To help celebrate Independence Day, we decided to look for the right mix of mansions and modest homes in our Nation’s Capital

So far we’ve looked at the mix of home prices in San Francisco and Boston. This month, we’re focusing our gaze on our nation’s capital – Washington, DC. Long synonymous with power and politics, the city designed by Pierre L’Enfant is home to the White House, the Capitol, the Lincoln Monument, and many, many Smithsonian museums. Attractions like these bring flocks of tourists and American history buffs year round, but what’s it like to live there? Are there any affordable neighborhoods where you can rub shoulders with DC elites (and we’re not just talking about the infamous “Real Housewives of DC”)?

If you’re hoping to live near the “DC Cupcakes” shop in Georgetown or be super close to iconic buildings like the Capitol Building and the Supreme Court in Capitol Hill, it might be a bit more difficult to find an affordable place. However, contrary to popular belief, you may actually find a steal in Dupont Circle, Adams Morgan or Logan Circle, granting you easy access to some of DC’s most famous attractions. But if you’re looking for a much more affordable, residential area, you might want to check out what’s east of the Anacostia River.  When you’re looking at homes, it’s not just about the median prices in a neighborhood, it’s important to look a bit deeper at the mix of home prices on the market. It turns out that there’s something for everyone in our nation’s capital, whether you want to have the nicest house on the block or be surrounded by mansions.

Let’s start by reviewing how we calculate our Home Price Range Index (HPRI). To figure out the range of asking home prices within different neighborhoods, we take all the for-sale homes listed on Trulia in 2011 in each Washington, DC ZIP code and identify the 90th percentile asking price (a.k.a. the price of a home that’s MORE expensive than 90% of the other homes in its ZIP code) and the 10th percentile asking price (a.k.a. the price of the home that’s MORE expensive than only 10% of the other homes in its ZIP code).

We then divide the price of the 90th percentile home by the price of the 10th percentile home. Here’s an example of the calculation:

Neighborhood: Hundred Acre Woods

(where Christopher Robin and Winnie-the-Pooh play)

90th Percentile Asking Price: $1 million (aka Rabbit’s Home)

10th Percentile Asking Price: $100,000 (aka Eeyore’s Home)

Home Price Range Index = $1,000,000 / $100,000 = 10

Interpretation: Rabbit’s home is 10 times more expensive than Eeyore’s home.

Since ZIP 20007 has a Home Price Range Index of 8.7, this means that a 90th percentile home in that neighborhood is 8.7 times more expensive than the 10th percentile home. Similarly, a neighborhood with a higher HPRI has more home price variation than a neighborhood with a lower HPRI. Thus, 20008 (HPRI = 8.5) has a bigger range in home prices than 20001 (HPRI = 2.8).


Mr. Senator, Won’t You Be My Neighbor?

Speaking of 20007, this ZIP includes the Georgetown neighborhood. One the oldest and wealthiest areas of the city, with a median asking price of around $1 million, you can expect to find some pricey real estate. Not only do many national big wigs reside here, it’s also popular with international dignitaries. In fact, Dominique Strauss-Kahn, former Managing Director of the IMF, is currently selling his old place – it could be yours for only $4.2 million. Any takers?

The heart of Georgetown is M Street, which is packed with neighborhood amenities like shops, bars and restaurants. The one drawback is that a Metro subway stop is nowhere to be found. That’s okay though, as you’ll appreciate a good walk after you’ve stood in a crazy-long line to eat one of the neighborhood’s trendiest treats — cupcakes.

But Georgetown isn’t just the most expensive neighborhood. The HPRI here is also the largest of any of the ZIP codes in the District, meaning there’s enough variety that you can find a more modest home among the mansions. For less than $500k, you could secure a 1-bedroom condo further away from M Street in Glover Park – but you might have to adapt to sardine living if you really want to share a ZIP code with Mr. Strauss-Kahn. The homes under $500k in this ZIP only have a median of 1 bedroom and 1 bathroom.

So if you can’t afford to live in Georgetown, what about Capitol Hill, located in ZIP code 20003? This historic area not only has old row houses but also Eastern Market. With an Orange/Blue line Metro stop, the commute is convenient too. But, you’ll have to pay up to live within walking distance of the Supreme Court and Library of Congress. With one of the lowest HPRIs in the district, it’s hard to find a bargain. The cheapest 10% of homes in the area are still $334k. But, if you’re really determined to live here, you might still be able to rent one of the area’s “English basement” apartments (check out this cozy little 2-bedroom, 1-bathroom rental, sunlight not included).

Frugal Living East of the Anacostia River

If the NW area is insanely expensive, then east of the Anacostia River is where the bargains are at. Situated just across the river from Capitol Hill, the houses in 20020 (Historic Anacostia) are dramatically more affordable. In fact, even better deals can be had next door in 20032 (Congress Heights) –the 90th percentile house here is on par or cheaper than the 10th percentile house in Georgetown (20007)!

Nature lovers may want to take a look at 20019 (Deanwood), another affordable area which straddles the SE and NE quadrants. Homes here have a median asking price of $163k. Home to many green spaces, including Fort Dupont Park, this neighborhood has plenty of places to go for a hike. Let’s not forget that both the Orange and Blue lines pass through here, allowing for an easy commute to many other parts of DC.

What’s really interesting is that these ZIPs east of the river are not only much less expensive than the rest of the city but also have some of the highest HPRIs in the District. In other cities we’ve looked at, high HPRIs are usually associated with super expensive mansions pulling up the high end of home prices. But in these ZIPs, we see that there are quite a few homes under $70k! That said, real estate is all about tradeoffs. While you’ll definitely find variety in these neighborhoods, you might have to be okay with buying or being surrounded by more fixer-uppers.


Living In The Heart Of DC On The (Relatively) Cheap

If you really want to be within walking distance of downtown and the attractions of DC, where can you live that won’t cost you an arm and a leg? Surprisingly, it looks like 20036, 20005 and 20009 may be your best bets. Here you’ll find some of the famous cultural hubs of the city including Dupont Circle, Logan Circle, Adams Morgan and Columbia Heights. With respective HPRIs of 6.2, 4.2 and 4 you can find multi-million dollar townhouses close to small condos like a 1-bedroom, 1-bathroom unit in this building (pictured below) for $324,500.

Take 20036 for example (which contains parts of Dupont Circle). Its median asking price of $336k is not that far off from its low end price of $224k, meaning that half the homes for sale are relatively affordable in spite of their location close to larger, more expensive real estate.

So, if you value easy access to lots of different neighborhoods, it’s possible to find a relatively modest home in the middle of the city if you look in one of these ZIPs. ZIP 20005 even includes parts of downtown, meaning it may be walking distance to where you work as well. And if you’re super worried you won’t be able to easily get your Georgetown cupcake fix here, you needn’t worry. You’re a short walk from another one of DC’s purveyor of baked goods (this shop’s just missing a show on TLC). That’s right, you can have your (cup)cake, and eat it too.

Just like political opinions, there are a wide variety of real estate options in our nation’s capital. You could live in Georgetown, where you’ll have to sacrifice space to live next to millionaires, or in Capitol Hill where you’ll need to be quite wealthy yourself to afford any place. But there are also a lot of options on the more affordable side — for $335k you can have a nice 3-bedroom, 2.5-bathroom home with a yard east of the Anacostia River (pictured below) or a comfortable condo close to Logan Circle.

The choice is yours — which neighborhood gets your vote?

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