How to Buy a Home in an Expensive Real Estate Market Like Washington D.C.
by Bryan Zupan
on Tuesday, April 30th, 2019 at 6:40pm.
It's true: Washington D.C. can be quite an expensive city to live in...
And part of the price tag is due to the hot housing market. The great neighborhoods, schools, and employment opportunities mean that homes around D.C. are in demand.
So what can a buyer on a budget do?
Read on for the ultimate guide to buying in Washington D.C.'s expensive real estate market.
Preparation and Planning
Buying in a hot market takes preparation. First up, you should be asking: is buying even right for you? Purchasing a home is a huge milestone for many people, and it's not a decision to be made lightly.
An honest appraisal of your finances and the market are key. Sometimes, the best thing to do is wait.
And what should you be doing while waiting? Saving!
When the time comes to buy, there are going to be a lot of extra costs which you'll want to pay in cash - things like inspections, agent fees, and moving costs. So, make sure you have some extra funds to handle these.
Next, a large down payment can be the difference between a crushing mortgage and owning your dream home with financial comfort to spare.
As a general rule - find out what a lender (like your bank) says you can afford, then aim for a home 20% cheaper than that. Aim to put 20% of the home's value down, and, whatever property you eventually consider buying, make sure that the monthly payments don't exceed 25% of your total income.
If you have some time, do a bit of research and figure out what the market is like. Visit open houses and take a look around, you'll soon get a sense of what your money should get you.
And finally, find out if you qualify for first-time home buyer assistance. Ask your bank about this one.
Once decided, stay firm on your financial boundaries. Communicate them to your real estate agent so they can work for you with those goals in mind.
Finding Value in Washington D.C.'s Real Estate Market
When buying a home in an expensive market, your goal should be more than just "get a nice house at a low price".
There are things you can look for in a home that will improve your financial prospects, and help to offset the cost of purchase.
The first is just to re-evaluate what you want out of a home. Do you really need a large yard and those extra bedrooms? Why not get a condo or town home instead, and use the extra money every month on lifestyle improvements?
Also, don't neglect the savings you could get from buying a classic "fixer upper".
Buying a relatively run-down house in a good neighborhood is a great way to secure value way outside what you would be able to afford otherwise.
You could also look for a home with multiple units, or a basement, or anything that could be rented out to offset the monthly costs of the home. Many homeowners are taking this route, and some are even managing to turn a profit.
An important component to all these tactics is the area. You'll struggle to find renters if the transport in your area is bad, and a rundown home in a neighborhood with nothing going for it is just a bad investment.
So, the next big step is to look for the right area. The "perfect" neighborhoods are also usually the most expensive, so you're going to have to shop for some place that blends the most important characteristics to you with overall affordability.
Not sure where to start? Need some recommendations?
Affordable Neighborhoods In Washington D.C.
For an affordable place to live around Washington D.C., check out one of the following neighborhoods:
Germantown is a large suburb to the northwest of Washington in Montgomery County. Known for its excellent schools and beautiful wooded parks, Germantown is home to some charming communities with affordable housing options.
A small, well-established neighborhood with mature trees and long, spacious lots. This community is safe, and conveniently placed just off US Highway 1.
A low cost of living combined with fantastic road and metro access, plus a selection of large, wooded parks. Greenbelt also hosts a few shopping malls, the Greenbelt Museum, and sits adjacent to the NASA Goddard Space Flight Center.
Located in Prince George's County, this community on the eastern outskirts of Washington offers family-friendly neighborhoods with charming mid-century homes. Right on the edge of scenic farmland, and within commuting distance of the city, this affordable suburb offers tremendous value.
Home to the Mall at Prince George's and Prince George's Plaza metro station, this conveniently placed neighborhood has schools, parks, and a recreation center.
Learn more about Washington D.C. real estate and the communities listed here. Contact the SIG team today! We can help you find the perfect Washington D.C. community to suit your needs and budget.
How To Buy A Home In An Expensive Market
So now that you know what you can afford, what you're looking for, and where to look - let's get into the business of actually buying a home...
Timing is perhaps the most important aspect of securing the home you want in Washington D.C.'s expensive housing market.