Area residents considering buying a home may be better off renting if they’re not planning to stick around for close to five years, according to Zillow’s latest breakeven research. The real estate site found that residents “would have to live in a home [for 4.5 years] before buying it would become more financially advantageous than renting it.” The national breakeven average is just below two years.
Zillow’s breakeven point is the time at which the initial costs of purchasing a home and its investment value outweigh the ongoing costs of renting. Zillow uses a number of factors in its breakeven horizon, including price and rent projections, maintenance costs, transaction costs and tax deductability. It assumes that buyers will put down 20 percent of the sales price.
Chevy Chase Village, a section of the tony Maryland suburb where homes regularly sell for millions of dollars, had the longest breakeven horizon at 31 years, more than double the Somerset neighborhood, where renters would need 15 years to balance the cost of purchasing. Seat Pleasant had the lowest breakeven horizon of 1.3 years.
This article originally published at http://dc.urbanturf.com/articles/blog/4.5_years_is_breakeven_horizon_for_dc_area_homeowners/10109
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