House - 2.5X your salary, how is that possible? (agent, fees, property taxes)

[michgc]

Originally Posted by rdflk

Are in in the DC area an just ignorant of the housing inventory in various areas? Or not in the area and not aware?

Well, lets see Realtor.com had 116 properties in Silver Spring a very large unincorporated are listed for under 250K, some SFHs. Rockville had 16. Fairfax had 6, all condos. Alexandria had 90 -- including a SFH.

Upper Marlboro had 150, Laurel had 104, Greenbelt had 24, La Plata had 17, College Park had 18, Cheverly had 100, Largo had 55.

Lived in the DC area for 22+ years until 2 years ago. Just sold my house there 6 months ago. I am very familiar with the area. The person you were referring to specifically was interested in a SFH. You said you could get a very nice house in a very nice area of DC area for $250K. LaPlata is 35 miles away from DC. Upper Marlboro and Laurel are 21 miles away from DC. - quite a haul for a commute. I wouldn't even count those.

From the remainder, according to Realtor.com, Silver Spring had 8 3-bedroom, 2 bath homes under $250K, 6 of which were 1300 square feet or smaller. Rockville had 4. Greenbelt had none. College Park did have 15 homes available and Largo had 19. Only Cheverly had a large number at 64. However, the last three places are all in Prince George's County which is an area people generally avoid because of the less-than stellar school system and higher crime - not really considered "a very nice area" of DC. But of course, that's subjective.

In Virginia, Alexandria had 4. Arlington had 0. Fairfax had 0. Chantilly had 2. It wasn't until you get out to Manassas or Woodbridge that you start seeing many homes available at that price point.

So in the huge DC metropolitan area, there were basically 18 3-bedroom homes available under $250K within 20 miles of the city. unless you go into iffy neighborhoods in PG County or head out to the hinterlands of Manassas, Woodbridge, Upper Marlboro, Laurel, or La Plata.

ETA: I lived in a 1950's 3 BR 2 BA house (with a screened-porch converted to a 4th bedroom) near the last metro stop in Vienna, VA - 17 miles away from DC. My kitchen was never remodeled nor were any of the other rooms except for the hall bath and we sold our house for $575K 6 months ago. That is a typical price point for the DC area - not $250K.

[rdflk]

1) Yes you’re absolutely correct, that what’s considered a decent home is subjective, which is why no one should make the blanket statement: "A decent home in the area around DC will set you back at least $500,000." (which is what was said, no qualifiers)

2) The post I was responding to also didn't give a mileage limit. YOU have set an arbitrary limit of 20 miles. And having lived here, especially, you also know that what’s considered ‘close-in” is subjective. With MANY, many people commuting in from Winchester, VA, West Virginia, Frederick, Howard and Anne Arundel counties not to mention Baltimore -- then dare I say Upper Marlboro, Laurel and Rockville are no where near "hinterlands." Is Manassas farther out than I PERSONALLY would commute. You bet. But that doesn't make it "hinterlands" for this area. Upper Marlboro and Laurel are one mile past YOUR 20 mile radius. That makes them hinterlands?

The last three places are all in Prince George's County which is an area people generally avoid because of the less-than stellar school system and higher crime - not really considered "a very nice area" of DC. But of course, that's subjective.

Had the statement been made with the parameters of closer than 20 miles, excellent schools, or crime below a certain amount per capita -- then that’s what I would have responded to. But that’s not what was said, which was “Please show me where can you find a very nice house in a very good area near DC for $250K?” No qualifiers just a blanket statement.

Now, if you -- for your own reasons -- don’t think Upper Marlboro, rockville or Laurel aren’t ‘decent areas, I’m quite certain many people who live there would disagree.

3) Ultimately, the bottom line is: The fact that Alexandria had 4. Chantilly had 2. Rockville had 4. College Park did have 15 homes available and Largo had 19. Only Cheverly had a large number at 64. Makes the statement. "A decent home in the area around DC will set you back at least $500,000, which is simply absurd” factually, and on its face, incorrect......which is all I pointed out.

[michgc]

Originally Posted by rdflk

1) Yes you’re absolutely correct, that what’s considered a decent home is subjective, which is why no one should make the blanket statement: "A decent home in the area around DC will set you back at least $500,000." (which is what was said, no qualifiers)

2) The post I was responding to also didn't give a mileage limit. YOU have set an arbitrary limit of 20 miles. And having lived here, especially, you also know that what’s considered ‘close-in” is subjective. With MANY, many people commuting in from Winchester, VA, West Virginia, Frederick, Howard and Anne Arundel counties not to mention Baltimore -- then dare I say Upper Marlboro, Laurel and Rockville are no where near "hinterlands." Is Manassas farther out than I PERSONALLY would commute. You bet. But that doesn't make it "hinterlands" for this area. Upper Marlboro and Laurel are one mile past YOUR 20 mile radius. That makes them hinterlands?



Had the statement been made with the parameters of closer than 20 miles, excellent schools, or crime below a certain amount per capita -- then that’s what I would have responded to. But that’s not what was said, which was “Please show me where can you find a very nice house in a very good area near DC for $250K?” No qualifiers just a blanket statement.

Now, if you -- for your own reasons -- don’t think Upper Marlboro, rockville or Laurel aren’t ‘decent areas, I’m quite certain many people who live there would disagree.

3) Ultimately, the bottom line is: The fact that Alexandria had 4. Chantilly had 2. Rockville had 4. College Park did have 15 homes available and Largo had 19. Only Cheverly had a large number at 64. Makes the statement. "A decent home in the area around DC will set you back at least $500,000, which is simply absurd” factually, and on its face, incorrect......which is all I pointed out.

