A shocking post title? Not really…buying your kid a condo vs. dorm life in college is a common occurrence in Foggy Bottom. In fact, I'd say 75% of the business that The Murphy Team does in Foggy Bottom is helping parents and their children find a place to live. That's why I was fascinated to read the article in the Post real estate section that discusses the practice. ("Consider buying a home instead of dorm rent")
George Washington University (GWU) is the most expensive university in the US. If parents can afford to send their kid to be educated at GWU, it's likely they can afford an investment property. $840 a month for part of dorm room is cheap vs. renting a studio or 1 bedroom in DC. A studio in Foggy Bottom can rent from $1300 to $1900 a month. A one bedroom can rent from $1300 to $4000. For most parents coming from other (cheaper) states, there is a lot of sticker shock. Buying becomes a more attractive prospect once they see the rental prices.
What the article doesn't address is the current market in Foggy Bottom. A lot of the buildings in Foggy Bottom have a number of investor owners (owners that don't live in the unit). Lenders don't like investor buildings. Refer to the recent mortgage crisis. In fact, you pretty much have to buy with cash in Foggy Bottom unless you have a creative lender. Loans are usually sold to Fannie Mae and Freddie Mac by whatever lender that finances the condo. Fannie and Freddie are currently no longer purchasing any loans in a building that has over a 50% investor ratio unless the purchaser is living in the unit. Since most of these units are being purchased by parents for kids, this poses a problem. The kid can't get a loan. He/She doesn't have a job therefore they have no income. It's proving to be quite a dilemma. In fact, this is the number one topic of conversation at most of our staff meetings.
Thankfully for the current owners, this snafu doesn't seem to be impacting prices dramatically. Studios continue to sell for 175K-250K in Foggy Bottom. Hopefully, this trend will continue and buying a condo for your kid will continue to be an option.
