DC Buyer: Two-Bedroom, Two-Level Units for Two People Who Saved

• May 26, 2010
• 18 Comments

by Martin Smith

DC Buyer is a series on UrbanTurf where we look at buyers from various demographics and provide available housing options for them in the current DC market. If you are a prospective buyer and would like to be featured in DC Buyer, send an email to .(JavaScript must be enabled to view this email address). See all of our past DC Buyer articles here.

This week, we’re working with Samantha, 31, and Aaron, 34, a couple who has saved for years and is now looking for a two-bedroom home in DC. Alice earns $71,000 a year as a contracts administrator in Dupont Circle, and Aaron earns around $48,000 working in a museum near the National Mall. Samantha and Aaron have saved about $90,000, most of which is the return on a long term investment. They do, however, have about $850 a month in consumer debt that they are aggressively working to pay down. While Samantha has a good FICO score of 742, Aaron’s score dipped down to below 700 last year. The couple plans to shop in the $475,000 to $525,000 range, but are very sensitive to condo fees, and will not consider anything with a fee over $400 per month that doesn’t include utilities.

1861 California Street NW

Samantha and Aaron just have a cat right now, but they are thinking about having a child at some point in the coming years. Therefore, a unit that is both pet-friendly and has a second bedroom is a must. They share a car, so off-street parking is also a bonus. Samantha likes units with some architectural character, while Aaron’s biggest request is to avoid high-rise buildings. They both agree that a two-level unit would feel more like a home, but without the maintenance a townhouse requires.

The first selection for our couple is 1861 California Street NW, Unit #4. This two-bedroom, two-full bath unit offers 1,229 square feet on two levels, in addition to a small loft. While the condo offers abundant natural light and a massive master bath, the kitchen could use some updating. Still, the unit is pet friendly and offers deeded parking in the back, skylights, and a monthly fee of $383. The Kalorama neighborhood is an easy commute, with both able to walk to Dupont where Aaron can take the train and Samantha can go the extra two blocks on foot to the office. 1861 California Street is on the market for $510,000 after a recent price reduction.

1442 Corcoran Street NW

Next for the couple is 1442 Corcoran Street NW, Unit #4. This two-bedroom, 1.5-bath condo is brand new to the market, and is also a bi-level unit. On the smaller side at 900 square feet, this property offers a recently redone galley kitchen with stainless steel appliances, wide plank (possibly original) wood flooring, a fireplace, skylight, and in-unit laundry. The Logan Circle location is still a quick walk to the Dupont Metro and is just a block from Whole Foods and other neighborhood retail. This unit is also pet friendly, and has a slightly lower condo fee of $349 than the California Street unit. The price, however, is slightly higher than what Samantha and Aaron wanted to spend: 1442 Corcoran is listed for $539,950.

1024 Massachusetts Avenue

Our last choice for the couple is a bargain near Lincoln Park. 1024 Massachusetts Avenue NE, #2 is a 1,076 square-foot, two-bedroom condo, once again on two levels on Capitol Hill. This property features a new kitchen, a formal dining room (rare in a condo), and private outdoor space in the form of a narrow, wrap-around brick patio on the ground level. The unit could use some updating to lighting, upstairs carpets, and some fixtures, but is in move-in condition overall. The generous depth of the patio helps conceal that the first level is technically the basement of the building. In addition, the property is a corner unit facing beautiful Lincoln Park and three short blocks to Eastern Market. The condo shares a private entrance with one other unit in the building, has ample closet space, and offers an in-unit washer dryer. Best of all, it’s the lowest priced of the three options at $469,900.

Given these three choices, where should Samantha and Aaron put in their offer?

This article originally published at http://dc.urbanturf.com/articles/blog/dc_buyer_two-bedroom_two-level_units_for_two_people_who_saved/2106

18 Comments

1. Abbrev said at 8:56 am on Wednesday May 26, 2010:

   The Corcoran Street property with those beautiful floors!

1. Jason said at 9:58 am on Wednesday May 26, 2010:

   I have been to the California Street unit and the rooms have a weird layout. The photos look great, but once you get there, it is disappointing.

   I like the Corcoran Street property, even though it is the most expensive. The living room looks like it has a lot of character and the location is very nice.

1. pmt said at 10:23 am on Wednesday May 26, 2010:

   Lincoln Park is a huge amenity.  I used to live two blocks away and I miss it.  They can touch that place up and add finishing touches over time.

1. guest said at 10:28 am on Wednesday May 26, 2010:

   my wife and I were in a similar situation when we bought a house in nov. we went for a house in columbia heights for the around $500K. CH isnt as nice as the addresses above but 1) we get an entire house w/ parking, backyard, and a roof deck 2) no condo fees 3) the potential for a large increase in value of property as the neighborhood continues to gentrify.

   i am convinced that condo fees are a scam especially in dc where you dont get any amenities like a pool, tennis courts, internet or cable.

1. Jeanne said at 10:48 am on Wednesday May 26, 2010:

   @ guest—What was the condition of the home when you bought it and how much work are you going to have to put in?

