Are millennials frozen out of the housing market? The reality may be more interesting.

Carson McDonald thought he would be a homeowner by now.

But the 35-year-old engineer and his wife, a dietitian, are just beginning to search for their first home. They’re prepared to look well beyond the D.C. neighborhood where they rent — possibly as far out as Annapolis, Maryland, some 30 miles to the east — to stay within their $700,000 budget. That price is just above the metro area’s median home price.