20s Couple seeking Area/Neighborhood Advice (Baltimore, Columbia: for sale, apartment, new home)

[MrRational]

Originally Posted by bufflove

That's some funky math...

Nope... it's old school.
And I'm the first to admit that it's very conservative by today's standards.

Those who advocate for more than the 25% of NET number...
tend to be those who lend and/or earn money on sales.
---

Try an exercise...
Gross income less all the pretax stuff (IRA, HI, etc)
Less payroll deductions for FICA and Fed/State Income

Even allowing for the deductability of interest, taxes and insurance...
you still need the cash to pay those bills ...right?

So.. how much of that gross is even available for the rest of your life?
Whatever it might be... this NET figure is where the rest gets calculated from.

I suggest you take that number and divide it by 52.
This becomes your monthly housing budget. Including utilities.

Stick to it... even if it requires that you have less house...
and the rest of your life will be a whole lot more pleasant.

[bufflove]

Originally Posted by MrRational

Nope... it's old school.
And I'm the first to admit that it's very conservative by today's standards.

Those who advocate for more than the 25% of NET number...
tend to be those who lend and/or earn money on sales.
---

Try an exercise...
Gross income less all the pretax stuff (IRA, HI, etc)
Less payroll deductions for FICA and Fed/State Income

Even allowing for the deductability of interest, taxes and insurance...
you still need the cash to pay those bills ...right?

So.. how much of that gross is even available for the rest of your life?
Whatever it might be... this NET figure is where the rest gets calculated from.

I suggest you take that number and divide it by 52.
This becomes your monthly housing budget. Including utilities.

Stick to it... even if it requires that you have less house...
and the rest of your life will be a whole lot more pleasant.

I'm fiscally conservative as well and it's perfectly valid if they only want to spend $300K on a house to, e.g. have more money for vacations or retirement savings. But - since they're otherwise debt-free - it's just inaccurate to say their upper housing limit is $300K.

[GeoffD]

Originally Posted by MrRational

Almost any NE city will be fine... if you can find the work needed to afford it.

Yeah, like that.

Nope... but household income is.

You and 30 million other couples.

Using the old school rule of thumb... the target of house price to income ratio is 2.5
The median home value in Knoxville, TN is $126,800. ... implying a $50,000 income
The median home value in Towson, MD is $346,100 ...implying a $138,000 income.

You can certainly spend less and you can push the ratio number up (too many already do)
but whatever the income number used... it should be that of only ONE partner; even a DINK couple.

A bit south of Towson is Anneslie and a few other similar older and very nice suburbs.
This is a LINK to some listings.

Where does that crazy housing affordability income number come from?

The old school mortgage qualification cutoff is 28% of your gross income for mortgage, taxes, and insurance. Assuming 20% down, a 1.1% property tax rate, a zero points 4.15% 30 year fixed mortgage, and $1,000 in insurance, I get $74,854 for income. That's a married couple where both make $18.75/hour. You'd need to come up with $69,200 down payment but that's the numbers. Any bank will give you that deal today if you have good credit.

The math for 20% down:
I get $20,959 total payments with $1000 in insurance, $3807 in property taxes, and $1,346/month in mortgage payment on a $276,880 30 year mortgage at 4.15%. $21K/0.28 is $75K.

5% down ($17,305) with 0.85% in PMI and 4.15% interest on an FHA loan is an income of $93K. That's still nowhere near $138K.

If you have a lousy credit rating, sure, it's going to be higher interest rates. If you don't pay your bills on time or rack up consumer debt, you have a lousy credit rating. Don't do that.

[bus man]

Everything on your wish list is just screaming COLUMBIA!! Except, that is, for price. But if you can wiggle your way around that, I think you'd really enjoy living there.

[ThoroughlyResearched]

Originally Posted by bufflove

That's some funky math that, among other things, doesn't take into account downpayment size. Traditionally, debt-to-income shouldn't exceed 36% of pretax income. @ 36% ($3600/month), OP having no other debt, and assuming 20% down, a 1.1% property tax, and a standard home insurance policy, you're looking at about a $700K house. Obviously, that shrinks if OP doesn't want to spend the $140K down payment or otherwise wants to play it conservative (which it sounds like they do), but saying they have an upper limit of $300K on a $120K/year salary doesn't make sense in even the most conservative of formulas.

Ellicott City is nice, OP, but you should read about the massive flooding the downtown experienced last year, if you're unaware of that issue, and then streetview Main St. A large swath of the retail is currently boarded up and likely will be in the short/medium term, so just know that going in. Nearby Catonsville might be a good, cheaper option.

Frederick is quite nice and stands on its own as a destination for retail/restaurants/bars. You're right that it's not an easy skip over to DC or Baltimore, so make sure you like Frederick itself enough. Traveling into DC/Baltimore with any regularity would be a real pain.

Thank you, didn't know about the flooding!

[ThoroughlyResearched]

Originally Posted by bus man

Everything on your wish list is just screaming COLUMBIA!! Except, that is, for price. But if you can wiggle your way around that, I think you'd really enjoy living there.

I actually talked to a college friend yesterday who is now living in Baltimore, and she was also singing the praises of Columbia. That being said, do you have any second or third place suggestions if Columbia is unworkable for us?

[papichulo2]

Originally Posted by ThoroughlyResearched

I actually talked to a college friend yesterday who is now living in Baltimore, and she was also singing the praises of Columbia. That being said, do you have any second or third place suggestions if Columbia is unworkable for us?

Laurel or Greenbelt, beltsville, Burtonsville or calverton

[cjmeck]

I think you'd probably like someplace like Maple Lawn in Fulton (zip 20723) if you're looking for new and masterplanned. But, your budget will be problematic in this area. While we aren't as expensive as the Boston area, its pretty obscene coming from the midwest myself. A budget of $300-400k will put you in a townhome or condo that may or may not be new. If you can move past your desire for "new" then I'd recommend Columbia (zip codes 21044, 21045, 21046). Its an older masterplanned community (and its enormous with all of its different villages). Both areas are fairly mid-way between Baltimore/DC. There are lots of others, haven't read up the thread but these should give you a good idea of pricing in the area. Good luck to you..

[papichulo2]

Yah i agree maple lawn is where its at! plus u near the 29 and major highways.

[Chaofan]

Originally Posted by ThoroughlyResearched

Thank you, didn't know about the flooding!

The flooding was confined to the historic area around Main Street. Most of the housing in Ellicott City is nowhere near Main Street nor is it in a confined, narrow valley area like Main Street. Ellicott City as a whole is in absolutely no danger of washing away. The vast majority of EC suffered little or no effect whatsoever from that big rainstorm (well, we did get wet, but that will happen anywhere when it rains).


It is possible to find housing in EC in your price range, but it will be an older home in need of renovation or updating. However, that older home will have a larger lot than most of the newer, more expensive homes, so that's the upside. Also, there are some nice townhome communities in EC and Columbia in your price range. You might want to consider making a trip here (and to other potential relocation sites) to check out what is available and maybe even renting in the area that looks most promising to see how you like it. Since you both work from home, you would have more flexibility than folks who have to consider the location of their job when selecting a place to live.


I think you would feel welcome and comfortable in most of the larger suburban areas in Maryland surrounding Baltimore or DC but maybe not so much in some of the more rural areas.


Setting out to find a new home in a new community is exciting! You are fortunate to be able to take your work with you, so you can focus on finding just the right location without worrying about a commute. Good luck with your new adventure!