DC Buyer: The 30 Year-Old Teacher in 16th Street Heights

• January 20, 2010
• 27 Comments

by Martin Smith

6 Rhode Island Avenue

In this new feature, UrbanTurf looks at buyers from various demographics and provides available housing options for them in the current DC market. After presenting some choices, we will ask readers to help them make their choice.

This week, we look at a single woman named Marie, 30, who works as a teacher in 16th Street Heights. Given her advanced degree and several years of experience, Marie makes $58,000 a year, and she has been aggressive about managing her debt, only carrying a $1,500 credit card balance and $10,000 in student loan debt. Marie’s careful management of her finances has earned her a FICO score of 715, and she has saved about $24,000 to put towards a down payment on her new home. She’s going to be looking for a home in the $225,000 to $250,000 range.

Marie is a first-time buyer who is interested in a one-bedroom condo. She likes the idea of new construction or renovated condos because she’s not very handy and doesn’t want to have to do extensive renovations or maintenance. In her free time, Marie likes heading to happy hour with her friends in Columbia Heights, hitting the museums downtown, and discovering new musicians on U Street.

3902 14th Street NW

The first property that we found that fits Marie’s criteria is a one-bedroom, one-bath condo on the corner of 14th and Randolph Streets in Columbia Heights. While not a luxury condo, this unit offers good space for the price ($237,500) and is convenient to public transportation (Columbia Heights Metro is about a 13-minute walk). The condo fee of $271 is reasonable, and the unit does feature wood floors and new appliances. The downside for Marie is that the only laundry in the building is in the basement, and she wants machines in her unit, if possible.

The second possible property is a two-bedroom, two-bath unit in Bloomingdale for $239,700.

The condo is in a small 9-unit boutique building about ten blocks from NoMa’s new Harris Teeter grocery store. Aside from the large size of the unit, the kitchen is completely new, and it has its own washer/dryer. While it offers a lot of space for the money, the unit is fairly far from where Marie works and she estimates that her commute would be about 40 minutes.

Given these two choices, where should she put in her offer?

This article originally published at http://dc.urbanturf.com/articles/blog/dc_buyer_the_30_year-old_teacher_in_16th_street_heights/1694

27 Comments

1. Spencer said at 11:13 am on Wednesday January 20, 2010:

   I personally would take the 1 bedroom b/c of its proximity to the metro.  Great new feature I look forward to future posts!

1. csm said at 11:14 am on Wednesday January 20, 2010:

   Honestly, I would say keep looking.  But if I had to choose, the Bloomingdale condo is the best deal.  Everything is new and she gets an extra bed and bath with the washer and dryer in her unit.  I’m not certain if she has a car, but she wouldn’t have to pay for a parking space.

1. mpg said at 11:32 am on Wednesday January 20, 2010:

   If I had to choose between just these two listings, I would take the Bloomingdale condo. Yes it extends her commute, but it has more of what she wants in the home (updated unit, w&d, extra bed/bath). sounds like it will be a better investment in the long run.

1. anna said at 12:43 pm on Wednesday January 20, 2010:

   i would take the columbia heights condo…closer to everything.

1. Emil Ali said at 12:50 pm on Wednesday January 20, 2010:

   Bloomingdale. If she takes the bus, her commute might be shorter but it should never be 40 minutes because the two areas adjoin each other.

1. HomeEconomics said at 2:03 pm on Wednesday January 20, 2010:

   Unless Marie plans on remaining single and alone into her 40’s, she’s better off renting a 1 BR in Columbia Heights or Petworth.

   Condos aren’t looking good for resale value in the next couple of years, FHA has been anti-condo in the last 12 months, and cheap loans for condos are drying up.

   She’ll pay around $1900 for a temporary residence and a 40 minute commute instead of renting for $1000-1400 in a more convenient and trendy part of DC.

   The 2nd choice is clearly better, but neither seems very wise in the long run.

1. Monster Trucks said at 2:47 pm on Wednesday January 20, 2010:

   She should definitely rent.  She can get a better location for a lower monthly cost and save or invest the difference.

1. DistrictJ said at 2:51 pm on Wednesday January 20, 2010:

   @HomeEconomics
   What is the $1900 /month cost? With her down payment her mortgage would be ~ $200k. Her monthly payment would be ~$1300 and that would be tax deductable. If that 2br/2ba unit isn’t a basement it could rent for at least $1400.

   If on hard times she could rent out the spare room and could bring about $700 and probably could get away with out claiming it if she didn’t want to.

1. Screwball said at 3:38 pm on Wednesday January 20, 2010:

   Definitely buy the two bedroom and rent out the second bedroom to a roommate.  Then use the rent money to pay down the mortgage more quickly.

1. Z said at 5:21 pm on Wednesday January 20, 2010:

   Definitely go for the Bloomingdale property.  It’s already the best value for the money and the neighborhood has the most potential to increase in value in the next several years.  The Shaw-Howard metro station is only a 12 minute walk from the Bloomingdale condo and the NY Ave. metro station is a 10-minute walk, so she’s actually closer to a metro than the 13 minute Columbia Heights walk.

1. PetworthRes said at 5:38 pm on Wednesday January 20, 2010:

   I would say keep looking. The 14th & Randolph place isn’t finished very nicely and the Bloomingdale property is far from her work. I think there would be other good options in the north Columbia Heights or Petworth (if close to or south of the Petworth metro, CH is still in walking distance). Keep the option of walking to work. The 14th & Randolph area is also pretty crime-intense - it’s quieter and safer if you go further north or east.

