Wednesday, June 17, 2009

We Bought a Townhouse

Yes. It is true! My wife and I bought a townhouse in the inner part of Silver Spring, MD.

The reasons for purchasing:

* Low interest rates 4.625%, no points (30YR Fixed)
* Rent is expensive in the area and will continue to rise
* It was the neighborhood we wanted
* It was the housing type we wanted
* Prices are unlikely to fall much more in our new neighborhood.

Our purchase price is about 20% lower from its peak price (nominally). Will prices in our neighborhood fall further? Most probably, I expect most parts of the Washington area to fall another 5 - 10% nominally. Despite this we decided to buy and do not regret our decision.


  1. Congrats David! I've followed your blog for years. It helped validate my own decision to wait. I also recently purchased. I appreciate all of the work that you had put into the blog. I think you helped a lot of people.

    I hope you are happy in your new place.

  2. Congrats are certainly in order David. I didnt post regularly here, but I was a Looong time lurker. Thanks alot for your tireless efforts.

    Werent you looking to buy in DC? In any event, glad to see things are working out for you.

  3. buyinginpetworthJune 17, 2009 3:04 PM


    We are buying a place, too. In fact, the inspection is this afternoon so I hope all goes well.

    We are buying a rowhouse in Petworth. My husband works in the neighborhood so he can walk to work. We have lived here for about a year and like the hood'.

    Anyway, we only went looking one day and found a foreclosure in almost perfect condition. It was the least expensive, biggest and in the best condition of all the houses we looked at.

    I only wish we had started sooner and locked in at a lower rate. However, we haven't locked in yet because we are planning to use the DC Bond program- 5.25 no points.

    Anyway, I have been reading your blog and obsessing about whether we made the right decision.

    I think we did. To rent the same house we would be looking at a minimum of $600/mo more that includes taxes and PMI.

  4. Yep - I too am getting of the fence after 3 years and buying in N. Arlington. (Close this friday).

    I may not have seen the big declines in this area but I still appreciate everything you have done.

  5. Congrats!
    I've been reading your blog for months now and appreciate all the effort. Enjoy your new place.

    One question: Why Silver Spring? You're obviously an expert in real estate issues. What made you choose SS?

  6. Congratulations! Tell us more about this DC Bond program though. I just looked at the website very quickly and I thought you could only take part if the house is in the District. no? Give us details.


  7. buyinginpetworthJune 17, 2009 3:37 PM

    @anon 3:11

    Yes, you have to live in the district. We are buying in petworth. You also have to meet certain income restrictions but they seem to be fairly liberal. The income restrictions are different for different areas is they way I understood it.

  8. Hummm…I guess you’re not priced out forever.

    Congrats David.

  9. After 4+ years. 1,773 posts after first telling us "the bubble will burst soon" the big day has come.

    The king is dead, the king is dead - long live the king!!!


  10. Thanks for the comments.

    We bought a place that is low maintainence (although more then renting). We choose the inner part of Silver Spring as we had a bunch of friends there and institutions we regularly frequent, it is relatively easy commute to our jobs, near shops and other amenities. A Purple line station should be built within a block and a half.

  11. Suddenly, James just died a little bit inside...

  12. For some non bubble areas the price declines are probably where they are going to be, so if it was exactly what you wanted great buy! The wife and I bought a house last year, but it was a family transfer so I got 45% off the then 20% drop from the bust, so no complaints!
    Congratutlations and i wish you the best!

  13. I just bought near downtown SS for exactly the same reasons. The price was 20 percent less than what the sellers paid in 2005. I studied the issue carefully before deciding to buy. The economy is still a major concern, but Montgomery County benefits from BRAC and DC will always be a jobs hub. Inside the beltway in a nice home is a fairly safe bet, as long as you can really afford your mortgage - none of this ARM crap.

    I'm glad I bought when I did as interest rates are headed back up. I think they'll dip again, and there will be more foreclosures on the market, but the nice parts of DTSS are pretty safe. I think. And hope.

  14. Well I gotta say, this is gonna be it for me. Time to throw in the towel. I was hoping for some movement in the Capitol Hill area, but damn its awful strong.

    Im like you David 5-10%? I dont care - ive had it with this whole thing - time to move on. I just wanted to make sure there was no big "leg down" coming, and (like you) I think that risk is gone.

    Anyway - Congrats - im glad for you.

  15. Hello David! First of all,I would like to congrats to your for bought a new house. It looks like very calculated and I totally agreed with your deal & coasting.

  16. Sorry to rain on the parade, but I still feel that there is at least another leg or two down in the Metro DC area, especially in the mid to upper end of housing. On the low end there are definitely some good deals, though.