In the context of this thread, when someone is talking about living in a decent home, most people reading are thinking a decent home is not a 40-year old, under 1300 square foot home that needs work, which is what most of those homes in Silver Spring, Rockville, etc. were. And even living in the DC area and adjusting expectations of what a decent home is, most of those were still lacking quite a bit. And while both 'very nice home' and 'very nice area' are subjective, most people would not consider the homes that I saw on Realtor.com "very nice" and many are in less-than-desirable areas. Sorry, I do not consider Largo or College Park "a very nice area." And I lived there at one time.

A 20-mile limit from the city is a pretty reasonable limit for a commute in a city like DC that has a huge amount of traffic. 20 miles is about a 1 hour-15 minute commute each way to downtown. Going beyond 20 miles is going to the exurbs, and yes people do it. Why? Because they cannot afford the homes closer in! Sorry, I completely agree with the other poster's statement that a decent home in the area around DC will set you back at least $500K.

If you replied with, "if you try hard enough, you can find a SFH for $250K in the DC suburbs but you will be either subjecting yourself to a very long commute or living in one of the less desirable neighborhoods" then I would agree with that statement. But you said, "There are very nice houses in very good areas for half that [$500,000]." I don't agree.

For fun, I looked at Silver Spring single family homes with 3-bedrooms or more and 2 or more baths. There were 391 of them. 383 (98%) of those were above $250K.

[rdflk]

"A decent home in the area around DC will set you back at least $500,000.

OK so you don't agree with my 250K figure.
But are there NO decent homes in decent areas for 350K, 400K?...if so (even if there are only 1,5, or 10 and obviously there are many more) then the original post I responded to is STILL factually incorrect. Because last time I checked 350K and 400K is still less than "at least 500K."

[michgc]

Originally Posted by rdflk

OK so you don't agree with my 250K figure.
But are there NO decent homes in decent areas for 350K, 400K?...if so (even if there are only 1,5, or 10 and obviously there are many more) then the original post I responded to is STILL factually incorrect. Because last time I checked 350K and 400K is still less than "at least 500K."

Okay, I'll meet you halfway and say you can find a decent house for $350K to $400K.

[lurtsman]

We bought at a little over 4x HH income. The 3.375% on our mortgage combined with low property taxes made it very feasible. Single income. No stay kids or stay at home spouse though. One working in career, other working on Master's degree for career.

[quoss]

I'd never pay more than 10% of what you clear. It's just too hard to save up enogh to retire at a decent age if you blow it all on housing, cars, clothing,etc. If you'll pay attention, you can retire in the US in 6-7 years and if you are willing to move abroad, ti can be done in 4 years, by pretty much anybody. There's tons of big old houses that can be bought for 60k, and fixed up with 10k, enough to rent out 20 rooms for 5k per year per room ($100 per week, actually, very easy to get rid of tenants, too.. A vet can get that house with no money down and no closing costs. So find a trustworthy vet, and you're in biz. You don't have to live in it, you just hire a management company to watch over the managers (who should be the vets you hired/live there) So why coop yourself up in a hell hole like DC, anyway?

[thatguydownsouth]

My wife and I make about 87k combined, with no kids yet. Last year we bought a 233k house with 10k down so 223k mortgage. The mortgage is 1500 a month with taxes and PMI. Once the PMI goes away the mortgage will be down to $1,250'ish a month. Thats what we paid in rent in our area for a 2 bedroom apartment. We still have like 4 grand left after the mortgage at the end of the month, so I dont see why 2.5X your salary is a big deal.

Now on the issue of families with one working parent, I know a few families that waited to lock in a mortgage THEN the wife stopped working to raise the kids.

[PacoMartin]

Originally Posted by pete6032

I hear this rule of thumb all over. Use 2.5x your HH salary as a rule of thumb.

The 2.5X rule was fairly common in the 1960's. You would put 0.5X down payment and mortgage 2X.

For many years a conforming mortgage was one which Principal Interest Taxes and Insurance was no more than 28% of you gross income, and total indebtedness was 33%. Now, you could still take a negative amortization loan for three years to meet that criteria.

But all those rules are now out the window when buying a home and putting money on the blackjack table started being on equal footing.

[Aggiebuttercup]

I live in the South, where housing prices are lower but property taxes are about 3.5%. My xH really wanted to move to one of the coasts to get "a more interesting job", and I refused because I had sticker shock at the prices.

Our first house, with me working and him in grad school, was priced at 2.4x our HHI; after downpayment the mortgage was 1.94 HHI. This was a 2500 sq ft new construction home.

When he graduated we moved and I became a SAHM for a bit. Our new house was about the same as the first one - mortgage at about 1.95 HHI, price at 2.4x. It was a 14-year-old, 2500 sq ft home.

When we divorced, I became a single mom with one professional salary and some child support. My new (15-year) mortgage was exactly 1x my household income. That gave me a 35-year-old, 2000 sq ft home at the back of a cul de sac in a nice neighborhood.

Remarried, and our new home was priced at 1.35 our HHI, and the 15-year mortgage was 1.06x. We qualified for much more than that, and we could have gotten this exact floor plan in a nicer neighborhood with a larger yards and fancier upgrades for about twice what we paid. We didn't even consider it.

For my house, taxes and insurance cost about as much as the mortgage principal and interest payment.

We live on my salary and save the other money, so if one of us loses a job, we should be okay.

I'm lucky to have a well-paying job. If I was not earning this much, I'd have a smaller home, or I'd be renting and saving for a down payment. It is important to me to save for retirement, for the kids' college funds, and to be able to pay the bills if we lose a job. I'll continue to live in a low COL area so that I can keep my expenses low.