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In N.Va., a $500,000 House Has Become a Rarity
Pimmit Hills, a community of more than 1,600 homes off Route 7, is one area where prices still are under $500,000.
(By Nancy Szokan -- The Washington Post)
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"If you want to live by transit, forget it: You don't find anything under $500,000," he said.
Janice Fife, an agent with Weichert in Silver Spring, said that in some cases a fixer-upper might be the best bet to get the most for your money.
"There are a lot of people paying for their houses in sweat equity," she said. "Ironically, they go in, fix the house up, making the neighborhood all the more unaffordable."
Weichert's Turk said that "new property availability across the board has helped affordability. In many areas, because inventories have increased, buyers are getting their dream townhome and not having to put in an escalation clause." In the hottest days of the real estate market, buyers commonly included such clauses in contracts, committing them to raise their offering price if there were competing bids.
Said Weichert's Holmes: "People are coming back and revisiting homes again. People now have time to step back and say, 'What trade-offs am I willing to make?' "
Adjustable-rate mortgages and interest-only loans -- which require the buyer to pay only interest and none of the principal, thus bringing down monthly payments -- also mean that buyers may be able to afford more house than they could under a traditional 30-year, fixed-rate mortgage, Lama said.
"Financing plays a very important role in affordability. If you understand how the loans work, understand the risks, then you may be able to buy a house where you thought the prices were out of your range," he said.
But agents offer some caveats.
Think twice about interest-only loans if you're planning on staying in the house more than five years, Turk cautioned.
Fife worries that some buyers, feeling priced out of a neighborhood, have taken on more debt than they should, and if the huge price increases of the last five years suddenly come to a standstill, they will be left owing more than their house is worth.
"You have to realize you are not going to have 25 percent appreciation forever," she said. "And while that will be good for buyers, sellers with no equity may be hurt."
