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For those wondering "why do houses have to cost so much in DC" or "why are builders making small houses and charging more?", just imagine this:
Imagine there is a nice area in DC (or very close in VA or MD) that is safe and near Metro. A developer builds big beautiful houses there, and prices them around $450,000 - for some reason.
What do you suppose would happen? First, each of those houses would be bought before they were even completed. Some would then be flipped for a profit - even in this market if they are so wonderful and priced more than 200K below comparable homes in the area. There are just that many people with the disposable income. Plus, if the houses are such a great value, there will be bidding wars. Once up for resale, their prices would definitely skyrocket. Once a few sell for $650,000 or up, all the others that go on the market will expect to get that, too. The people who don't flip aren't going to be selling anytime soon.
So what happened to those imaginary $450,000 houses? They aren't available at $450,000 anymore. Finite resource, much larger pool of people with the money you are competing with.
Gotcha!. More than big hubby and I want something in the burbs w a bit of style, not necessarily big. Our plan is to get something we can modify over time. I'm praying that works out.
Dc has zoning regs and infrastructure limitations that limit housing supply. Imagine if they opened up a part of the city to developers where they could build 40-story towers. Or, imagine if there were more train lines so the city could support more housing. A city can be highly desireable, with tons of jobs, but if its housing supply is high relative to its population, it will not be DC-level expensive.
My brother lives in DC area and he use to live downtown DC. When he sold his row home 9 years ago he picked up an older home for $325,000 and it too was a dump. Then the home was too small for his 2 girls and his wife so he rented his 2nd home to an older couple and purchased another home. The 3rd home was $600,000 and the same home in the Philadelphia area wasn't worth $200,000.. I wouldn't live in any of his homes because they were not in a nice area and at times he heard gunshots at night.
Now he has 2 homes and each have increased a lot and now each of them are worth more than $1 million according to the DC Real Estate marketplace.
I, on the other hand, live in Florida in a 3,000 + SF new home that is on the water and have a pool etc etc......I guess my home now is worth half of what it once was 4 years ago.
I think it is funny how homes in the North are mostly increasing while the nicer and more eye appealing homes in the South are taking a real whipping....
Synergy you do have a point in regards to the values rising. My neighbors in Oh bought back in 1979 for 79k the same house sells for 150k if lucky in todays market. In DC the pace of appreciation is much faster.
That wasn't always the case though. DC's real estate market languished for years, until the late 90s when things started to take off. by 2001-02, the market was exploding. My guess is, we've seen the end of skyrocketing property values for now and things will be settled for awhile. Some neighborhoods will always hold and/or see property values increase, but I think the days of seeing homes in Trinidad appreciate at a 300% pace over the span of a few years are done, at least for now.
If you want housing like you might expect in the rest of America at $450K in the DC area then we've got the place for you. It's called Prince Georges County or PG for short. It's on the east side of town. All you will need to do is buy a gun so you will have a fighting chance!
check out the neighborhoods of Brookland, Woodridge, Petworth... particularly Brookland which has lots of different kinds of older homes and is very centrally located with a metro stop. It's 15 mins to Capitol Hill etc.
That wasn't always the case though. DC's real estate market languished for years, until the late 90s when things started to take off. by 2001-02, the market was exploding. My guess is, we've seen the end of skyrocketing property values for now and things will be settled for awhile. Some neighborhoods will always hold and/or see property values increase, but I think the days of seeing homes in Trinidad appreciate at a 300% pace over the span of a few years are done, at least for now.
I agree. I think the days of instant flipping and profits are done. The only flipping will be done with delapidated houses which is something I'd like to entertain one day. I think people will have to get back to buying a house for the purpose of owning a home not instant profits.
At the very same time home values inside the beltway aren't plummeting to the earth like they are further out. I love suburban living. I love the cheaper but nicer houses and I've never been a fan of older homes. At the same time the commute is starting to wear me down. So living closer to work starts looking attractive despite the costs.
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