Advice on buy or hold off on home purchase in current market? (Arlington: 2015, apartments)

[LuvVA]

House price may have reached the peak in few areas but not all. For e.g. home prices were at peak in 2005 and early 2006.

In some areas it may not have reached the 2005/2006 price. It could be due to several reasons. for e.g. new homes are available, school rating may have gone down etc.

If you are looking for a primary residence, then you shouldn't worry about this too much because no one can guess when the prices will flat out or will start to come down.

[breakingbad]

Originally Posted by pragmatic12

Home prices seem to have increased in the area by about 15-20% from the 2010 downturn period. So a home that would have been priced at 500k now costs 600k. In other words, an increase of 100k, which is quite significant.
Trying not to purchase at a peak. Especially if the interest rates rise and cause a corresponding decrease in prices later. What do folks around here think about this - does this data sound correct, and would you buy or hold off? Is the current price inflated?
Looking to get some thoughts, TIA!

i feel it has more to do with supply and demand in RE. This area is very transient and aside from the bubble burst it is consistent.

[fcyolo]

Originally Posted by pragmatic12

Home prices seem to have increased in the area by about 15-20% from the 2010 downturn period. So a home that would have been priced at 500k now costs 600k. In other words, an increase of 100k, which is quite significant.
Trying not to purchase at a peak. Especially if the interest rates rise and cause a corresponding decrease in prices later. What do folks around here think about this - does this data sound correct, and would you buy or hold off? Is the current price inflated?
Looking to get some thoughts, TIA!

I have always purchased in a good school district, inside the beltway and close to the metro. These three attributes will insulate you from depreciation.

I would also take advantage of the low interest rates. There is a study that states dc metro area housing will continue to appreciate as long as the 30 year interest rates is below 11%. Remember that interest rates rise in relation to how well the job market and economy are doing. Basically the fed won't do anything toi drastic and wants the housing market to flourish in order to prevent another recession.

[pragmatic12]

Thanks all for the information! I see your point about not worrying too much about market and price swings. However note that 20% (in this case 100k for a 500k home) is a chunk of change and does affect your lifestyle, and buying it low gives you many options after it goes up because the equity has increased dramatically. But you are correct, there's not much that can be done about it as you can't predict the market.

Originally Posted by Old Guard

It only takes one home you are interested in to come open at a price you think is fair so it does no harm getting on a real estate agents automated mailing list for the houses and areas you like. Even if you are interested in buying it still may take you months to find what you are looking for.

Good advice, I have been looking at zillow, but should get on a mailing list as well.

Originally Posted by Germany2DC

Not sure how much home prices have risen but when buying you should also be concerned with the interests rates for a home mortgage which are currently low when compared to rates over the past few years. We recently purchased a home and received a 3.652% interest rate.

That's a great rate! If I may ask, how much approximate down payment did that require?

Originally Posted by FCNova

Are you talking about an investment property, or a primary residence? It's impossible to time the market. If you're buying a house as a primary residence just don't even worry about it. Buy within your means, and make sure you are going to stick around for awhile. Otherwise just rent.

I think home prices are a little inflated, due to the low rates. But I also don't foresee a crash of any kind because rates are going to rise very slowly.

It's for primary residence, and it would be first time home ownership. Maybe that's why I am thinking so much :-).

Originally Posted by Ashley Tauzier

If you know the area and types of homes you are looking for, I can look in the MLS and tell you the difference in prices from 2010 to now, so you have a good idea!

Ashburn, or 20171, or 20191 TH or SF with about 2500 Sq feet living space. Thanks!

Originally Posted by LuvVA

House price may have reached the peak in few areas but not all. For e.g. home prices were at peak in 2005 and early 2006.

In some areas it may not have reached the 2005/2006 price. It could be due to several reasons. for e.g. new homes are available, school rating may have gone down etc.

If you are looking for a primary residence, then you shouldn't worry about this too much because no one can guess when the prices will flat out or will start to come down.

Originally Posted by fcyolo

I have always purchased in a good school district, inside the beltway and close to the metro. These three attributes will insulate you from depreciation.

Inside the beltway is great, however it probably costs close to 1M.


That does lead me to the other question - if home prices are almost back to the 2005/06 levels, then it would follow that people are doing better and can afford more now? There are also other factors such as lack of smaller/affordable homes being built, but instead builders had focussed more on "luxury" TH/SF homes.

[FCNova]

Originally Posted by pragmatic12

Inside the beltway is great, however it probably costs close to 1M.

