9 house at age 31 or 35 (while also employing a nanny, paying for private school and traveling extensively).
There is just tons and tons and tons of family money in NW. Probably not as much the case in Arlington or elsewhere in NW (where I'd imagine there would be more of the "dual law partner" type households.

But yes, it is remarkable how thousands upon thousands of young families (under 40) can even afford the million dollar price point. We did by saving (saved $400K by leaving really cheaply for 5 years pre-kids---in the 'hood on about a $200K HHI).

Anonymous wrote:

Anonymous wrote:It isn't all family money, though. Sometimes it's just plain old savings. Hard to do around here but possible.

I'm sorry. Savings is ludicrous for a 1.2M house. Assuming it just went up 4% a year, you would need to save 50k/year after taxes just to tread water.

So 1.2M houses are everywhere, from Chevy chase, Nw, Bethesda, to Bluemont. There are that many law partners and tech entrepreneurs? 'Dougt it. Just lots of pre-bubble buyers.

The average house in the DC area- even within the beltway is well below $1m. Not everyone is buying the high end houses.

Anonymous wrote:It isn't all family money, though. Sometimes it's just plain old savings. Hard to do around here but possible.

+1, Not that hard. Interns do it all the time. Live in a group house and save save save. DC is a great place to do things on the cheap. Museums, concerts, volunteering for events..........

Anonymous wrote:We did zero down and are dual income earners mid 30s, not lawyers, with 2 youths kids 350k hhi. One consultant and the other in sales.

Sorry for the triple postt, not sure why that happened

We did zero down and are dual income earners mid 30s, not lawyers, with 2 youths kids 350k hhi. One consultant and the other in sales.

We did zero down and are dual income earners mid 30s, not lawyers, with 2 youths kids 350k hhi. One consultant and the other in sales.

We did zero down and are dual income earners mid 30s, not lawyers, with 2 youths kids 350k hhi. One consultant and the other in sales.

$1.2M will get you a small fixer-upper in our close-in suburban neighborhood, which is currently experiencing a significant turnover with folks who bought 25+ years ago selling and downsizing, as well as estate sales. DH and I are the next wave of pre-bubble owners -- we bought our tear-down for $500K 15 years ago. That would be considered a bargain now, but it was a stretch for us then when DH had just made partner, so pre-bubble didn't mean you could just waltz in and buy a place for a song (sorry to mix musical metaphors there)>

The younger families who are moving in now are late 30s/early 40s. Most are double-income couples -- very different from our generation. While there are lawyers among these couples (mostly in firms, but also GC lawyers and some gov't), there are also World Bank folks, some entrepeneurs (mostly in tech), some in consulting ('tho not so many as you might find in a comparable Virginia neighborhood, I'm guessing), a few doctors, and quite a few people in financial services. I can think of only 1 younger couple -- in their late 20/s -- and they have family money and ties to the neighborhood.

Anonymous wrote:It isn't all family money, though. Sometimes it's just plain old savings. Hard to do around here but possible.

I'm sorry. Savings is ludicrous for a 1.2M house. Assuming it just went up 4% a year, you would need to save 50k/year after taxes just to tread water.

So 1.2M houses are everywhere, from Chevy chase, Nw, Bethesda, to Bluemont. There are that many law partners and tech entrepreneurs? 'Dougt it. Just lots of pre-bubble buyers.

It isn't all family money, though. Sometimes it's just plain old savings. Hard to do around here but possible.