    We almost bought a couple months ago, until we went back and studied the data again and found that prices in the area we were looking at are still way above where they should be. Better prices than a few years ago did not equate to good prices. Affordability is still a major problem, and while DC may hold out longer it is not immune.

    I know everyone is excited about the low interest rates, but what do you think happens when they rise? That's right, home prices come down. Better, financially speaking, to buy when interest rates are high and prices are low. Remember, those that profited from the bubble bought before it inflated, when interest rates were higher, and sold during it, when interest rates were lower. Those that did the reverse didn't fair as well.

    Still, I completely understand the desire to get on with life...even if it means risking some financial losses. After 5+ years of renting an overstuffed apartment we're almost there ourselves.

    Congratulations and good luck to all recent home buyers.

  17. Congratulations, David.

    I'll likely be renting for at least another year. I think that whether now is a good time to buy depends on where you're buying. I don't pay much attention to Maryland specifically, but here in Northern Virginia, Prince William County seems to have plenty of bargains while Fairfax County does not. On the whole, DC and New York are still pricey, but if I lived in Arizona, Nevada, or Michigan, I'd be buying now.

  18. Wanna know who else bought? This guy.

    The undisputed king of data analysis in DC decided it was safe to go back into the water in DC.

    And the noose around the bears necks grows that much tighter...

  19. "And the noose around the bears necks grows that much tighter..."


    Prices have collapsed and people are now returning to the market, and getting far better deals than they would have if they had bought during the bubble.

    All that proves is that the "bears" were right. Waiting has proven to be the right decision.

    Nobody here has ever been against the idea of buying, just against the idea of paying too much.

  20. I have to agree with wirenob concerning interest rates. What do low interests rates have to do with the timing of a buying decision? Whatever anyone's reasons are for buying, interest rates should not factor. And if interest rate is so important to you, why would you not buy points to lower that all important interest rate? Are you going to refi in a couple of years at a higher rate?

  21. Hey, we just bought a townhome in Downtown Silver Spring too! We bought at the Courts of Woodside - is that where you bought?

    Congratulations! We have rented in the neighborhood for about 5 years, and we really like the area.

  22. "All that proves is that the "bears" were right. Waiting has proven to be the right decision.

    Nobody here has ever been against the idea of buying, just against the idea of paying too much."

    There is a difference between being a bear in 2005, and being a bear in 2009. We still in 2009 have some bears suggesting "weve got a long way to go" or "were nowhere near the bottom" or, my favorite "were just in the 3rd inning of this thing" (why is it always the 3rd???).

    Bears in 2005 were wise, prudent, and got some really good deals in 08-09. Those that are bears in 09 and expect to get good deals "close to the still far away bottom" or the "far away 8th or 9th inning" have no clue where we really are in this thing. These guys are gonna get slaughtered.

  23. David, I have been an avid reader of your blog for a while. I want to thank you for taking the time getting the information out to us. However, I wonder if your view on housing will change now that you are a home owner. If you are going to keep blogging, I hope the integrity will not be lost through your home ownership.

  24. You are not the only one that thinks houses are expensive in New York. There was an article on CNN the other day about how New York metro area house prices are forecast to drop 40% from the price in March before this is over and a national average drop another 14%.

  25. Congrats David!

    It will be interesting to read what your views are now 'from the other side' ...

  26. P.S. It sounds like you 'bought smart'

  27. Congrats. There's a very good chance you timed it perfectly, or darn near.

    For sure, that interest rate is as good as it is likely to get for a long long time.

  28. The real lance would have said something much stupider.

  29. I've been a bear since moving here in 2004. I too recently bought. I got a rowhouse in Brookland for about 40% off peak prices. It had the features that I wanted, a good commute, space, and was in the city. My mortgage is about 300-400 cheaper than renting. Might prices fall some more? Perhaps, I just don't care anymore. I bought at 2002 prices.

  30. Anonymous@9:30am, you sound like someone who bought quite well...i.e., price way down from the peak, back at 2002 prices, and at a low interest rate. There may be a little more downside in the short run, but if you stay put for the long run you are probably in good shape.

    Just to clarify my above remarks, I'm mainly saying that it is a bad decision to buy near peak prices in the mid-to-upper end of the market, which hasn't experienced much of a correction. Some say these areas are immune to the declines. I respectfully disagree.

    I'm also saying that it is a bad idea to buy at low interest rates because they allow you to buy at prices beyond what you could normally afford. It's good to buy at low interest rates only when it makes what you could otherwise afford much cheaper.

  31. ugh, a townhouse?