Young Homebuyers

The Washington area's booming housing market and strong economy are creating a new breed of homebuyers: young adults in their twenties and early thirties who are using untraditional loans, buying for investment purposes and fearful of being priced out of the market if they don't buy now.

People ages 18 to 34 make up 39 percent of all homebuyers last year, according to the most recent data from the National Association of Realtors. Similar statistics from the Washington area are not available, but anecdotal evidence suggests that real estate fever is not just something for Baby Boomers and Generation X.

Washington Post staff writers Ylan Q. Mui and Michael Rosenwald were online Thursday, Oct. 27 at Noon ET to discuss their story, Only the Good Buy Young.

A transcript follows.

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Ylan Q. Mui: Thanks for joining us today! We look forward to answering your questions about our story on young homebuyers. Fire away!

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Burke, Va.: People are flocking to the D.C./Metro area by the thousands year after year. It is likely that a significant percentage of these individuals are in their 20s. That being said, why aren't there any AFFORDABLE "starter homes" in the D.C./Metro area??? (I define "AFFORDABLE" as a domicile that costs 2.5 to 3 times the average annual gross salary of this demographic.)

Michael Rosenwald: Hi Burke: Thanks for your question. It's a good one. The answer is complicated, but it has to do with the overall shortage in the market. There is just not enough available land to really build all the houses the area needs. When developers do come across a nice piece of land, many are opting to build larger, more luxury type homes. In theory, when people move into their new luxury homes, they should be leaving more starter ones behind. But because of the shortage, those house price stay high. It's really a supply and demand thing. Hope that helps.

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Washington, D.C.: I just moved back to D.C. after almost 10 years in Ohio. At 34, I'm a little older than the folks in this article, but also have anxiety if I don't buy now, I won't ever be able to get in (at least, not as a solo buyer who's unwilling to live in a studio). The amount I've been able to save down payment is much, much higher than all those in the story, but my salary, in the low $50,000s, still makes an affordable mortgage payment and reasonable commute, even in 'transitional' neighborhoods like Petworth, Eckington or Brookland, seem like a far-fetched dream.

My (not so serious) question is -- how do I find co-investor roommates, like the guys in LeDroit? My hope was to get a two-bedroom place and get a roommate to make the mortgage affordable, but it seems I'm a year or two too late.

Ylan Q. Mui: Well, I think two things: First, that you need to be really careful who you go in with. Those guys have been friends for years, so they knew they could trust each other. It's the kind of thing that goes without saying, but really give it some thought. It could easily turn ugly!

So, second, you might want to start with your own friends who have some money socked away. If they're haven't been so good at saving, try craigslist.org (that's actually how I found these guys) or City Paper classifieds ... (Not to plug the competition, but ...)

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Washington, D.C.: Three years ago at the ripe old age of 29, I bought my first home, a large two-bed, two-bath condo in Silver Spring. I had very little money to put down, but had great credit so I was able to get a 30-year conventional mortgage at a sensible rate (6%). For the subjects of your article, which was the biggest obstacle when purchasing a home, lack of cash or lack of credit?

Michael Rosenwald: Congrats on your home purchase! I think the biggest obstacle for our subjects was coming to terms with how much more they would have to pay per month vs. just paying rent. Going from renting to buying can nearly double your monthly housing payment, so you must really make sure you have that kind of cash to make that happen. You also have to be willing to change your lifestyle to support the payments -- cutting down on new gadgets, dinners out, movies, sporting events, etc. You have to be willing to make trade-offs. And stick with them.

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Westminster, Md.: I am a 26 year old professional that was fortunate enough to get into the real estate market 3 years ago. I recently upgraded from a townhouse to a single family home an hour away from work. I couldn't afford a newer single family home where I work because they are all going for $1 million + (I work in Clarksville).

Do you think the people like me that are moving out to the farther regions will have a big problem when/if there is a price decline? The houses are slightly more affordable in Carroll versus Howard and Montgomery, but I am worried that there might not be enough of a population surge to feed demand for all of the expensive housing.

Michael Rosenwald: Hi Westminster: Thanks for your question. Having just bought a house myself in Germantown, I have thought a lot about your question. Here's my theory: The main driving of the region's economy is the federal government, and it's not exactly moving to Des Moines anytime soon. And the government and its counterpart in contracting and technology are adding jobs by the thousands. So I think there is enough population growth to support moving to "far away" areas.

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Arlington, Va.: Many of us 20-somethings feel great pressure to buy, almost like we're participating in a game of musical chairs--and none of us want to be without a seat when the music stops. However, your piece omits the valid arguments in favor of renting (i.e., stable rents, the freedom to live in areas in which most can't afford to buy, the probability that the majority of new homeowners will not see values increase on par with the subjects of your piece, etc.). If only the "good" buy young, what did you learn from the "bad" who are passing on the frenzy? What is the true cost of homeownership?

Ylan Q. Mui: Renting is always an option, and I believe that there are some indications that rents are dipping slightly or staying flat. One of the guys I interviewed, Jeremias, had an amazing rent in a great location in Adams Morgan. He realized that buying just wouldn't be worth it - that the true cost would probably be serious debt (especially when the market cools, and there is some indication that it already has) and also the loss of his social life!

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Bethesda, Md.: I am concerned how first time home buyers are purchasing homes. Common sense dictates that if one cannot afford a home with a traditional fixed rate mortgage, they have no business in purchasing that particular property. The danger I see is that these first time homebuyers are gambling their financial future on the hope that property will continue to rise, with the expectation that their salaries will rise as well. Unfortunately, salaries have not kept pace with rising home prices. So, as a result, a larger % of income needs to be allocated to mortgage payments. This affects the ability to pay student loans, car loans, credit card loans, etc. It seems that with record indebtedness, these first time homebuyers are courting a lifetime of debt that will prevent them from investing in areas that are perhaps more important than owning a home-education beyond the bachelor's level and retirement. I just cannot see how all these costs can be paid for with less disposable income. Are we headed for a national crisis where consumption lifestyles will prevail?

Michael Rosenwald: Dear Bethesda: You raise all of the valid points that first-time homebuyers need to face when making their decisions. For a lot of first-time buyers, those questions get put aside over the excitement of owning a home. These questions and concerns should be foremost in a buyer's head. Thanks for your note.

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Washington, D.C.: OK, now I'm upset. For years I've been watching in amazement (and silence) as people I know pay New York real estate prices while earning middle-class Washington salaries. But "Only the Good Buy Young"? I really wish you had resisted the temptation to use that pun as your title. My husband and I work hard and earn salaries that would make us well-off in most parts of the country, but we're not a two-attorney couple, and we can't afford to buy in this market. I'm sorry that other people have been making what I consider to be insane decisions, but I feel no responsibility to buy into this market and validate those decisions by keeping prices rising. Right now, our home-buying strategy is to leave the Washington area, something we hope to be doing within the next couple of months. A better title might have been "Only the Fools Buy Young"

Ylan Q. Mui: There has actually been some discussion within the paper over whether or not that was the right headline to use. I'll be there are a lot of others just like you -- who are leaving the market altogether because the prices have gotten so high and out of control. Those who try to jump in unprepared can easily end up swamped. At the same time, those who have figured out how to make it work for them are definitely sitting pretty.

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Washington D.C.: What are your thoughts about on these young people buying these properties with risky mortgages? I personally find it hard to believe that any good can come of this.

My husband I are in our late 20s and make a combined income of 300K per year. We are thinking about buying a place but stories like this make us fearful about the stability of the DC market. There has been a real psychological shift with respect to real estate. A lot of people are buying out of fear or greed. We are currently renting (an incredibly good deal right now) and do not plan on buying a place anytime in the near future.

Michael Rosenwald: Your question highlights an important aspect to home buying: One has to be comfortable with the investment. Many people feel that since the market has swung so far one way that at some point it has to swing the other way. Some people don't think that at all. What's important is that you carefully weigh the risks of buying a home. Because, after all, for many people it is the biggest financial risk they will ever take.

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Alexandria, Va.: After reading yesterday's article about young home-buyers, a nerve has been touched within me.

To give you an accurate picture of the demographic I reside in (pun intended), I'm 27 years old, unmarried, earn a yearly income in the low $40,000 range, consider myself middle-class, but am still renting because I feel that I'm ALREADY priced out of my ability to buy real estate. On my salary (which, I might add, felt high 5 years ago but surprisingly LOW today), I would scarcely be able to afford a condo priced at $200,000, minimum--by myself. (And I emphasize the point "by myself" because 99% of my local friends are married, which kind of rules out my opportunities for taking on a friend as a roommate.)

If you'll allow me to say so, I think that real estate prices in the metro Washington region are so outrageous that it's become downright offensive. The market very clearly favors people with 6- or 7-figure incomes, which by default excludes people like me who make a modest but decent wage to live off of and are just looking for a nice place to settle down.

Unlike many of the young homebuyers noted in yesterday's article, I put MUCH emotional value on my home, and would want to live there as long as I possibly could. I'm not looking to milk the market for all the money I can, and I fear very greatly that I would have to go way way out into rural Virginia, Maryland, or even West Virginia just to find something affordable (whereupon I'd have to live with a 2-hour commute one-way).

The way I see it, really, is that there is almost no way that a single person can buy even a small place for him/herself because of the ludicrous prices of real estate in this area. If real estate prices don't go down, are people like us doomed to renting for the rest of our lives? Is there any hope whatsoever for young middle-class people like me to be able to afford a place on our own without having to resort to such desperate payment measures like interest-only payments or taking on 5 or 6 roommates?

Ylan Q. Mui: Wow, you definitely do sound emotional! And there are still people who aren't in it just to make money, of cousre. I would say there is hope, but you may have to compromise on what you'll take. I feel like you can always find *something.* (Though maybe I am an optimist?) It's just a matter of what. Hence, the folks who live in Frederick, the urban pioneers who speculate on which neighborhoods in DC will be hot next, etc. etc. Like the realtor we interviewed said, it's all about managing your expectations ...

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Falls Church, Va.: First, I loved the article yesterday - I am 25 years old, consider myself in good shape financially, and would like to buy a home in Northern Virginia in the next year. I have a question regarding one of the "tips" mentioned in yesterday's article. The tip was to have parents take over monthly bills for a little while to inflate the amount of money in the young buyer's bank account. I currently keep a fairly low amount in my bank accounts as any extra money I have been using to pay down student loans. How much should one have in their bank accounts in anticipation of buying a home? And since other outstanding debt usually factors into the equation is it better to reduce the student loan debt or to keep a larger amount of cash on hand in a bank acount?

Michael Rosenwald: I think that most people would say you need 3 to 4 months worth of living and housing expenses before a lender will seriously consider a large loan. I know that was the situation when I recently purchased my own first home. Good luck.

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Washington, D.C.: Thank you for a great article.

One thing I wonder is if employers are picking up on this trend and trying to come up with any sort of assistance programs. I know that recently my employer had someone resign due only to the fact they could not afford to buy in this area, so they relocated. Do you think that will be a new trend by employers?

Ylan Q. Mui: We haven't heard of that, but hey, CEOs, listen up!!! It's not a bad idea! Some companies do give their employees access to financial advice or may have credit unions where you could get loans with lower interest rates, however.

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Jessup, Md.: Do you believe that younger people are going to miss out if they don't invest in real estate right now? It feels like if I don't buy a house right now, I will be left behind and never be able to afford a house in Maryland.

Michael Rosenwald: That's exactly why we did this piece. We wanted to know how young people feel about the market and how they are reacting. I'd say overall, that fear of being left behind was one of the major drivers of why the people we spoke with made a purchase. From personal experience, I can tell you that I also feared being left behind -- I'm 30 years old -- and therefore that was a major driver in my own purchase of a new home. Good luck.

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Springfield, Va.: Would you agree that "NIMBY" folks opposed to new in-county (specifically Fairfax) developments--for a proclaimed "fear of 'suburban sprawl'"--further add to the home shortage issue???

Ylan Q. Mui: Well, the housing shortage is a simple supply and demand issue. So folks who are trying to contain growth/sprawl do contribute to the shortage of housing. But that's not the only reason that housing prices are going up alone. There was recently a report by the Washington Council of Governments that predicted that the number of jobs added to this area would outpace the amount of housing for something like the next 50 years!

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Alexandria, Va.: Just a comment - thank you so much for writing this article. At the age of 27, my mom could not understand why a single woman was in such a hurry to buy a place - apparently in her eyes, you only buy a home if you are engaged or married. She couldn't understand how I could spend a huge amount of money on a condo. I emailed her your article and she said that she understands now. Thank you again!

Michael Rosenwald: Well, I'm glad you and your mom were able to get something out of the piece. There are definite generational differences in how people perceive home buying habits.

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Washington, D.C.: I'm an economist and I'm worried about the effect on the overall market of the riskier mortgages. The loans being made don't make a lot of sense from the lender's perspective. Where is the lender's upside in making a 5% interest only ARM with little down payment? If the borrower defaults, the lender will probably have to sell the foreclosed house at a huge loss. The risk doesn't seem worth it for such a marginal interest rate.

Quite a few people could default if there is even the slightest hiccup. Putting those houses on the market would lead to an oversupply on the market, lowering prices. The lenders would probably increase interest rates to make up for the increased risk. The combination of higher rates and lower prices would push even more people into foreclosure. The process would repeat itself. Foreclosures and higher interest rates are very likely to become the chicken and the egg.

Ask yourself a question. Who will be buying all of the houses on the market? Current real estate investors will probably be wiped out. They are already overleveraged and are the most likely immediate victims of foreclosure. They won't be in a position to take advantage of it. Current homeowners won't be able to sell their current houses, so they won't be in the market for new ones. First time homebuyers are one potential market but will very likely be shell-shocked.

I think you are very likely to see a market with little demand and enormous supply. In my opinion, anybody that buys now is a fool. Why not rent for a couple more years and be ready to take advantage of the opportunity that will present itself?

Michael Rosenwald: Thanks for these very perceptive thoughts.

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Arlington, Va.: A common quandary is that the profit you make from selling your DC home isn't as profitable when faced with the problem of buying another home in the DC metro area. So, it makes me wonder about the plans of the three roommates in your article who are selling their DC house? Are they staying in the DC metro area and doing another investment?

Ylan Q. Mui: I hear you! That's actually the problem I'm facing now with my own condo -- make a bundle from the sale of your place only to fork it over to buy a new one! It sucks. Ok, off the soapbox ...

I think that those three guys have made so much money between the sale of their first condo and the sale of this house that they're doing fine. One of the guy is going off on his own to live in Penn Quarter/Gallery Place. The other two are looking to buy a building in Columbia heights and renovate it. They'll turn it into a multi-unit condo building and sell them other units ... So if anyone is looking!!!

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Washington, D.C.: In your research for this article, I'm curious if you know the average percentage the mortgate payment takes up the homebuyer's (20-something and 30-something) income?

Ylan Q. Mui: Actually, we don't! We have some statistics in the story about how much of the salary mortgages eat up in general, but not specific to 20- and 30-somethings. In fact, we couldn't find stats on the income of young people in the Washington area. That would've been great to add to the story.

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Capitol Heights, Md.: I enjoyed your article--well done. It was presented without bias, and allowed this reader to draw her own conclusions... that this market has gone waaaaaaay too far out of control if those are the options we've got to buy a home.

Can I assume that none of the subjects interviewed were confident that the market would come back down again, or at least stagnate? And for those with interest-only and ARM mortgages, how did they plan on handling the payments once the rates jumped?

Michael Rosenwald: Great question. I think most people who get interest-only and/or ARM loans are banking on two things: either selling the house before the new amounts come due (and making a profit at the same time) or they hope that their salaries will increase to help soften the blow. Of course, both strategies are big gambles.

