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Old 04-12-2011, 08:56 PM
7 posts, read 13,331 times
Reputation: 12


Hello I just finished my 1st of 5 years of residency at a DC hospital. My husband and I had always planned to stay in NOVA long term so my question is- should I continue to rent while in residency or buy since I plan on settling in the area anyhow? I realize I will have better housing and loan options once I make a "real" doctor's salary. I also realize there is no way to predict where I'll land my first job but we will be staying in the area due to my husband's contract. I just have a hard time spending 25k on rent/year for 5 years when this could be going toward a mortgage in the next neighborhood (or my 200k school loans which is the only debt we have).
Thanks in advance for thoughts.
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Old 04-12-2011, 09:21 PM
262 posts, read 758,090 times
Reputation: 68
After the last big run-up in house prices, in the 1980s, a long slump followed. In the New York area, prices peaked in early 1989 and then fell 9 percent over the next three years, according to government data. (Adjusted for inflation, the drop was much bigger.) Not until 1998 did prices pass their earlier peak.
http://www.nytimes.com/2007/04/11/re...leonhardt.html (just google for New York Times Rent vs. Buy because there have been updated revisions).

You have to realize you are not throwing away 25K a year because there are significant costs with buying and selling a home, and with maintaining and repairing property over the years. And first years of mortgage are mainly interest, so you are not going to develop much equity in those first years anyways.

Plus with 200K student loans, you may not be able to get a mortgage for sufficient amount to buy nice place.

Unless you plan on turning first home into a rental property and owning that property for 10 or more years (I believe rule of thumb is 3 -5 years during normal, slowly appreciating 2 - 3 % / year type market just to cover buying and selling costs), I would guess you would want to upgrade to better home once you enter private practice. Might be better to stay liquid in interim.

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Old 04-13-2011, 05:48 PM
7 posts, read 13,331 times
Reputation: 12
Thanks for the article- that really puts things into perspective. In terms of a decent loan, I've qualified for 417k which won't get me very far in Arlington- a perfect location for commuting into work.
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