A Georgetown home that sold earlier this year.
Homeowners in the DC region will need to stay in their homes for about 3.5 years to “break even,” according to a recent report.
The Zillow report, released twice a year, tallies the “Breakeven Horizon” (BEH) for 35 metropolitan areas in the country — and the DC region, along with San Diego had the longest breakeven horizon at just over 3.5 years.
The breakeven point is the time it takes for the initial costs of purchasing a home and its investment value to outweigh the ongoing costs of renting. Zillow assumes that homebuyers put 20 percent down and have secured a 30-year, fixed-rate mortgage. Other housing costs such as taxes, fees and security deposits were also factored into the calculations. The national breakeven point is currently 1.8 years.
Across the DC region, the BEH varies by location. Areas in Prince George’s County have the shortest BEH in the region, while Fairfax and Montgomery County have the longest. In DC proper, the zip codes of 20003 (6.4 years) and 20001 (5 years) have some of the longest breakeven points, while 20017 (2 years) has one of the shortest.
“Over the most recent quarter, Breakeven Horizons have shortened across much of the country, driven by the combination of falling price-to-rent ratios and an uptick in expected home value appreciation over the next year,” the report stated. “In most large metros, rent appreciation outpaced home value appreciation, pushing price-to-rent ratios downward – particularly in the Northeast.”
This article originally published at http://dc.urbanturf.com/articles/blog/3.5_years_dc_area_homeowners_have_longest_breakeven_point_in_the_country/11362
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