As DC Area Home Values Rise, Owners Break Even More Quickly
A Lanier Heights home that sold last year.
In high-priced metropolitan areas across the country, slowing growth in home values has lengthened the amount of time it takes for a homeowner to break even on their purchase. However, the DC region is bucking that trend.
Compared to a 4.5-year breakeven horizon a year ago, DC-area homeowners who purchased in late 2016 need only own their house for 3.5 years before breaking even, according to Zillow’s newest report. The Breakeven Horizon, as defined by Zillow, is the point at which purchasing a house is more fiscally sensible than renting it. Zillow calculates this measure assuming a 30-year fixed-rate mortgage and 20 percent down payment, while factoring in things like expected rent and home-price growth, mortgage interest rates and purchase price-to-rent ratios.
story continues below
loading...story continues above
While the DC region’s breakeven point is still over twice as long as the national median — one year and 11 months — home values in the area are expected to appreciate over the next year, which could lessen the breakeven point further.
“Previously expected to remain flat, home values in and around Washington, D.C. are now expected to grow by 3 percent through the end of 2017,” the report stated. “This renewed vigor in home value appreciation has actually shortened the time it takes to break even in this metro by one full year compared to Q4 2015, to 3.5 years.”
The breakeven horizon varies by sub-market across the region. For example, in DC proper, the breakeven horizon is just over four years. Prince George’s County continues to have the shortest breakeven horizons in the region; in fact, several cities have a lower breakeven point than the nationwide median, with Temple Hills claiming the shortest at 1.25 years.
Higher-priced areas like Great Falls (6.5 years), Bethesda (6 years), Chevy Chase (5.6 years) and Arlington (6.42 years) still have some of the areas longest breakeven points, although these horizons have all dropped since last year.
This article originally published at https://dc.urbanturf.com/articles/blog/3.5_years_dc_area_homeowners_are_breaking_even_more_quickly/12116.
Most Popular... This Week • Last 30 Days • Ever
Roadside Development filed a sketch plan with Montgomery County this month for the 30... read »
The Matthew is located on 9th Street, overlooking the iconic Naylor Court and neighbo... read »
Construction continues humming along on several developments on the uppermost stretch... read »
Today, we take a closer look at home insurance.... read »
Unlike other new residential developments in the city, all of the apartments will be ... read »
- A First Look At The 525-Unit Development That Will Incorporate Silver Spring's Tastee Diner
- Nine Stylish Condominiums Debut in Shaw's Iconic Naylor Court
- The 1,600 Units In The Walter Reed/Takoma Development Pipeline
- A Look at What is Covered By Home Insurance
- 8-Unit Project + Restaurant Proposed Along Georgetown Canal
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. Start browsing below!
First-Timer Primers
Intro guides for first-time home buyers
Unique Spaces
Awesome and unusual real estate from across the DC Metro