1. Ashley said at 11:06 am on Wednesday May 26, 2010:

   Another option is to look slightly further out of the dupont area.  I have lived in the apartments in Fort Totten for about a year and decided that the area was convenient enough to everything I need and has great things coming to the area that it would be a worthwile purchase.  A 10 minute walk to the metro there are brand new townhomes for the high $300s.  Another option would be to look into the new townhomes in Brookland.  If you want to live in DC but are willing to live away from the center of it all there are many great options.

1. lauren said at 12:26 pm on Wednesday May 26, 2010:

   Unfortunately I don’t see how they could possibly afford the Corcoran St unit:

   They earn $119k a year, which after taxes I would estimate to be ~$6,000/month take home.

   With 17% down (this is assuming they put *all* of their saving toward the downpayment) and a 5% interest rate, the mortgage is $2,400. Add in condo fees, insurance and taxes and you’re talking over $3,000 a month. Add in their $800/month in debt and their debt-to-income ratio is almost 2/3rds. 

   Am I missing somehting?

1. Furi said at 2:09 pm on Wednesday May 26, 2010:

   @Lauren - Yes, as usual this is a crazy financial option for these guys who are going to be their whole finances into real state. Good luck!

1. benji said at 2:29 pm on Wednesday May 26, 2010:

   Crazy financial option? Please.

   For those who don’t think that you are going to have to sacrifice mightily in terms of your day to day finances to buy a home, think again. I bought my condo for $400K, the upper reaches of what I was approved for. So I cut back on buying clothes, going out to eat, drinks, etc. But I have a great place and I am happily making my mortgage payments every month.

   As I see it, these guys are approved up to about $520K, so yes, $539K means that they will have to cut more out of their weekly budget to afford it. So do it. Eat out less, go out less, don’t go on vacation. If you do stuff like this, Samantha and Aaron, you will be happy every time you come home at night to your new place and will be able to make mortgage payments.

1. lauren said at 2:36 pm on Wednesday May 26, 2010:

   @ benji - 2 comments:

   1) I really doubt they would be approved for $500k in the first place. It isn’t 2005 anymore.

   2) I guess to each their own, but personally I think their is more to life than having granite countertops and the right zip code. Being able to go on vacation, save for the future (e.g. children), and enjoy a nice restaurant once in a while seems far preferable than spending 60% of your take-home pay on housing.

1. m said at 5:37 pm on Wednesday May 26, 2010:

   It’s also important to note that just because the current ASKING price is more than where they wanted to be financially, that doesn’t mean the property wouldn’t sell for a lower price. One of the other properties in this post just took a pretty sizable reduction, and still hasn’t moved…

1. Jesmoi said at 8:10 pm on Wednesday May 26, 2010:

   @ Lauren-

   I completely agree with you.  If anything, this crisis should have taught people that you should NOT think of your home as an investment.  And the asking price is nothing compared to the real cost of the home once you add in all the interest you’ll be paying on the loan AND the condo fees that never go away.

   I too appreciate a night out at a restaurant, a vacation, and the peace of mind of knowing that I have money in the bank for emergencies.  But hey, to each his own.

1. Diane said at 8:15 pm on Wednesday May 26, 2010:

   22301 zip code in Alexandria might be a good option for them if they aren’t urban pioneers, are willing to leave the District, and willing to tackle TH maintainence.  There are several 2 bedroom THs in the 475,000-490,000 range zoned to Mt. Vernon Elementary.  The Del Ray area is young but family-oriented, has a main street feel with lots of shops and restuarants, and good access to transit (walk to Metro or frequent bus service to Metro).  Longer commute is the main tradeoff.

1. guest said at 11:41 pm on Wednesday May 26, 2010:

   @jeanne - i am guest. my $500K was a total renovation. everything except 3 walls was brand new.

1. DG Cromwell said at 9:56 am on Thursday May 27, 2010:

   consumer debt = $850/month
   Savings = $90k from long-term investments

   interests rates on debts usually outpace the yield on investments. Suzy Orman is banging her head on a table. Bang Bang!

1. benji said at 10:11 am on Thursday May 27, 2010:

   People should do their homework before making uneducated comments. This couple is approved (based on the information given) for between $500K and $550K, according to a loan officer I know that I ran the numbers by. The Corcoran option is thus doable.

1. lauren said at 10:42 am on Thursday May 27, 2010:

   @ benji,

   This is what I got after running the numbers. I’d be interested in seeing how your loan officer friend found differently.

   They earn $119k a year, 9,916 monthly gross.

   Using the back-end ratio of .36: (http://www.bankrate.com/finance/mortgages/how-much-house-can-you-buy—1.aspx)

   9,916 * .36 = 3,570 is their max allowable debt obligation.

   They already have 850 in debt service, so
   2,720 is maximum allowable housing expense.

   The expenses for the Corcoran condo are:
   
   2410 mortgage (449k (539-90 downpayment) @ 5%)
   348 condo fee
   347 taxes

   = $3,105

1. Frag said at 12:59 pm on Thursday May 27, 2010:

   Approved at 500-550 I dont see why they wouldnt check out houses with rentals, like last week’s one (featuring the CA couple) in NOMA that was huge and had an inlaw that rented for 850 a month.  If I recall it was around 550.  Seems liek something like that might actually match this couple’s needs.

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