As both home values and rents rise, how long the DC region’s homeowners need to stay in their homes in order to break even has dropped again.
Zillow's latest breakeven horizon report, which delves into how long it takes for home purchasing costs to pay for themselves versus having spent the same amount of time renting, shows that DC area homeowners will break even in the shortest timeframe seen in recent years.
As of the first quarter of 2018, the median breakeven horizon for the region came in at 2.96 years. This is a 1.74 year drop compared to the last quarter of 2017.
Despite being a surprisingly reasonable amount of time compared to previous quarters, the DC region's breakeven horizon is actually the sixth-longest natiwonwide, but shorter than Los Angeles/Long Beach (3.7 years) and San Francisco (2.98 years); Portland, Oregon (3.07 years); Hartford, Connecticut (3.23 years); and Virginia Beach (3.11 years).
The breakeven point is measured with a one-to-one comparison of the costs of purchasing vs. renting a random sample of 3,000 units in each zip code. The purchase price and rental rate of each dwelling is determined using the controversial Zestimate tool.
A home purchase assumes a 20 percent down payment; a 30-year fixed-rate mortgage at the current interest rate; ancillary costs like homeowner’s insurance, property taxes, 3 percent closing costs, and, where applicable, either 1.2 percent in annual condo fees or 1 percent of home value in annual maintenance costs; tax deductions; and predicted home price appreciation. Rental costs assume one month’s security deposit and renter’s insurance, while assuming that not having to pay home-associated expenses affords the renter a 5 percent annual accrual on the foregone down payment.
This article originally published at https://dc.urbanturf.com/articles/blog/2.96-years-the-breakeven-horizon-for-dc-area-homeowners-gets-shorter/14006.
Most Popular... This Week • Last 30 Days • Ever
Harry Wardman is responsible for developing huge swaths of northwest DC, from row hou... read »
The NHP Foundation has submitted plans to DC's Historic Preservation Office for a new... read »
An updated look at the residential units on the boards at Union Market.... read »
The golden handcuffs of low mortgage rates; where the fastest trains are being made; ... read »
The Wall Street Journal is reporting that the Jewett House has hit the market for $14... read »
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
With interest rates reaching their highest levels in 14 years, it is critically impor... read »
Before deciding to build an addition to your rowhouse, find out whether you'll need t... read »
A stately five-bedroom Woodley Park house has been home to not one, not two, but thre... read »
A look at the residential projects in the works within a block or two of Dave Thomas ... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro