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DC Area (Military) - to buy a home or not to buy a home
I will try to keep it short..
Just got stationed in DC after being in the USAF for 5 years. After 3 years on this assignment, I MAY OR MAY NOT get assigned elsewhere. I got into a good agency, and I am told that possibly once you get your foot in the door, you are able to stay in the area. If you know anything about the military, you know that this is usually not the case.
Option A)
Live on base, pay $1,881 (my full allotted BAH [housing allotment]) per month, and walk 5 minutes to work.
What does this mean? Spending $22,572/year towards no investment. Nothing.
Option 
Buy a SFH for ~$280K in either Virginia/Maryland (in Maryland I will pay double in taxes, but get more home for the money), and commute an hour one way to work.
What does this mean?
After 3 years, I will have only $16K in equity (3.75% interest rate - VA loan - $0 down aside from $1,881 to break my current lease w/11 months remaining & ernest). If I am able to stay in the area, AWESOME! If not... Move to option B1
Option B1)
Sell the house and (HOPEFULLY) make a little bit of money off of the property. 7% fee for selling ($19.6K) the house for what I paid for it puts me at -$3K.
So...
First time homebuyer.. I WANT to stay in this area, but I am not quite sure if I will be able to.
Take the risk? Will my house pickup in price over the next 3 years? I have no idea, I am asking you 
Re: DC Area (Military) - to buy a home or not to buy a home
I've lived in the DC area for 11 years and have the following questions:
1) what will your commute look like if you buy in MD or VA. Are you buying very close to the base? You have to consider the time and costs of commuting in this region, which can be extremely unattractive. And could possibly negate any "loss" you're supposedly taking by living on base.
2) Where are you finding lots of SFHs on the market for only 280k? Are those places you'd really want to live? And are they anywhere near where you work? I live in a neighborhood where the median sales price is 500k+ and shootings are not uncommon--even during the daytime. I don't doubt that somewhere there is a safe and desirable neighborhood with SFHs for sale for under 300k, but I haven't yet found it. Maybe its way way out in the suburbs, but then you may not be close to the appropriate bases (I have no idea what base you're talking about, but if living in MD or VA is the same to you I'm assuming it's not say, Quantico).
Whether homes will hold their value or increase in value is anyone's guess. It's also completely dependent on the town and the neighborhood. In general the DC area market is pretty stable, but I would never buy a house in this economy if I didn't think I could stay in it (or rent it at a good rate) for 7+years.
Expecting to break even or only take a small loss after only 3 years in this market is very unrealistic. It usually takes 5-7 years to break even.
I'd rent.
Yeah, at Bolling I'd probably stay on base.
My caveat would be that if you can find a place where
a)you'd genuinely like to live (because you might, as you note actually get to stick around for a while) and
b)in a neighborhood with good rental potential (so, close to transit or close to the base or something else that attracts transient populations like a university)
there probably wouldn't be much harm in buying, so long as you could afford to pay the mortgage in the months after you move away in which you may not be able to find renter.
I would NOT count on being able to sell at a profit in three years. Especially in PG county where there are still a lot of areas with big foreclosure/SS markets.
That probably wont happen.
I have been in DC for 5 years now, and am also a landlord for a home that primarily attracts military tenants (very close to a base). There are lots of military families in my part of town that have been here for many years, so it does happen, although I obviously can't guarantee it. (My current tenant is ex-military)
Anyway, as far as home prices go DC is currently one of the most stable markets in the country. Prices in my neighborhood have been steady for over a year. But I say currently, because right now I don't think anyone can make a good guess where prices are going to go. On one hand you have BRAC bringing a lot of people into the area, but on the other hand the federal government (which is the single biggest employer, esp if you include all the contractors) is looking at huge potential downsizing over the next few years. Things really could go either way as far as home values.
If you buy, are you eligible for the military assistance program where they sell your home for you if you are reassigned? Because that would be the only situation in which I would currently consider buying. At 0% down (or heck, with any down payment on a traditional mortgage), you won't make enough equity in three years to justify the costs you will pay in closing to buy and sell the house. For a 280k home your closing could easily cost 20k or more, each time. You'd have to earn 40k in equity solely to break even...housing isn't going to rise that much in three years.
And for the poster who said you can't find SFH's here for 280k...yes you can, depending on the part of DC, just not brand new ones. But we paid 180k for our 2,000sqft home last fall - 40 year old fixer-upper south of beltway, that will be worth more like 240k when we finish renovating. Now on the north side...no haha, you'd be lucky to get an old townhome for that much.
I think I am convinced that buying is really not an option. It just hurts. I was in NM for 4 years in a rental - $ down the drain. Now I am here - trying to invest/do the right thing for the future. Buyers market? I guess only buyers that are in it for the long haul?
Maybe I will wait a year to try to forecast my situation to see if I am really here to stay in the DC area. I will no longer be in a yearly lease, and can break with 1 months notice without penalty (opposed to breaking now and paying $1,881). The elections will be near - or wait till they are over. Maybe I will have a better idea.
My plan - Separate at 10 years (2016) and do the civilian thing (which I was ready to do before I moved here). I can buy somewhere where I can really call home... for the long run..
I think it's very important to stop looking at renting as money down the drain and owning a home as an automatic investment. Neither of those things are true. Paying rent ensures you have a roof over your head. Sure, you don't own it, but it also means that you aren't dealing with the headaches that can come along with ownership. Something breaks? Call the landlord. You have the freedom to pack up and move, something that is pretty much a must in your situation.
This is not the same market as it was a few years ago where you could own a home for a few years and make a decent profit. You just can not think like that now, or you'll risk ending up stuck in a house you hate and underwater. You see posts here everyday from people who bought a house intending to only stay a few years, and now they're stuck because they're so upside down or can't sell.
It's only a smart investment when you are at a stable point in your life when you are ready and able to potentially stay put for awhile. Don't rush what is the most expensive purchase of your life.
I agree with this 100%.
I cannot agree with this enough!! I WISH I had rented instead of buying a house! I am in the process of paying $22k to get out of a house that I have already put $60k into PLUS paid 6 years of mortgage payments to and our market isn't even terrible. So imagine the rental I could have gotten for the last 6 years instead of "investing" in a house, I would have been serious money ahead. No one can predict what is going to happen in the future.
Ditto this.
I recently moved away from D.C. area. I lived there for a little over 2 years. Have you seen what's available on the market? I don't know about you, but for 280K you don't get much...My friend bought a 1100 sq. ft ranch home two years ago for a little over 300K and it was 50 yr old, nothing was updated...talk about tacky green refrigerator with no dishwasher in the kitchen. She bought it because it sits on half acre lot. Yes, most houses don't have .25 acre lot for 300K. For three years, I can't imagine what you'd have to fix, especially for older homes..such as broken plumbing, old pipes, etc. all that will get really expensive.
And what the PP posted makes complete sense.
I would be especially hesitant to buy in your circumstances b/c you're looking at an outlying area of DC and a low price point. Those areas got hit hard in the downturn and there may be more pain to come. Places like Arlington are usually a safe bet, but you'd have to double/triple your budget.
The chances of you making money on the house are slim to null, especially if you're buying an hour outside of the city... By the time you figure in closing costs, the extra stuff you're going to buy for the house (you will, trust me), etc. you will lose money on this deal.
If you figure extra gas prices into this equation, you'll probably come out ahead by renting closer to work.