A half million dollars may sound like a lot to buyers in other parts of the country, but for those in our nation’s capital city, at a $500,000 purchase price, they’re just getting started!
One of Redfin’s real estate agents, Steve Centrella, took a look to see who can buy what for $500,000. in the Washington, D.C. area. “Generally speaking, people in this price range are either going to be entry-level buyers, folks who are moving to D.C. from outside the area and then, occasionally, you’re going to see folks who are going to be downsizing. Once you start getting out into some of the surrounding jurisdictions…will still likely be someone early in their home buying career.”
With median sale prices coming in at $462,500. in May, 2017, while national median sale prices register $274,900. according to realtor.com, people moving to the D.C. area from other places who have some home buying experience consider the region’s prices to be “exorbitant.” The other side of that home buying experience coin is that the D.C. area ranks #2 in the abundance of millennial buyers. Those millennial buyers tend to be more accepting of D. C. prices as well as more willing to buy faster because they haven’t a comparative frame of reference on pricing.
Houses and condominiums within the $500,000. price range tend to be snapped up quickly due to low inventory and still relatively low interest rates. Centrella of Redfin “…tells folks I’m working with to look at homes that are anywhere between 5 – 10% below their maximum spend because we’re going to face multiple offers and potentially escalations in those offers…” Usually, the “homes” Centrella mentions tend to be condominiums in urban areas that are within walking distance to workplaces, shopping and restaurants. The “homes” he mentions tend to be small homes in more suburban areas of metro D.C.
Neighborhoods such as Brookline, Riggs Park and Brentwood are increasing in popularity because one can get good value and “decent” location. Neighborhoods such as Dupont Circle, Logan Circle, Georgetown that have “great” location are less popular than they were just a few years ago because they are now unaffordable to most buyers.
How much would a monthly mortgage payment be on a $500,000. home with a 20% down payment and a 30 year fixed interest rate of 4%? Approximately $2,626.00 including taxes and insurance, according to realtor.com. To stay within the general guidelines of spending no more than 30% of your income on housing, the first time buyer in metro Washington, D.C. would need to earn at least $105,053. annually in order to afford that $500,000. home and/or condominium