Subscribe: just up the pike
Added By: Feedage Forager Feedage Grade B rated
Language: English
advice  code  county  couple  home  homes  house  million  montgomery county  montgomery  time  years ago  years  zip code  zip 
Rate this Feed
Rate this feedRate this feedRate this feedRate this feedRate this feed
Rate this feed 1 starRate this feed 2 starRate this feed 3 starRate this feed 4 starRate this feed 5 star

Comments (0)

Feed Details and Statistics Feed Statistics
Preview: just up the pike

just up the pike

Updated: 2018-01-19T11:00:29.890-05:00


“move to the cheaper area” is good individual advice, but not a solution to our housing shortage


As house prices around Washington have risen over the past few years, everyone from friends to real estate agents offer the same advice: “Have you considered a cheaper area?” However, this advice really only works for an individual person looking for a house. Applied to an entire city, county, or region, this advice doesn’t work very well.Wheaton may be more affordable than other parts of Montgomery County, but it's not guaranteed to stay that way. Image by the author.Last week, candidates for Montgomery County executive spoke to the Greater Capital Area Association of Realtors, a group that represents real estate agents in the county and the District of Columbia. (Full disclosure: I am a member of GCAAR, though I didn’t attend the event.) As David Alpert wrote last week, each of the candidates were asked where they’d recommend a young couple making $100,000 per year should live in the county. Two of the candidates, Roger Berliner and David Blair, suggested that they look at Silver Spring or Wheaton.Would our hypothetical couple actually be able to do that? $100,000 seems like a lot of money and it is, though it’s actually a little lower than the county’s median household income of $100,352 per year. But what can they actually afford here?Does this advice work?A couple making $100,000 per year makes about $8,333 per month in monthly income before taxes. Most lenders require that homebuyers spend no more than 36 percent of their income on debt, and will subtract any other debts from that amount to get their mortgage payment. (That percentage is higher for government-backed FHA loans.) They’re just out of school, so let’s assume they each have $351 a month in student loan debt, which is the national average.That leaves a monthly payment of $2,250. Assuming they can produce a down payment of $20,000 (or five percent of the purchase price), they could afford a home of about $400,000. That’s just below the county’s median home value of $420,000, according to Bright MLS, the region's multiple listing service.A map of which zip codes have more homes for sale under $400,000. Data from Bright MLS. Image by the author. Click to make it bigger!And here’s where that advice works out: as of January 17, 2018, there are 389 homes in Montgomery County priced below $400,000 and with two or more bedrooms. Seventy-five of those homes, or about one out of five, are in zip code 20906, which (depending on who you ask) is part of Silver Spring, Wheaton, or neither. The Glenmont Metro station is at the very southern edge of this zip code, so most homes here aren't close enough to walk to it.Meanwhile, all of the other zip codes with a bunch of homes our hypothetical couple could afford are all in the Upcounty, further from jobs and other amenities. Zip code 20874 (Germantown) has 39 listings in their range, while zip code 20886 (Montgomery Village) has 35. Gaithersburg zip code 20878 has 25, while 20871 (Clarksburg) has 17.What if our hypothetical buyers wanted to look inside the Beltway? They’d still have a few choices. Zip code 20910 (downtown Silver Spring) has eight homes under $400,000, while 20814 (downtown Bethesda) has ten homes. 20902 (Wheaton and Forest Glen) has fourteen homes under $400,000. It's worth noting that most of these homes are condos.If I were working with one couple looking for one house, this would be great! They’d have a few choices of different neighborhoods and home styles and likely be able to find something that meets their needs.A graph of homes currently for sale in Montgomery County under $400,000, arranged by zip code. Data from Bright MLS. Image by the author.That said, much of the county would be off-limits to them. Most zip codes have only a handful of homes our couple could afford, and several have just one or two. Yet those are the areas that are close to transit, jobs, and sought-after schools.And of course, there isn’t just one couple, but thousands looking for a home in this price range. Many of them are currently renting in[...]

"be in the right place at the right time" is not a strategy for buying a house


Tuesday's announcement that Discovery Communications plans to close and sell its headquarters is a huge blow to Silver Spring, whose revitalization Discovery helped kickstart 20 years ago. Discovery in 2010. Photo by the author. One out of every ten houses currently for sale in DC is listed for over a million dollars. Curious to find out who's living in them, former GGWash contributor Rob Pitingolo at the Urban Institute found that million-dollar home owners in DC are generally not wealthy, nor do they work in high-paying fields. Many of them have just lived here for a while and bought their houses before 2000, when house prices were much lower. WAMU talked to Cleveland Park resident Robert Edmonds, who said he was simply in the right place at the right time:“I think it would have been a lot more challenging to try to buy now,” Edmonds said. “We purchased about 15 to 18 years ago, when the market was just starting to really skyrocket. … I wanted to start a family, and we wanted to buy, get some equity, and I think we just happened to do it at the right time. If we did it 8 or 10 years later, I think we really might have regretted it for a while, at least.”Growing up here 20 years ago, I would've found it hard to believe that neighborhoods like Petworth (where, in 1977 my grandparents bought an apartment building for $30,000!) would ever become a "hot" area. But due to a combination of low interest rates, demographic shifts, and a resurgent interest in city living, house prices skyrocketed. Between 2000 and 2005, the median house price in DC rose from $150,000 to $420,000, and today it's $575,000.And folks who bought homes in neighborhoods that were, at the time, not that desirable, discovered later they had won the lottery. So what are homebuyers starting out supposed to do now? One real estate agent told WAMU that they should be patient, save up, and eventually they can buy a million-dollar home too: “A lot of people who live in those $2 million houses now started out buying maybe a $150,000 place first, then eventually sold it, bought a $500,000 or $600,000 house, put some time, put some work into it, paid down the mortgage so that they are building equity. That equity then can be transferred to a new house. And once you do that three or four times, you find that you are actually in a position to maybe spend $1.5 or $2 million, if that’s your goal.”That generally makes sense. Even people who bought houses in a much-cheaper DC 20 years ago started out small and worked their way up. But the entire structure of the local and national economy has changed since then. Twenty- or 30-somethings today earn less than their counterparts did in 2004, have less stable incomes, and of course have staggering student debt. As a result, for many Millennials that cheap starter house is out of reach, let alone the more expensive move-up house.And besides, that starter house may not be that cheap. WAMU shows a photo of a modest 1920s colonial in Cleveland Park that sold for a million dollars, but when it was built, it was probably a house for a young family starting out. Due to the shortage of homes in this region, in many areas that "first house," whether it's a small single-family house, a rowhouse, or a one-bedroom condo, is now priced like a luxury house. As a result, first-time homebuyers can't afford homes that were essentially built for them.The article notes a variety of programs that DC (and other jurisdictions) are doing to help make first-time home buying more affordable, like offering grants to help cover closing costs or a down payment. But the real solution is to build more homes. Montgomery County recently did a rental study that found that the greatest demand are for low-cost units and really high-cost units. Translated to for-sale housing, this means starter homes (for people starting out) and luxury homes (for people who can afford them), and thus relieves the pressure to turn starter homes into luxury homes.Twenty years ago, DC was affordable beca[...]