I’ve got a couple of friends in the DC area who have been asking about real estate investing there. What is the general concensus of those in that market? What are the thoughts on a price bubble, rental rates, economy, etc. Are investors making buys or are they waiting it out to see what happens?
BTW, I used to live in Old Town/Alexandria but I don’t think I could afford to live there now with the prices the way they are! Great area though, although I was a Dallas Cowboys fan which was “interesting”!
I moved from there in 2005, but I know a little about the vibe there today…
It’s a double-edged sword. There are fewer wannabes in the market, which is good, as it weeds out the know-nothings who tend to overpay. The wannabes were scared out because the average DOM has gone from a week (back in the go-go days) to 90 days plus (what we used to call a normal market).
Higher-end homes are always going to take longer to sell, and of course in that market a modest house can cost $500,000 easy. We sold our 1600 sq. ft. house in Germantown for $410,000 in 2005…
I think if you stick to houses costing less than $300,000, you are going to be okay. Similarly, if you are buying right, you should be able to price competitively to draw buyers and still make money.
When people say, “What about the soft market?” I usually respond, "When you’re buying dollars for 70 cents, you can still sell dollars for 90 to 95 cents and have buyers lined up while still making money.
Also, when people say, “But it’s a buyer’s market…” I remind them that the first half of their transaction is AS A BUYER, so rejoice in the fact that you hold the cards on that end.
Bottom line…buy right, sell right, and avoid the $1 million McMansions in McLean. Stick with properties that average working-class type people can afford.