From the Forum – Should I Move?

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“I look at the housing market and things are crazy around here. My neighbor just sold her condo for like $90,000 more than she paid for it. I live with my GF now and would love to get a row house somewhere. I don’t need the space now but I see a point where I will need it. Should I wait and continue to save or sell my place and try to get a house before things get crazier. ”

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10 Comment

  • Buy when the time is right for you and don’t stretch yourself financially. The market could just as easily crash as “get crazier,” in which case you may find yourself overleveraged and under water. At the same time, I wouldn’t hesitate to buy a house if you can do it without paying much more than you pay in rent.

  • Certainty is your friend, I don’t see home prices falling, I do see rates going up though, so for lifetime interest savings, now is the time.

    • The days of 20% annual increases are over. I think we’ll still see moderate year to year increases, but the big thing is interest rates. Over the life of the loan 1 point in interest is equivalent to something like 60k in equity on a 500k house. It’s definitely worth locking in rates on a house you could see yourself in for 8-10 years if you can.

  • I recommend passively looking. My wife and I were in a 2 bedroom condo with two kids. We loved the place, but it was starting to feel pretty small. We had our realtors (Deb and Skip from DC Living, they’re fantastic) send us listings that met our requirements, and then we just waited. You have a huge advantage in not needing to move right now, so you can wait until the perfect place comes up.

    We went to open houses here and there and got a better sense of what we wanted and where we wanted to be, and then one weekend the perfect place popped up, and we moved.

    You can drive yourself crazy trying to time the market, and maybe it pays off, maybe not. I’d also keep an eye on the zoning laws and whether or not the council is going to put any restrictions on condo conversions or popups – that could change the real estate market really quickly, and no one seems to be giving much thought to what those changes would be, and are just focusing on “ew, popups are ugly” and “when you convert that house to condos where will they park?”.

  • Move doesn’t equal buy. But, if you buy with a GF, that complicates your relationship. I bought with a GF but we were fully committed for years, so make sure that your standing is clear before you go house shopping. What’s her stake in the new place, financially and emotionally. Does she get a say in the backsplash, and the bigger closet?

  • Depends. How much equity do you have now? How long have you lived there? Are you planning to buy with your GF? That is a big financial commitment. I’d say that unless you are an investor, don’t try to time the market. Instead make the move when you are mentally and financialy ready for the change in your life.

  • Don’t forget that closing costs are insane in DC. Expect to sink a lot of money that you’ll never get back into that stuff. It was something like $20k for us.

  • If interest rates rise, DC housing prices should temper a bit. If you buy in DC now you will pay top dollar (ever think Trinidad would get expensive?), but then again, mortgage rates are very, very low at the moment.

    Another thing to consider: As regards prices, trees don’t grow to the clouds. These $900K, two-bedroom rowhouses on Capitol Hill will just never be $1.5K anytime soon. Very few people have that kind of money. This is the “affordability gap”, and will serve to keep prices from getting NY or SF nuts here.

  • Yes, if you want to buy, buy now while interest rates are low. Because I saw this happen when I lived in Brooklyn. No one thought it would ever get as expensive as, and more expensive than, in many neighborhoods, Manhattan. I DO think DC can get that crazy. I see no reason why not. There’s more money here, because of politics. The prices have risen a lot in recent years; neighborhoods that were affordable just a few years ago are not any longer. People don’t only buy with earned income – they buy with capital gains from places they bought years ago that increased a lot in price; they buy with money they inherit from, or are given by, family members; many are transplants and buy with savings or capital gains from homes and jobs elsewhere; and people can buy a lot with salaries around here while interest rates are low. Salaries may be relatively low for entry level jobs in many fields of work common here, but they are higher than New York in many areas for more senior people – the government pays well, and has much better job security than anything in the private sector. If you want it, go for it. DC is going through what Brooklyn did some years back – going from who’d want to live there to incredibly popular and increasingly expensive. I wish I had bought a house, which I could have done for what I paid for a coop, when I bought there around 15 years ago – a house would have gone from 300 some K to well over 2 million by now – much more than the increase on coops and condos. Go for it!

  • justinbc

    Whatever you do, don’t base the (likely) single biggest financial decision of your life on some tips from the internet.

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