I had a 2 bedroom lease in Adams Morgan, one block off 18th, for $2500 last year. We've since bought a place a few blocks away, so I'm unsure if it's risen.
And I pay a $800 a month mortgage for a 3500 square fort castle with 5 beds and 4 baths on 1/2 acre in BF Indiana. Doesn't mean I am getting a good deal though, just where I happen to be.
I would way rather be paying more for a city home :)
I'm in the opposite situation. I moved to Washington from a small Rust Belt city. The last house I toured there was a historic 5500 ft^2 Victorian 6 bd 5 bath, in the most desirable location, and thus with near instant liquidity. It was listed for $500k. With a local bank, which knows the housing market in the area, the mortgage would have been less than $2000/mo.
Considering the inexpensive housing, an excellent Jesuit preparatory school for $7k/year, the low cost of living, and the huge scholarships to the city's University, a family of five could live extremely comfortably for $150,000-$200,000/yr. Couples with occupations such as lawyer, doctor, engineer, or small business owner live like they're downright rich.
I suppose it's the old adage that keeps me in DC: You could sell your house here and live like a king anywhere else. But you never will, because you're afraid you'll never be to get back.