Who Knew?

Who wondered a few years ago about the people buying up property in their city? Me and my friends.

A local columnist asks the question as part of the end of 2008 wrapup. How could anyone not asks who could be paying all thismoney for these places when the housing prices were going up insanely?

In DC, buildings with a hundred ormore units went up with everybody asking $600,000 for one-bedroom boxes. Washington had 1/3 investor ownership of condos, second only to Miami. But with all the homes values dropping and the funny money disappearing, what’s happening in DC now.

A neighbor told me that on our street with 1,200 square foot houses, a person was paying over $2400 a month in rent. With that being about $28,000 a year, and a rule of thumb of taking on a mortgage at 40% of one’s income, this person could buy a house at over $400,000 given a fixed rate of 5.75% over 30 years.

The largest house on our street to go on sale over the last two years went to a person for $375,000 in late September 2007. One slightly smaller house went on foreclosure for $181,000 in the fall of last year and required complete renovation worth an estimated $125,000 in materials and labor. Asking near $400,000, the place remains unsold.  The Federal Home Loan Bank Corp purchased another house roughly the size of the first house for $376,000 in September 2008. It seems the houses on the street are holding their value.

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5 comments so far

  1. » Who Knew? on

    […] hilton0208 wrote an interesting post today onHere’s a quick excerpt Who wondered a few years ago about the people buying up property in their city? Me and my friends. A local columnist asks the question as part of the end of 2008 wrapup. How could anyone not asks who could be paying all thismoney for these places when the housing prices were going up insanely? In DC, buildings with a hundred ormore units went up with everybody asking $600,000 for one-bedroom boxes. Washington had 1/3 investor ownership of condos, second only to Miami. But with all the homes values dropping and the funny money disappearing, what’s happening in DC now. A neighbor told me that on our street with 1,200 square foot houses, a person was paying over $2400 a month in rent. With that being about $28,000 a year, and a rule of thumb of taking on a mortgage at 40% of one’s income, this person could buy a house at over $400,000 […] […]

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  4. Mari on

    ^
    | Who are these jokers linking to you?

    Anyway the high investor rate may be a reason why I’m not all that sympathetic when I hear about foreclosures. As far as I’m concerned it’s not the owners’ primary home that’s going down on the auction block. And renters can just find another place, tis the joy of being a renter.
    Also, having your mortgage being 40% of your income is not ideal in the long run. When I took on the big 2nd mortgage it was about 48% of my take home pay and that hurt my rate of savings. With pay raises and a roommate I’ve gotten it down to 30-something percent. Now I can put more into savings, the retirement, and live the life of which I have become accustomed prior to the renovation.

  5. bla2222 on

    I know. If you can get it to 33% that’s really good. I was surprised to learn about the money the renters were paying for a house up 4th St.


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