A home on the market in Great Falls, Virginia.
Homeowners in the DC region will need to stay in their homes for just under five 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 had the longest breakeven horizon at 4.5 years, more than twice the national average.
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. For the past two years, the national breakeven point has been 1.9 years.
The BEH has increased for over two-thirds of jurisdictions in the region during the past year, including DC proper, where the horizon is 4.5 years. Areas in Prince George’s County have the shortest BEH in the region, while Fairfax and Montgomery County have the longest. Montgomery County’s Chevy Chase Village has seen the biggest year-over-year drop, decreasing from 24.5 years to break even in 2014 to 6.8 in 2015. Unsurprisingly, high priced areas like Great Falls (9.4 years), Bethesda (7.4 years), Arlington (6.9 years), and Chevy Chase (6.5 years) all have long break even points.
Overall, metropolitan areas in the Northeast and on the west coast have longer breakeven points than other regions. Similarly, condominiums generally have longer BEH than houses due to condo association fees. Although the conclusions in this report may be discouraging for some (or perhaps confirmation for others), the fact remains that if you are moving somewhere for only a couple of years, renting a home is likely wiser than buying one.
This article originally published at http://dc.urbanturf.com/articles/blog/4.5_years_d.c._area_has_longest_breakeven_horizon_for_homeowners/10851
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