We have to move this August or September to shorten our commutes, and are deciding whether to go through all the work and time and effort to buy this year or go through the hassle of moving twice and rent for another 6-12 months down in the Franconia Springfield area outside DC where we intend to buy. There exist nice, 2bedroom apartments complete with lofts for our cat to have stairs for less than $1400 / month such that we'd be able to continue to save at our absurd $2k /month rate. While we are willing to save at that rate, the plan is to not go above $2200 /month once we own.
relevant financial details:
saved as of now (May 16, 2008) $30k +$2k emergency only savings
gift from mom in the next month $12k , possibly another $12k next spring
savings being put aside each month $2k
~$240k buying power available by August, assuming 20% down, but leaving no saved funds for closing, moving, minor renovation costs
~$340k buying power available by next April, assuming 20% down, $4k for moving twice, $4 closing costs, that 2nd gift from Mom is forthcoming, otherwise $280k
Right now there are like 5 properties within spitting distance of our price range (and <15 min walking distance to the Metro and above 1300 sqft etc etc) but they are all foreclosures. Whereas if one could go to $325 suddenly there are 50 or 60 choices many well-maintained seller-owned. Given that the owners think these should rent at $2500 /month, that's essentially at fundamentals. By looking for $240, we're essentially asking them to be at cash-flow positive levels for a $2000/ month rent. Unless things really start changing, I don't think they'll be reaching that style of fundamental this summer. Next year if things fall, we won't have taken the loss and will be in a great position to buy, or if this really is the bottom in this area (for the stuff near the metro) we'll be able to make the choice between something adequate but cheap, or something with a little something extra.
Is there really any reason for us to be trying to fight the market to bargain for the bottom prices now? Is there something I'm missing? Interest rates are all that come to mind. But how far could they really go up in a year without totally destroying the housing market?
It's a lot of work to look for a place in a market where prices vary by 25-30% for townhouses in the same development, and where that's not true it's just because the foreclosures haven't happened yet.
relevant financial details:
saved as of now (May 16, 2008) $30k +$2k emergency only savings
gift from mom in the next month $12k , possibly another $12k next spring
savings being put aside each month $2k
~$240k buying power available by August, assuming 20% down, but leaving no saved funds for closing, moving, minor renovation costs
~$340k buying power available by next April, assuming 20% down, $4k for moving twice, $4 closing costs, that 2nd gift from Mom is forthcoming, otherwise $280k
Right now there are like 5 properties within spitting distance of our price range (and <15 min walking distance to the Metro and above 1300 sqft etc etc) but they are all foreclosures. Whereas if one could go to $325 suddenly there are 50 or 60 choices many well-maintained seller-owned. Given that the owners think these should rent at $2500 /month, that's essentially at fundamentals. By looking for $240, we're essentially asking them to be at cash-flow positive levels for a $2000/ month rent. Unless things really start changing, I don't think they'll be reaching that style of fundamental this summer. Next year if things fall, we won't have taken the loss and will be in a great position to buy, or if this really is the bottom in this area (for the stuff near the metro) we'll be able to make the choice between something adequate but cheap, or something with a little something extra.
Is there really any reason for us to be trying to fight the market to bargain for the bottom prices now? Is there something I'm missing? Interest rates are all that come to mind. But how far could they really go up in a year without totally destroying the housing market?
It's a lot of work to look for a place in a market where prices vary by 25-30% for townhouses in the same development, and where that's not true it's just because the foreclosures haven't happened yet.