Jun 24, 2023 - Real Estate

What it costs to buy a house in D.C. as a first-timer

Illustration of a book, shaped like a house, with many page markers sticking out.

Illustration: Maura Losch/Axios

Navigating D.C.'s market, especially as a first-timer, isn't easy.

Why it matters: The share of first-time buyers in the U.S. has reached record lows — dropping from 34% to 26% from 2021 to 2022 — as inventory and affordability issues persist, per a report from the National Association of Realtors (NAR).

State of play: Home prices are cooling in D.C., but mortgage rates have forced would-be buyers to the sidelines.

  • If you buy a $500,000 house with 3% down, your monthly payment on a 30-year fixed-rate loan with 3% interest would be $2,986, per Freddie Mac.
  • With 7% interest, it's $4,168.

What they're saying: "There are no deals in Washington, truly; it's a matter of pricing and condition," D.C. real estate agent Daniel Heider tells Axios.

  • He recommends buyers cast a wide net to find the right house at the right price for them.

Between the lines: These mortgage rates won't be around forever. The right time to buy is when your financial ducks are in a row and you can afford the monthly payment, says Christopher Suranna, president-elect of the Greater Capital Area Association of Realtors.

  • Suranna recently hosted an open house for a two-bedroom condo. He says those prospective buyers had been house-hunting for three to six months on average; one person had been looking for an entire year.
Average years it takes a household to afford a mortgage down payment, by state
Data: Zillow Economic Research; Map: Tory Lysik/Axios Visuals

Zoom out: First-timers are waiting longer to buy across the country. The median first-time buyer age jumped from 33 to 36 from 2021 to 2022, per NAR's report.

  • Saving enough for a down payment is the largest barrier to entry, says Brandi Snowden, a NAR director.
  • Many would-be buyers are saddled with debt, including student loans, car loans and credit card debt.

Still, Suranna says first-time buyers in D.C. are "cautiously optimistic."

If you decide you're ready to buy, you can work with a mortgage lender to determine how much you can afford and get pre-approved.

First-time buyers should expect to put 3-5% down, plus an additional 3-4% in closing costs, $300-$500 for an appraisal and $700-$800 for a full inspection, Suranna says.

  • You also need a cushion in your account for repairs, furniture or anything else that might come up once you move in. Suranna recommends 2% of the home price for that.
  • So, if you're buying a $400,000 house, you need around $41,000.

It'll take Washington buyers nine years to save up for a 10% down payment on the typical home, Zillow data show.

  • That accounts for saving 5% of the median household income every month.

By the numbers: The U.S. average is 8.9 years, with states like Iowa as low as 5.2 years and Hawaii as high as 18.4.

  • In Virginia, it takes 8.4 years. In Maryland, it takes 7.4.

The bottom line: The right time to buy is when it's right for you.

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