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19th & K St.: While I agree with Bethesda's concerns about young first-time homeowners setting themselves up for a life of debt, I'd also point out that debt is fact of life in this market. As a 26 y/o working in a good professional job making a solid salary, but nothing outstanding, I continue to pay rent because I can't stomach the idea of devoting nearly all of my salary to housing - I need to deal with car payments, the essentials like food and everything, etc. But the musical chairs that another person alluded to is exactly right - there's a feeling that if you don't do it now, you are going to miss out entirely. As I look at the single family homes in Arlington with 3 BRs and small yards that sell for close to $1million dollars, and the McMansions farther out that leave you with a 1+ hour commute into downtown DC, I wonder if by waiting, I'm simply setting myself up to a life in which I've paid way too much for a small house near Dulles, suffering through a commute that kills my life, all because I waited too long to get into the game.

There's no magic balance, but for someone who loves DC and wants to be here for a long time, it is hard to imagine this city getting more affordable. So taking the risk now seems safer than having to deal with the risk when I'm 35 with a wife and kid.

Ylan Q. Mui: Thanks for comment. Good thoughts!

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Silver Spring, Md.: Hello,

One comment on your report of "young" buyers. In 1970, no one would have called a 30 year old first time buyer "young." They would have asked "what have you been waiting for." The fact is, home prices have driven up the age of first time buyers.

Michael Rosenwald: Excellent point.

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Anonymous: "fearful of being priced out of the market "

No not fearful, for 99.9% of us we are priced out of the market.

Michael Rosenwald: You may be priced out of the market you are thinking of, but if you expand the possible locations a bit, while making some sacrifices in what the home will look or feel like, perhaps you might be able to find something that will work for you and your wallet. My advice: Spend a lot of time looking at as many different locations and homes as possible. You might get lucky.

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Arlington, Va.: I'll be honest with you. I thought your article was extremely irresponsible.

My wife and I were lucky enough to have bought a place in Arlington 4 years ago putting 20% down and getting a 30 year fixed mortgage. In fact, we waited until we finished paying off our student loans from graduate school. We were 29 at the time.

Whatever happened to saving money and buying what you can afford? Your article, whether intentional or not, seems to encourage the opposite. I see a lot of my younger co-workers (exactly in the same position I was when I was their age - no salary increases) who are taking on more and more debt.

To all the twenty-somethings out there - be patient, it is OK to rent. Sometimes the best thing to do is the opposite of what everyone else is doing.

Michael Rosenwald: Arlington, thanks for your comments.

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Washington, D.C.: Great article, thanks for it. Based on your interviews and research, which neighborhoods in the DC Metro area are currently attracting the most upwardly mobile twenty and thirtysomethings (i.e., buyers looking for $600K or higher homes)?

Ylan Q. Mui: Hmmm, interesting question. Well, we don't have stastics on the number of young people living in a certain zip code, much less their income! And fair housing laws prohibit real estate agents from characterizing neighborhoods in those ways. That said, it depends on what you're looking for. If you want up-and-coming, I'd suggest anywhere near the new convention center, LeDroit Park and Columbia Heights. If you're looking for more established areas, check out Dupont, Gallery Place area and, of course, Georgetown.

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Upper Marlboro, Md.: The "emotional" poster from Alexandria sounds like me 6 months ago. I am 23, mid-range salary, was living at home and desperately wanted to leave. But rent prices mirrored mortgage prices and I felt it would be more beneficial to buy. So I looked and looked and looked, and became very depressed because I felt like I was either doomed to live at home forever, rent forever, or have a quick marriage in order to afford a house. But I looked every day for 9 months and I had an agent that was the human equivalent of a Pit Bull, and my 7th!! contract was -finally- accepted. I bought a 2 bedroom/2 bathroom condo, with all the amenities I request and in my price range. I know a lot of people will boost you up who aren't fighting in this market, but know I've been there and after all of defeats came a victory.