If you're ok with 2500 sq. feet and a SFH or TH like you stated, you can get one for well under 1M inside or near the beltway. Townhouses in my area which is in Vienna near Tysons Corner go for about 500k right now(give or take a little depending on condition). They are in the 2200-2300 sq. foot range. I didnt see your price range but if you are overly concerned with home appreciation/decline the advice to buy closer in is good because the outer burbs will be the first to take a hit, due to being farther out and also the abundance of supply out there that you don't have closer in.

[Ashley Tauzier]

I just ran a search for SFH home with 2500+ sq ft available in Ashburn now and the prices range from $535,000-1,750,000. Then if you go back and run the search of homes sold in this time frame in 2010 for same criteria the prices range from $386,000-1,061,828. So I would say prices have definitely increased over the past 5 years! Obviously no one has the answer of whether or not the prices will continue to increase or if interest rates will go up dramatically or not, but most industry professionals have their opinions. I also agree inside the Beltway is so transient that you do have a built in safe guard for home values dropping, but ultimately you have decide which area fits your needs best. I know speaking as a Realtor, most would be happy to set you up on an automatic email list and keep you informed with the market!

[Ashley Tauzier]

Also I did see you were asking about down payments. You do have other loan options to explore other than your conventional mortgage with 20%. You could have options to go FHA with 3.5% down or FHA plus with no money down(credit dependent). Obviously you would have PMI on those mortgages, but it does allow first time home buyers to get into the market, without having to come to the table with 100k!

[NC211]

Originally Posted by Ashley Tauzier

I just ran a search for SFH home with 2500+ sq ft available in Ashburn now and the prices range from $535,000-1,750,000. Then if you go back and run the search of homes sold in this time frame in 2010 for same criteria the prices range from $386,000-1,061,828. So I would say prices have definitely increased over the past 5 years! Obviously no one has the answer of whether or not the prices will continue to increase or if interest rates will go up dramatically or not, but most industry professionals have their opinions. I also agree inside the Beltway is so transient that you do have a built in safe guard for home values dropping, but ultimately you have decide which area fits your needs best. I know speaking as a Realtor, most would be happy to set you up on an automatic email list and keep you informed with the market!

I think an even more accurate comparison would be to compare against 06-07 time frame, as 2010 was right in the thick of the recession for housing in general.

Personally speaking, I'm not so sure if now is a good time to buy a house if you don't think you'll be there for at least 7 years in the Ashburn area. And if you do, I'd give serious consideration to the 05-07 vintage homes before considering one of these brand new homes being delivered. Reason being, is that I see quite a few of those 05-07 homes on the market now for prices that compell the question if $100k is worth another 1,500+ of space, and not having to incur the costs of what is essentially the cost to finish a newly constructed home (paint, deck, fence, ect.). Serveral home owners that wanted to move but couldn't due to the recession and associated impact on their home values, are now seeing the ability to do so as their mortgage balances are at a point where they can now sell without a problem. They're willing to take the hit to their equity to finally move. This doesn't apply as much to homes built during the recession. They're the ones who've ridden this wave up over the past couple of years. I'm of the opinion that new homes and those built over the past 4 years, are likely approaching a temporary plateau in their value, and the bigger "McMansions" of the 05-07 cycle, represent the best value overall in the Ashburn market. For example - why spend $750k for a new Miller and Smith home with barely no yard and 4,000sf of primer white walls, when for $790k you can buy 5,000+ SF of an already established home in an established neighborhood that is maybe 10 years old, plus good size yard of ¼ acre or more in the Broadlands?

[FCNova]

Originally Posted by NC211

For example - why spend $750k for a new Miller and Smith home with barely no yard and 4,000sf of primer white walls, when for $790k you can buy 5,000+ SF of an already established home in an established neighborhood that is maybe 10 years old, plus good size yard of ¼ acre or more in the Broadlands?

Some people just covet brand new, but I agree that I'd rather have an older well updated home and get much more bang for your buck. Often the updates the homeowners have done over time are nicer than the builder grade finishes, and who really care if your wall studs are brand new or 10-20 years old. Tell that to my wife though...

[Germany2DC]

Originally Posted by pragmatic12

That's a great rate! If I may ask, how much approximate down payment did that require?

We put down a lot -- 52%. More than what I understand most people normally put down. Our realtor mentioned to us a few times that most Americans have trouble putting down 20%. We just wanted the peace of mind of low monthly mortgage payments and were willing to sacrifice some capital to that end.