The pricey, highly competitive market in the District of Columbia can make the home search a daunting prospect for first-time buyers — but real estate experts who know the market well say there are ways to scout out a solid investment and get the home you’re looking for without breaking the bank.
Whether you’re looking for a turnkey property or a fixer-upper, Avery Boyce, an agent with Compass Real Estate, says the pace of investment in the District is very strong right now. “There are large public and private investments in many residential neighborhoods around the city,” she adds. Strong stock options and rapid population growth mean that buyers continue to gravitate to this prosperous area.
[See: 10 Ways Millennials Are Changing Homebuying.]
Looking for a place in the nation’s capital? We asked some of the top local real estate agents as identified by OpenHouse, an agent referral company (and a U.S. News partner), to offer their advice on purchasing a home for the first time in the District of Columbia. Here’s what they recommend.
Don’t let politics dissuade you. November’s presidential election has some buyers holding onto their cash because they’re worried about uncertainties the election may bring. But in the Washington, D.C., metro area, “this is a big opportunity for first-time homebuyers to take advantage,” says Anita Galang-Mason, a realtor with Weichert Realtors. “There’s less competition and some sellers that have to sell are reducing their prices significantly.”
Case in point: One of Galang-Mason’s clients just got a home for $442,500 that had been originally listed at $480,000.
Go off the beaten path. A first-time buyer may end up living in a neighborhood that isn’t as popular as their original choice, but is much more affordable. “First-time buyers often end up purchasing in neighborhoods they hadn’t considered originally,” says Carl Bender, a realtor with Coldwell Banker Residential Brokerage.
If you’re interested in purchasing a home in downtown Washington, D.C., but can’t afford prime locations like Logan Circle, Columbia Heights, Adams Morgan or Capitol Hill, you might want to look in neighborhoods outside the city’s core that offer similar lifestyles. Silver Spring, Maryland, has a vibrant downtown area full of new shops and restaurants and is near multiple public transit options, including Metro and MARC train service. If you don’t need to be near a Metro stop, Boyce says the Shirlington area in south Arlington, Virginia — known for its arts and entertainment attractions — is worth a look.
Within the District of Columbia, neighborhoods like Trinidad and Brookland are up and coming areas that have undergone redevelopment. Once considered too dangerous by most homebuyers, these neighborhoods are shedding that reputation with the creation of new residential and commercial spaces. The takeaway is: If you’re willing to go off the beaten path, you can find a few crown jewels to call home.
[See: The Best Apps for House Hunting.]
Consider the condo route. If you’re a first-time homebuyer who doesn’t have to house a family of five kids, it’s worthwhile to invest in a condo, especially since they can often be found in walkable, easy-to-commute areas.
“Condos are a solid investment here, in part because there are a lot of single people who want a low-maintenance place to live,” Boyce says. With the city growing denser, builders have to accommodate by constructing condos, so the choices for these homes are plentiful.
But keep an open mind. Sometimes a first-time buyer with their sights initially set on a condo may end up finding a slightly larger townhome for an equivalent monthly cost.
You don’t need a big down payment. First-time District of Columbia homebuyers with good salaries but minimal savings often assume they’ll need a huge down payment, like 20 percent of the cost of the home. The truth is, you don’t. “It changes the field dramatically when you can buy with 3 percent or 10 percent down instead of coming up with 20 percent, because your salary can support a bigger monthly payment,” Boyce says. Many lenders are doing 3 to 5 percent down on conventional financing these days. It’s something that many first-time buyers aren’t aware of, but it ultimately costs less than a traditional Federal Housing Administration mortgage.
Buyers also worry about what the market will think of their purchase for resale reasons. These statistics may be useful in other parts of the country, but not so in our nation’s capital, where almost everyone is looking for an easy commute and access to fun and entertainment, according to Boyce. “Usually, everyone wants the same thing and spends money in the same way,” she says.
Don’t overlook homes that sit on the market. It’s tempting to compete for properties fresh on the market, but those homes often have multiple buyers and offers. “First-time buyers usually don’t play well in an all-cash market, and aren’t able to compete as effectively for those properties that get a lot of initial interest,” Bender says.
To get a good price, a better strategy is to look at a home that’s been on the market for a while. You might find something you like, and the seller is more likely to lower the price of the home.
Look at the neighborhood’s rental rates. High rental rates mean a potential windfall if you move out of your home and rent it to tenants. If the rental rates are higher than your mortgage payment, “it makes sense on several levels to purchase rather than rent there,” according to Bender. A higher rental rate than your payment is a sign of a good investment.
[See: Weird Home Features That May Confuse Homebuyers.]
Work with an experienced agent. For a challenging market like Washington, D.C., make sure you work with a well-qualified real estate agent who can troubleshoot for you. Whether it’s an overpriced property or a fixer-upper that’s ripe to become a money pit, first-time buyers can get in over their heads. “As an agent representing first-time home buyers, I will sell them the house that I would buy myself,” Galang-Mason says.
Bottom line: know your priorities, Boyce says. “D.C. is a fun city and a great place to live. If you find someone you trust who will guide you through the process, it will work out well.”
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A First-Time Buyer’s Guide to Washington, D.C. originally appeared on usnews.com
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