Only the Good Buy Young
Wednesday, October 26, 2005
Paul Newland stood in the newly updated kitchen of a Germantown townhouse on a recent afternoon. It was Sunday, open house day. The price tag on this one was $280,000.
Newland, who works at the State Department, liked the place -- the finished basement, hardwood floors, the big fenced-in back yard. But he was worried. He had just lent his girlfriend a couple of thousand dollars, so his liquidity was seriously in doubt.
Still, Newland was determined to buy. Though just 30 years old, he was worried that time was running out.
"I feel like if I don't buy now, I'll never be able to live in Washington," Newland said. "And if I don't do it now, nothing will be in my range."
The Washington area's booming housing market and a strong economy that keeps producing high-paying professional jobs have created a new breed of home buyer. Like Newland, they are in their twenties to early thirties and have come of age in an era when six-way bidding wars are standard. Their mantra is buy now -- condos, townhouses, suburban colonials -- or get left in the dust. And many are relying on creative financing -- from interest-only loans to going in with their roommates -- to make sure they don't miss out.
Young buyers' "willingness to consider taking financial risks is much, much higher than it used to be," said Keene Taylor Jr. of Taylor Foster real estate, whose firm has worked with a handful of clients under the age of 25. "They're not in a position where taking a chance is as scary as for somebody who's got kids at home to feed."
Home buyers between the ages of 18 and 34 made up 39 percent of the market last year, according to the most recent data from the National Association of Realtors. And 12 percent of first-time home buyers were younger than 25. Similar statistics from the Washington area are not available, but anecdotal evidence suggests that real estate fever -- even at a time when the local market seems to be softening -- is not just something for baby boomers and Generation X.
Dissecting mortgages has become a hot topic of conversation in the local bar scene. Friends compete for bragging rights in snaring the lowest interest rate. Social groups like District-based Professionals in the City have added home-buying seminars to their lineup of happy hours, speed dating and trips to Iceland.
Everyone, it seems, has a friend like Elizabeth Goldman, who works in marketing and public relations, and at age 26 is on her second home.
Goldman bought her first condo in 2003, when she was 24, with money saved up from lifeguarding in high school and savings bonds from her grandparents because she couldn't shake the feeling that she was wasting money paying rent for an apartment in Centreville.
"I figured, hey, I could probably afford to buy something."
After boning up on real estate jargon and ditching a lender who refused to use e-mail, Goldman clinched a contract on a 625-square-foot, one-bedroom condo in McLean for $157,000. She put down 5 percent, mortgaged 80 percent and took out a line of credit for the remaining 15 percent. She sold it last summer for $300,000.