House Purchase Advice

[Apoc]

have you worked 20-30 years? because my house's value isn't that much more than yours... AND you spend a lot more "other" money than me... and i'm guessing (actually, i know) our combined income in about the same as yours... and i'm willing to take on a roommate.

I'm an outside case because we made $160k on our previous house and used that as a downpayment. Without that ridiculous jump in equity, we couldn't have afforded the house we have when we bought it. I also don't think our houses are worth anywhere near each other anymore. We could afford it as a first home now, but only because it's dropped 25-30% of it's value. The bottom fell out around these parts but it hasn't really inside the beltway because 1) it wasn't nearly as inflated as the 'burbs and 2) government and defense spending has made that area somewhat immune.

edit: Here are the assessments.

You
* $540,100 on 2008
* $558,200 on 2007
* $564,900 on 2006

Me
* $428,700 on 2008
* $466,300 on 2007
* $540,900 on 2006

I'm pretty sure you could afford what you're looking for in this area. I know that's not an option for you but you gotta pay to be at the center of the universe.

[Mike]

there is an entire generation that missed that jump in equity that you were fortunate enough to grab... those people have to buy homes eventually in order to make the world go round... they currently can't.

i could afford to live in ashburn, but you're right, that's not an option.

[.RJ]

Mortgages still havent fallen to the point where it makes more sense to buy rather than rent. I think the temporary resurgence in prices will be just that (my unfounded speculation).

Zillow says that the house we're in is over $600k. Rent for the neighborhood is pretty stagnant at $2500/mo. A $600k mortage @ 6% is over $3500/mo. Add in $500/mo in property taxes, and a 50% increase in 'buy' vs 'rent' costs is too significant of a gap for it to make sense unless you are rolling in a large big of equity into it - and even then, thats dicey.

IMO, a false bottom. Still waiting.

[WRXtranceformed]

Ahhh, the overinflated prices in DC

One of the primary motivators for me to move down south. My goal was to own a home by 25 and it wasn't going to happen in noVA unless I magically started making 3xs what I was making or I got married.

[Evan]

for pretty much decades home values have increased lockstep with inflation, so house values and buying power pretty much remained flat. (also why investors will always tell you homes are a bad long term investment)

then came increased demand from artificially lowered interest rates, community reinvestment laws, and "loan products" which drove up prices, some of which was a 'bubble', some of which was not.

will there ever be a correction back to be inline with historic home value trends? personally I doubt it, especially in this area. IMO youre going to keep waiting for a loooong if you expect houses to drop another 100-200k+

[Mike]

i'll keep on waiting, because renting makes more financial sense than owning [where i live, and where i want to buy]. i've crunched a lot of numbers and the freedom that owning affords in NOT worth the premium.

[Apoc]

The simple fact is this area has way too much money to ever really see the correction other metropolitan areas like Las Vegas are seeing. When you have people who have worked for the federal government for 30 years and have very little risk of losing their jobs, it makes it very hard for there to be any massive correction.

For most people our age (25-35), renting will be the smart option for a long time in the area. I don't necessarily think that makes the DC metro area a bad place to live, because home ownership isn't the holy grail of being an adult.

[JustinG]

so wait, im completely ignorant at the moment....is a NOVA salary double what someone in Richmond would make? Cause housing is 2x as much and so one would assume you get paid 2x as much as well compared to someone in the same position in Richmond. Is the cost of living compensation even close to that? Im just curious.

[Mike]

so wait, im completely ignorant at the moment....is a NOVA salary double what someone in Richmond would make? Cause housing is 2x as much and so one would assume you get paid 2x as much as well compared to someone in the same position in Richmond. Is the cost of living compensation even close to that? Im just curious.

2 times? no chance.
1.5 times? possibly, when you look at higher-end jobs.

[ViPER1313]

I don't really understand how anyone can live inside / directly outside the beltway.

Rent for the neighborhood is pretty stagnant at $2500/mo

hock:

Good starter houses w/ a 2 car garage in a decent neighborhood in Frederick run 140k to 200k, which is still expensive compared to backwoods VA but not 500k+ like it would cost closer to DC.

No way in hell I could afford to live anywhere in MoCo or Nova.

EDIT: I'm also w/ Apoc on this one - the DC metro area has not and most likely will never see the correction in prices Florida / LA / Vegas have seen. I really think this correction cycle already hit bottom about 3 months ago and is on the upward trend in this area. Too many government jobs. Anyone around here who complains how bad the recession has been needs a reality check.

