Why DC Real Estate is Doomed
Run the math, and the home doesn't even break even after 30 years. The only way it comes close if you jack up the annual home price appreciation to 5% (completely bogus), or dial back your after-tax investment return to 4% -- which some of us can get in our sleep. Even then, the home wouldn't break even for 10 years (5% home appreciation, 7% investment return) or 14 years (3.5% home appreciation, 4% investment return).
Prices have a long way to fall in this area. $700,000 doesn't get you much around here.
To look at it another way -- making the huge assumption that our neighbors around here have $100,000 for down payments, which I doubt.
In order for them to have their house payment = to 40% of their income, they'd need to be pulling in $160,000 a year. In order to have it = a more reasonable 25%, they need to be hauling in $252,000 a year. That's to get a middle-of-the road home in this area.
I don't see any reason to be house shopping yet.