The Washington Post
By: Karen E.T. Garrett & R. Sam Garrett
June 5, 2011
We grew up believing our American dream would include easy access to homeownership. We knew owning a home would take saving and discipline, but as a professional, married couple, buying seemed like a foregone conclusion. Then the housing crisis hit. Washington's housing market has been insulated from some of the worst effects, but there is an aspect of the crisis that seems to have gone unnoticed: Otherwise qualified buyers like us who might just leave the market altogether.
Shortly before the housing crisis took hold, we thought we wanted to buy. But we never found anything we liked, kept on renting and continued to save on the assumption that we would buy eventually. Now, however, we're questioning whether our American dream should include homeownership.
A few years ago, lenders readily provided mortgages to individuals who could not afford them; many of those buyers have since been foreclosed on, costing families, communities and the nation far more than money. Although we realize the reforms being considered today could ensure that what happened during the boom doesn't happen again, some aspects of the new market, such as a potential down payment requirement of 20 percentfor the most favorable terms, could exclude homebuyers who would otherwise - and should be - considered responsible, valuable customers.
We are exactly the kind of buyers the housing market should want. In our early 30s, we are both college graduates; one of us has a doctorate. We have a combined six-figure income and excellent credit. Including our retirement contributions, we save at least 30 percent of our income each month. We carry little debt, pay off our credit cards every month and don't have a car - or the expense that comes with it.
Nonetheless, aside from the occasional doubt we feel about bucking conventional wisdom and not purchasing property, we're no closer to buying today than we were before the crisis. Not only are we uncomfortable paying the mortgage that would be required, but we also have determined we simply don't want to participate in the market under current conditions.
And why should we?
It's prohibitively expensive to purchase a home - especially in the District but also in the Washington suburbs. An average two-bedroom condo in many parts of town starts at $400,000 (townhouses and single-family homes can be more), which means homebuyers need at least $80,000 to achieve a 20 percent down payment. Even if our income technically places us in upper-income status, our lifestyle and financial sensibilities remain middle class. Despite our professional jobs, $80,000 is daunting, at best. Ironically, however, we earn too much to qualify for some programs designed to help first-time homebuyers; lenders have also told us that many condos - a staple for new owners in the District - are increasingly difficult to finance.
Even without these financing challenges, it's also prohibitively costly to add a mortgage to monthly expenses for those who are used to renting - especially in and around the District. If we decided to buy, the resulting mortgage would be twice our current rent. The difference is staggering and would require significant lifestyle changes that don't necessarily seem worth it to us, including backing off on long-term retirement savings.
Our homebuying odyssey began long before recent regulations were proposed and long before the housing crisis. We said no to no-money-down years ago.
We didn't buy when many others did, especially when prices were even more exorbitant than now. Perhaps this makes us suckers to some, but maybe it makes us responsible. We don't believe we are owed a chance to buy a home. But we are concerned that homeownership in markets such as the District might not even be an option.
We've been told homeownership is crucial to the American economy, but the current environment may be generating a group of people who are choosing not to buy. The housing boom and bust isn't only about banks, regulators and questionable loans. At least for us, it's about a shift in the American dream that may exclude homeownership.
One day the old dream might be ours. For now, we're keeping our money in the bank.