Michael Rosenwald: Thanks for that anecdote. I thought I would sure it with the rest of the group.

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Springfield, Va.: First off, excellent article! Thank you for writing about our demographic!

Question: What are your options if you don't want to rent and burn money, don't want to buy something and have 5 roommates, and don't want to live 75 to 100 miles from Washington, D.C.???

To the best of my knowledge, the rule-of-thumb used to be that you could afford a domicile that cost 2.5 to 3 times your gross annual income. For me, that's $120,000 to $144,000. However, everyone knows you can't even get a cardboard box in northern Virginia for that price.

Michael Rosenwald: Ah, this is the bind. You may in a position where it would make more sense to wait for your income to go up a bit. Or possibly just consider having one roommate.

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McLean, Va.: As a recent college grad living at home with a decently well-paying job, obviously taking the next step in my housing situation gives me lots of pause. Everyone I've ever spoken with has counseled AGAINST buying a house with another person. So it's hard to get my head around the idea. Is it really a bad time to be jumping into the market right now? Waiting is no big deal for me, when is going to be the best time to take advantage of the cooling housing market as a young buyer?

Ylan Q. Mui: If I knew the right answer to that, I'd be a real estate agent making a lot of money!!! I think that the best thing you can do is to make sure your financial house is in order and then ... just be persistant! Again, there are already signs that the market is cooling.

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Fairfax, Va.: As a real estate agent, I've seen many 20-something year olds doing anything they can to get in on the real estate craze. However, these individuals never had to live at a time where unemployment, inflation and mortgage rates were high. They think that if they lose their job, they will be able to get another one FAST. And, I am sure they are correct for now. They've also never known a 15% mortgage rate. The real estate market and economy runs in cycles. The carnival of wealth that we are seeing in the Washington area will eventually end. These types of homeowners are the most venerable. Many economists believe that there is no bubble in housing market because people actually need their home to live (unlike the stock bubble of the 90's). That is wrong. Homeowners, esp. the ones in your article are unattached and young enough to walk away from a bad investment. We also have a huge amount of investors and speculators in this area that also have little to lose by walking away. All in all, I think these "savvy" young investors are in for a long and rocky financial future.

Michael Rosenwald: Thanks for this smart opinion. Anyone out there considering buying should read it.

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optimist?: You're an optimist all right, more like delusional. Afford what with a 40,000 salary?

I totally agree with "emotional"--it is insanity to submit to a two hour commute in nearly the worst traffic in the country.

Come on, urban pioneers? That means compromise personal safety at worst and major remodeling at best. Take your head out of the sand.

Ylan Q. Mui: A comment to an earlier response ...

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Anonymous: I don't know where these people work or got approved. I earn aprox 57K, have 10K college dept, and car payment. I can't afford a cardboard box with a window, much less pay rent and save enough to keep up with a down payment and retirement. No I'm not going to drive from Frostburg to work in DC so I can have my cardboard box.

I also find it sick that it is suggested we young people should leach off our parents to inflate our account. Our parents have paid enough to raise us, now support yourselves.

Ylan Q. Mui: Thanks for your comment!

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Arlington, Va.: In response to the "two attorney couple" comment, let me say that I am half of a two attorney couple, and we cannot afford to buy anything in this market either! We are both 26 and have a combined student debt of $200,000. So don't assume that professionals have it easy. That's what makes this area so crazy--the fact that people who earn what would be excellent salaries in most other parts of the country can't even afford a one-bedroom condo unless they buy in Pennsylvania.

Michael Rosenwald: Yes, correct, every situation is different, even when the situations seem equal. This has actually caused a lot of jealously in the workplace -- between the people who own and between the people who don't.

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Crystal City, Va.: I sort of feel like the opposite of the people profiled in the Post article. Instead of feeling the need to buy now, my fiance and I are planning on waiting about 9 months to a year to purchase a single family home in NoVa. We're thinking that if the housing market is just starting to cool now, prices should be lower a year or so from now than they currently are. Are we totally off base here???