1. Lauren said at 5:40 pm on Wednesday January 20, 2010:

   I think the Bloomingdale condo is a better value also—Z is right, it’s about as far away from a Metro stop as the 14th & Randolph one—but there’s also a 1br in that building for $179k (http://franklymls.com/DC7177461) which might be the best deal if she doesn’t care about having a 2nd br / doesn’t want a roommate.

1. Janson said at 6:41 pm on Wednesday January 20, 2010:

   Fun feature. I agree with @HomeEcon, @DistrictJ’s math is way off. The loan, if she uses 100% of her savings (which she shouldn’t) will be 215,700 and at 5.7% which would be a decent rate for her credit score she would pay $1566 plus her hoa fee of $239 = $1805/month. With an income of $58,000 she’s in a low tax bracket, so the interest deduction is about $2700 in the first year and only goes down from there. Talk about house poor! $1580 a month after tax credit and her electric heat will take a $200 more out of her pocket in winter out of $3300/month in take home. Hope nothing breaks and needs fixing.

1. Lipton said at 7:56 pm on Wednesday January 20, 2010:

   5.7% is a decent rate for someone with 715 fico score?? I think you are way off. The 30 years Fixed mortgage rate is @ 5.07 and I don’t think 715 is a bad fico score.
   It could be a typo though or not?

1. GPO said at 8:02 pm on Wednesday January 20, 2010:

   I would take the 2nd in Bloomingdale. It is new construction, larger, nicer, and not too far out for what she is getting. That being said, I would keep looking since I don’t particularly love either option.

1. Jay said at 11:17 am on Thursday January 21, 2010:

   16th Street Heights - The neighborhood is so much more safe, plus she’s just a couple of blocks from Rock Creek Park, AND has the advantage of being in the best area in the Metro area for bus service.

   16th Street Heights is the nice “sleeper” in-close neighborhood that everyone desires, but is under everyone’s radar.  The strip bounded by 14th & 16th, from Arkansas Ave to Military is a particularly good find.

1. Jin said at 11:21 am on Thursday January 21, 2010:

   If she HAD to pick, I’d say Columbia Heights because my guess is that she wants to keep her lifestyle of convenience and proximity to friends - that’s a guess.  What is the most important thing for her?  But I think ultimately should keep looking.  BTW, I really like this new feature.

1. Janson said at 11:37 am on Thursday January 21, 2010:

   @lipton
   You’re right. 5.7% is wrong, 5.09% is more likely, so the monthly cost is lower…

1. Conrad said at 12:42 pm on Thursday January 21, 2010:

   I would keep looking. Time is on the buyers side right now. As far as tax deductions, I’ve owned my place for four years now. I have found that the money I save on deducting my mortgage interest equals the amount of money I spend on property taxes. So basically if you own, the mortgage payment plus your condo fee is your true cost of living there. So if you are paying $1400 in rent and you can buy a place for $1600 a month in total mortgage and condo fee, then its worth it. I like owning because at least have a chance to make some money if I sell.

1. BM said at 1:03 pm on Thursday January 21, 2010:

   I’d slightly lean toward Bloomingdale - it’s on a nice tree-lined block, and has room to appreciate.  The other 14th Street location will provide better access to transportation and services, but as one commenter mentioned is somewhat dicey.

1. HomeEconomics said at 1:08 pm on Thursday January 21, 2010:

   @ Janson:

   5.09% would be the case for a conventional, but there’s no way this person is putting down 20% ($45k) to get a conventional condo loan.

   FHA means 5.25% to 5.375% for a condo in today’s market. A 715 score does this buyer no better than a 680 score since they are stuck with FHA financing. Maybe above 760 they could get a 5.125% pricing, but that is best case scenario.

   As for these comments about renting out the 2nd bedroom, why?!? Why deal with the hassle of being not only a cash-poor homeowner, but also a landlord? Renting that bedroom (and common areas) cuts this owner’s personal space by more than half. They could get more personal space in a rental in Columbia Heights for less money. This is a no brainer unless they expect hyperinflation in the near future and simply want to own “something” in anticipation.

1. Kamila said at 11:13 am on Friday January 22, 2010:

   Given her social life style, I think she should pick #1. It fits her needs in terms of proximity to everything. Also, the neighborhood is much safer than the Bloomingdale and being a woman myself I would not want to be walking around there after 10PM. Condo #1 is high enough that is very bright and airy. It doesn’t need major renovation immediately. Down the road, she can hire help to make the improvements (maybe even add the washer and dryer to the unit). As every real estate agent says - location, location, location - I truly believe that this location is far more superior than #2.

1. Felicity said at 1:28 pm on Friday January 22, 2010:

   This is a great new feature.  She should keep looking and consider renting for a few more years in a vibrant neighborhood where she can walk safely to work and play. If I were her and had worked so hard to save to find a great place, I would not entertain the roommate option; sounds like a real hassle.

1. NN said at 4:13 pm on Friday January 22, 2010:

   The Bloomingdale location is much closer to downtown museums, U St., and three metro lines.

1. elizabeth said at 12:35 pm on Thursday January 28, 2010:

   Actually Bloomingdale has much less crime and shootings than Columbia Heights. I consider this block to be very safe. I live nearby, on the other side of North Capital (which is less nice) and walk around by myself at all hours without incident.

1. Marta said at 8:01 pm on Friday February 5, 2010:

   I’m confused by something in the listing.  What NoMa Harris Teeter are you talking about?  I’ve been looking for a condo in that area but I’m turned off by the lack of grocery stores.  Is there something I’m missing?

1. AY said at 1:37 pm on Tuesday February 23, 2010:

   This is a fantastic feature. I love how DC Buyer profiles so many diverse prospective homebuyers. Marie’s situation almost mirror’s my situation. I ended up buying a condo much further away from the action, but my place has more space, and a private parking space. I think she should sacrifice the laundry and go closer into town.

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