Sometimes, the risk seems too great. Jeremias Alvarez, 26, engaged in some fancy financial footwork to win a contract over the summer on a $450,000 two-bedroom condo in the District's rapidly gentrifying U Street corridor.
He planned to finance 100 percent of the cost with no money down. But that meant his closing costs totaled about $15,000, and he was considering borrowing against his retirement plan to pay for it. That plus renting out a bedroom and maybe even getting a part-time job to supplement his government salary.
But then, in a moment of clarity, Alvarez pulled out of the deal. His real estate broker, the seller, everyone was pushing him to buy. But he just wasn't sure prices would keep going up, and if they didn't it would be a financial disaster.
As for Newland, he's still looking. He said he has been outbid more times that he'd like to share. "I know I can't really afford a mortgage," Newland said. "But I also know I have to buy a house."
You are still a human being if you do not own or seek to buy a housing unit. Do not commit financial suicide for housing unit. If you cannot afford it the do not succumb to the herd mentality just so you can buy.
Already, there are some signs that the Washington market could be slowing down, and some analysts think it peaked months ago. If owners try to sell their homes when the market has cooled off, they could wind up owing more than it's worth.
The peak has been reached in the Washington, DC area. Very small price declines are now occurring. A buddy of mine said he was trying to sell his 300K condo in DC. He has already lowered his price thrice ( three times). No takers yet. I suggested he lower the price once more and emphasize the solid condo managment in his building.
Graph showing who is buying. Data from National Association of Realtors Study.
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