Thursday, January 05, 2006

Interview with Young Potential DC Buyer

I interviewed a young 25 year old who currently rents in the Washington, DC metro area. He works in Information Technology.

I understand you currently rent. Have you considered buying?

I think about it every once in a while. But, I don't think I can afford to buy a house anywhere on one income without being married. A house ties you to one place, with the uncertainty of the housing market I don't know if its prudent to buy a house as a temporary place. The Baltimore market is undervalued. At the same time I am worried if I don't buy now in the Baltimore area, I will miss the train.


Have you considered a condo?

No prices for condos are outrageous and you still have to pay condo fees. [ If you buy ] you have to hope prices keep on appreciating. A condo is not something to live in the rest of your life. You are forced to sell when you need a bigger house. Condos are not a good investment in the DC area.


How often do you keep up with housing prices?

I hear people talk. I stopped looking for listings along time back because it was far out of my price range.

Do you feel pressure to buy from friends, family, and/or coworkers?

My grandmother, bless her soul, calls every week and asks me when I'll buy.


If prices were to decline significantly in the Washington, DC area would you buy? If so where?

Yes I would in a safe neighborhood along the Metro ( train system ).


Many homeowner have made a boatload of money during the housing boom as prices became unaffordable to young professionals. Are you a bitter renter?

As the rolling stones say "you can't always get what you want." There is nothing to be bitter about.

When do you think you will be buying a home?

Well looks like I'll be marrying an Occupational Therapist (OT). Based on that I'll have to wait till divorce then marry someone a little more like a doctor or lawyer. I don't understand where all this money comes from there are only so many lawyers. Who is buying a rowhouse for 4,000 a month in the ghetto.? The average professional couple takes home 3,000 per person per month ( after taxes ). They bring home 6K a month. Pay 4K a month in mortgage which only leaves 2,000 a month for everything else. It requires women to work for the rest of their lives. They can't afford to take a year or two off for children. Therefore if want the wife to stay home a little bit you cannot consider a home for 600K. If one loses a job it is very tight. That is why not even after marriage I would buy such a house. I am not buying in the city. I might buy in the far suburbs or in Baltimore. Hopefully, the Baltimore market will not go through the roof as it very well may

10 comments:

  1. I think the rolling stones said "you cant always get what you want." Just a friendly copyeditor chiming in.

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  2. "Who is buying a rowhouse for $4,000 a month in the ghetto?"

    Ahem, LMFAO!!!

    A rather astute observation. Could it be, a mania?

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  3. Amen, brother.

    I'm here in DC too, in a dual high-tech/research professional couple, no kids - who are these people buying 800 sq ft. condos for $400,000-$700,000? I know so many people here in mortgages that I can't imagine how they sleep - friends who can't make much more than I do in debt for $800,000 for a fixer-upper in a marginal neighborhood.

    Going to open houses this summer just made my head spin. I looked at a loft condo in Logan Circle and almost threw up - $600,000 for a shoddy McCondo (I probably could have pulled some of the fixures out of the wall by leaning on them hard) that was smaller than my $1200/mo Adams Morgan apartment, with a view of a dark alley filled with other McCondos. Yuck.

    If prices stay this high, I'll rent forever, I don't care. I'll continue to sock lots of cash into my 401(k) and rent cheap in my beautiful hassle-free rental in a great neighborhood.

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  4. Erika - They will not, "stay this high," for plenty of reasons of which I'm sure you're aware.

    I remember, vividly, the mid-90's, when condos in Dupont, Adams Morgan and even Georgetown could not be given away.

    I actually bought one, in Dupont, like this: 3% down, 15 year fixed mortgage for the balance. Add the monthly condo fee and property taxes, and the total payment was about 15% less than all my neighbors were paying in rent.

    Rent is the very best barometer. Those paying double and triple what you are paying for comparable space are going to get KILLED.

    And in the meantime, you've got plenty of leftover cash to enjoy A/M. :)

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  5. Great interview. That person is not alone. More and more people who are not buyers talk like him/her. So all these sellers who think they are going to get $600,000 for the condo in the ghetto... have to sell to people like that... bwahahahahahahahaha

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  6. David -- you had me going there. Clever piece.

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  7. Maybe he should look at Anacostia. It could be the next big thing in DC. Not as dangerous and people think and Columbia Heights was/is unsafe but smart investors made a bundle, even after the burst.

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  8. Thought you might be interested in some flippers in No.Va. that might be getting into some trouble soon.

    One guy bought 2 places in Vienna and listed both the day after he closed. One was purchased for $760,000 and he listed for $850,000. The other was purchased for $800,000 and he listed for $875,000. One house has been sitting since July 2005, the other since September 2005. With his carrying costs and broker's fees - he's coming close to losing money even if he's able to sell at those prices (which is doubtful).

    Another flipper paid $2 million for a house in McLean in April of 2005 (I didn't even realized people flipped property that expensive!) He listed it in August (I think he did some renovations) for $2.25 million. It is still sitting so he's reduced the price by $100,000.

    Thought you'd find these interesting!

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  9. dcgirl,

    Those are powerful stories. Thanks for sharing.

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