Trulia: Buying Still Outweighs Renting in DC Area

by Shilpi Paul

It is still cheaper to buy a home than rent one in DC (along with 98 out of 100 major Metros in the U.S.), according to a report published today by real estate search website Trulia.

Trulia’s Rent vs. Buy Index, which launched in June 2010, calculates the price-to-rent ratio using the median list price for two-bedroom properties compared with the median rent for two-bedroom apartments, condos and townhomes listed on its site. The index uses a rule of 15, which means that if the median list price divided by the annual median rent produces a score of 15 or less, the city is considered a good place to buy. While any score below 15 indicates that it is better to buy than rent, the lower the number, the better to buy.

Courtesy of Trulia Trends.

Trulia sent UrbanTurf some DC-area specific stats, breaking down the region into the city proper and the surrounding suburbs, and every area has a score that falls below the 15 point rent-buy threshold. DC proper has a score of 12.2 (down slightly from a score of 14 last year), while Alexandria tops the list at 14, just barely making it better to buy. Housing prices in Prince George’s, MD gave them the best score in the area at 6.5. Nationally, San Francisco, Honolulu and parts of New York City (Manhattan, Staten Island, Brooklyn) are the only major cities where Trulia deemed it is better to rent than to buy; on the other end of the spectrum, Detroit had a score of just 3.7.

“As rents rise and prices stagnate, homeownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” said Jed Kolko, Trulia’s Chief Economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face.”

While the index does provide some perspective on the rent versus buy debate, an individual’s decision as to whether they will buy a home requires taking a number of variables into account (property taxes, down payment, interest rates) for the total cost of ownership, a point that Trulia acknowledges.

“We created the index to determine which cities have overpriced rent and which have underpriced,” Daisy Kong of Trulia told UrbanTurf last year. “The decision to buy a home is a very personal one and the index should just be used as a guide in that process.”

To see Trulia’s full post and interactive graphic, click here. For Kolko’s in-depth commentary on the topic in Atlantic Cities, click here.

This article originally published at http://dc.urbanturf.com/articles/blog/trulia_still_better_to_buy_than_rent_in_dc/5311


  1. SL said at 12:36 pm on Wednesday March 21, 2012:

    Thanks for posting this. I wanted to comment a little on some wording in the article I found slightly confusing. When you visit Trulia’s Rent vs. Buy Index launch story, it makes it clear that the lower the value (1-15) the more affordable it is to buy vs. renting. But this story says “Alexandria tops the list at 14.” Actually, Alexandria just barely makes it into Trulia’s category of cities where it is much better to buy than rent. The real story here is that Prince George’s County, MD is where it’s truly the most affordable to buy rather than rent in the whole area (this table should be presented with the lowest value on the top). When you look at the whole list, you see that PG County and the exurbs have the best buy vs. rent ratio, probably because these same areas have seen the least gain in home prices, while rent prices are still high. But in even the areas with the healthiest real estate markets (DC) it is still more advantageous to buy rather than rent. It would be interesting to see some stats on how expensive it is to rent in DC vs. the rest of the country, because part of the story here is that the rent in DC is “too damn high!”

  1. Shilpi Paul said at 1:01 pm on Wednesday March 21, 2012:


    Thanks for the comment. I added a couple sentences that hopefully make the ratio more clear and highlight Prince George’s, MD.
    We will see if we can find some stats on DC’s rent compared to those of other cities—that would make for a great post. Thanks for the suggestion!


  1. Jason S said at 1:28 pm on Wednesday March 21, 2012:

    Is there any way to get this type of information for the Reston/Herndon area? I just moved here this month and would really like to know more about it in the area I am working to see if it is worth trying to save up to buy here. Thanks.

  1. Joe Bob said at 3:12 pm on Wednesday March 21, 2012:

    This is good info, thanks!  Some irony in that the ad at the top of the page for Potomac Place calls this out.  Guess they saw this coming!

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