[Apoc]

so wait, im completely ignorant at the moment....is a NOVA salary double what someone in Richmond would make? Cause housing is 2x as much and so one would assume you get paid 2x as much as well compared to someone in the same position in Richmond. Is the cost of living compensation even close to that? Im just curious.

2 times? no chance.
1.5 times? possibly, when you look at higher-end jobs.

No so fast there Mikey...

Median Household Income
Richmond: $31,121
Alexandria: $56,054
Arlington: $63,001
Fairfax: $67,642
Leesburg: $68,861

<!-- m --><a class="postlink" href="http://www.idcide.com">http://www.idcide.com</a><!-- m -->

I agree job for job, it wouldn't be 2x as much... but it's the money being made in the area that matters, not job description.

[JustinG]

wow didnt realize richmonds median income was that low. But if you get that specific, the median income for where I live is Tuckahoe: $55,420 / Short Pump: $60,531. Since I don't technically live in the city of Richmond. HAHA, this is one of the big ballin neighborhoods around the Short Pump area, Wyndham: $113,723, Jesus.....

[Mike]

so wait, im completely ignorant at the moment....is a NOVA salary double what someone in Richmond would make? Cause housing is 2x as much and so one would assume you get paid 2x as much as well compared to someone in the same position in Richmond. Is the cost of living compensation even close to that? Im just curious.

2 times? no chance.
1.5 times? possibly, when you look at higher-end jobs.

No so fast there Mikey...

Median Household Income
Richmond: $31,121
Alexandria: $56,054
Arlington: $63,001
Fairfax: $67,642
Leesburg: $68,861

<!-- m --><a class="postlink" href="http://www.idcide.com">http://www.idcide.com</a><!-- m -->

I agree job for job, it wouldn't be 2x as much... but it's the money being made in the area that matters, not job description.

but, but, we're talking job for job.

[Steve85]

According to my handy-dandy salary survey tool that I use to build our billing rates, job-for-job is about a 7% delta DC to Richmond.

e.g. Applications Systems Analyst/Programmer with a BS and 5-7yrs, we would expect to have to pay 81K in Richmond and 88K in DC (higher in Fairfax). So, dual income family in NOVA/DC will have about 14K additional gross income to put towards a mortgage. With milk, cars, etc the same price, the extra income almost always gets put towards the hou$e.

Hmmm...are townhouses included in the "median home price" or just detached SFH? At 350-400 for a TH, it is the new SFH. The amount of $100K+ jobs in this area make it hard to compete for a good property.

[Apoc]

Hmmm...are townhouses included in the "median home price" or just detached SFH? At 350-400 for a TH, it is the new SFH. The amount of $100K+ jobs in this area make it hard to compete for a good property.

A household refers to pretty any group of people living together... even includes condos and apartments.

[.RJ]

Too many government jobs

Doesnt matter what the gov't jobs are unless they're paying 50% more income. That aint happening. Its a more stable market but the contracting jobs arent all paying $150k.

Until the rent vs buy split gets closer then the market is not sustainable at the current pricing, especially when rent is historically fairly stagnant (i.e. rising with inflation). Looks like any 'corrections' have already happened further out (rockville, ashburn, etc), as a $160k house (your example) is = $1000/mo. I'm guessing thats close to what it would cost to rent a similar house out there. Of course its going to be much higher in arlington but a $2500 rent payment is out of line with a $650k house. It just doesnt make sense from a cost standpoint, save the extra $$ and put it away.

[Steve85]

Hmmm...are townhouses included in the "median home price" or just detached SFH? At 350-400 for a TH, it is the new SFH. The amount of $100K+ jobs in this area make it hard to compete for a good property.

A household refers to pretty any group of people living together... even includes condos and apartments.

For "household income" yes, but I was wondering what types of properties are used in the "median home price" index. I doubt apartments would fit into such an index very well.

[Apoc]

For "household income" yes, but I was wondering what types of properties are used in the "median home price" index. I doubt apartments would fit into such an index very well.

Anything that is bought and sold, so condos are included... but the numbers above are median household income.

[Steve85]

For "household income" yes, but I was wondering what types of properties are used in the "median home price" index. I doubt apartments would fit into such an index very well.

Anything that is bought and sold, so condos are included... but the numbers above are median household income.

Yes I realize that the figures immediately above were income, it was pretty clear. As I thought my response was, indicating that I knew those figures were "household income" and my question was about "median home price"

I was thinking out loud about a statistic most widely used to determine the direction of home values and there affordability relative to the area's income in a thread discussing home values, their direction, and thier affordability. I didn't think it was much of stretch... :dunno:

[JustinG]

Btw....just saw a commercial. Tax credit ends Nov. 31