Michael Rosenwald: You are not totally off base here. Paul Newland, the fellow we wrote about, wanted to wait until the winter, when home buying is slower, meaning there will be less bids, meaning the prices went be driven up as high. I recently bought during the spring, when everyone and their uncle was buying. Did I pay more becuase of that? Probably.

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Olney, Md.: As much as I enjoyed your article, it left me more concerned than ever that the D.C. area is in a midst of a major housing bubble in the condo and low-end townhouse markets. These young condo and townhouse owners will eventually get married and have children, and they will have to sell their condos when they move to single family homes. Unless this influx of young buyers continues, we're going to see a huge number of condos come on the market in 3 to 6 years with few interested buyers.

Do you think that the huge influx of young buyers is going to continue for many years, thus protecting the condo market, or is the high demand for condos going to end soon, thus putting these young buyers at great risk?

Ylan Q. Mui: There are so many variables in this equation ... How quickly will jobs in the area continue to be added, and will they continue to be the types of jobs that pay well? How successful will the District's redevelopment efforts be? I do believe buying now is very risky. But I don't have any answers on whether it will become riskier or harder in the future.

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Arlington, Va.: In response to the commenter from Washington DC, the economist who recommended renting for a few more years in the expectation that home prices will flatten or fall, I would only point out that many people said the same thing back in 2000-01, as the end of the Internet boom raised fears of widespread home-loan defaults. Anyone who decided back in 2001 to wait out an expected fall in home prices would have missed out on several years of sharp growth. There's no way to be confident, even now in 2005, that a crash is around the corner.

Michael Rosenwald: Excellent reply. Thanks for it.

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Springfield, Va.: The young lady from Alexandria that you said was "emtional" was, IMHO, EXACTLY on point. When I read her comment, I felt like I was reading my very own thoughts about housing in this area. Well said, Alexandria!!!

Michael Rosenwald: You two should meet for coffee!

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Bowie, Md.: You guys talked about the profits made from selling and flipping homes by the younger generation. Did you guys forget to cover the tax consequences of selling too soon, and/or situations where coowners/roommates ended up going their separate ways due to disagreements?

Ylan Q. Mui: No, actually, the three guys who flipped their property in Old Town had to pay capital gains taxes because they sold in 1.5 years. That's why they waited 2 years before selling their second place.

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Fairfax, Va.: Great article. The way the real estate market has surged so fast, and hearing/reading about people (kids) buying homes without much thought really scares me. At 24 do you think these homebuyers really understand the responsibility of a mortgage?

The people in your article are admittedly getting into real estate purely for the investment, living house poor, expecting prices to continue to increase. If we are heading into a downturn in real estate as we are starting to see, do you think that the actions of these homeowners will be different than older homeowners with families? Since at 24, they can still move back home with Mom and Dad, do you think that they will be faster to default on their interest only loans?

Ylan Q. Mui: Good question! I'm not sure what they will do during a downturn -- we'll have to wait and see! But I do think that younger people view mortgages/debt in a different way. Maybe more as a tool for investment rather than as an obligation. It's like, even those who work hard to stay out of credit card and other debt, housing debt is OK because there is an ingrained belief that, in the end, they will make money.

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SW, DC: Thanks for the article which I read with much interest as this topic has been causing me to lose sleep for at least the past year- my problem has been touched on by others today- what about single, 25-35yr old (me),current renter, 9 yrs Federal worker, Masters Degree, etc but making just over $50k a year? I would love to see an article about those in that salary range (under 100k), because we are caught in the catch -22 of living far away & commuting that actually can cost almost as much as gas, or continuing to rent close in for social life and easy access to work. An article on some solutions would help instead of pointing out how the young 100k salaried workers have got it made. Thanks for taking my comment/question.

Ylan Q. Mui: Actually, several of the people who were interviewed for the story make well below $100k!

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Southwest, Va.: I bought a 5 BR home in North Arlington in 1999, as a single woman at the age of 24, for 240K (now it seems like a dream!). Of course, I had roommates to help me pay the mortgage. Now I've sold out of Northern Virginia and am telecommuting from my new home in Southwest Virginia, which is mortgage-free.

Do you think there will be more pressure on employers to allow this sort of telecommuting?

Michael Rosenwald: I think that's a great question. Telecommuting is very popular these days, particularly for people who have long commutes. I just talked to a person the other day who comes in to work on mondays and fridays and works the rest of the time from home. In many workplaces, there is absolutely no reason to be there every day---the work can be done just as easy on a computer from home (or maybe a Starbucks, shhhh.)

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Silver Spring, Md.: In response to jealousy in the workplace issue. I bought a 1 bedroom condo in Silver Spring 4 years ago at the age of 23 for $89,000. It is now worth 225-250K. I actually keep this a secret at work because I feel so guilty about it.

Michael Rosenwald: Interesting anecdote. Thanks for sharing it. There must be thousands of people like you in this area. And thousands more wondering what their co-workers homes are worth. What a tricky subject.

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Silver Spring, Md.: Like many young people (I'm 25), I've considered buying, but decided I couldn't afford to in this $300,000-for-a-tiny-2-br housing marking.

Would I be better off financially buying an over-priced condo rather than renting at $650/mo?

Ylan Q. Mui: That is the question du jour! Answer du jour: It depends. $650 is very low -- many places will charge condo fees that are at least half that, on top of your mortgage. It depends on how much money you have saved up. It depends on what will happen with interest rates. But mainly, it's all about what you're comfortable with, what you're willing to compromise on and how much risk you can handle.

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McLean, Va.: I think a very important point for these young people to know (and on which you touched but brushed in the article) is that real estate prices can and do -go down-. They weren't homebuyers in the down years. Coming to the closing table as a seller & having to bring a -big check- will be an unfortunate and humbling experience for many of these young speculators.

Ylan Q. Mui: Very good and important point.

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Waldorf, Md.: Phenomenal article, guys. Seriously, very informative and thought provoking.

I was INCREDIBLY lucky to find my current townhouse in Sept. 2004. I bought it at the age of 23 for $185,000. It's in great shape, in a nice area with good schools with a fenced in yard and everything. So, I was wondering if you guys knew what the growth value of this whole area might be? What might I expect to be able to sell my place for in, say, another year? If you both are not sure, do you happen to know how and/or where I can find out?

Michael Rosenwald: Nobody can predict the market. However, you can pay close attention to home sale prices in your area---which you can find in your handy Washington Post. What houses are selling for in a given neighborhood is a good indication of what your own home might be worth. Also, here's something fun: If there's an open house near your townhouse, GO! See what it looks like. And see what they are asking.

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Arlington, Va.: In researching for your article, did you happen to find out how 20- and 30-somethings in other areas of the country (like New York or California where the market is even more expensive) are approaching homebuying?

Ylan Q. Mui: We didn't interview anyone in those areas, but I have a feeling that many of the things that feel new and different here are old hat in NYC or SanFran.

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Richmond, Va.: 27 years old here. I find it interesting that people feel they "have" to work in the DC area. Sure, there are a lot of jobs that can only be found inside the beltway, but seriously, if your living in places like York, PA, West Virginia, or south of Fredericksburg and doing that commute every day, maybe you should look for a job a little closer to home. I know, I commuted from Richmond to Annapolis 2-3 times a week for 2 years and I HATED it. So I got a new job, took a small (about $1000) pay cut, but now my commute is about 5 minutes, less if I decide to work at home like I did today. I recently purchased a house in the West end of Richmond for $182,000 that would be over $400,000 if it was 100 miles north. I would love to move back to DC, but I know I'm priced out of the market and I don't have to struggle to pay my bills, mortgage, and student loans by living and working down here.

Ylan Q. Mui: Good point ...

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Michael Rosenwald: Well, we are out of time. Ylan and I want to thank all of your for your excellent thoughts and questions. This is obviously an issue that is important to many in this area, and we intend to keep covering it. Again, thanks. This was fun.

Mike and Ylan.

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