Plan to Stay in DC for 3-4 Years? Buy, Don’t Rent, Says Zillow Study

• September 17, 2014

by Lark Turner

Zillow has once again released its breakeven research, and in the DC area, the results are familiar: It’ll take you about 3.5 years to “breakeven” on the benefits of buying over renting. So if you’re planning on staying in the area for less than 3.5 years, it’s probably worth your while to keep paying the landlord.

The study uses the “Breakeven Horizon” to calculate the most financially advantageous way to pay for your living costs. It’s a measure of, according to Zillow, “the typical time it takes for the accruing costs of renting a home in a given area to exceed the costs of having purchased that same home, and it is calculated down to the neighborhood and ZIP code level.” Zillow used a number of factors, including price and rent projections for each city, maintenance costs, transaction costs and tax deductability, to determine the breakeven point. It assumes that buyers will put down 20 percent of the sales price.

In the DC area — a statistical area that includes parts of Virginia, Maryland and a smidgeon of West Virginia — buying edges out renting after 3.4 years, according to the latest analysis. Here’s how it stacks up against other large metro areas:

Click to enlarge.

In the DC area, home values are expected to appreciate at a rate of 2.26 percent a year (yes, this will vary greatly depending on where you live); meanwhile, rents are expected to increase at a rate of 2.73 percent per year.

This article originally published at http://dc.urbanturf.com/articles/blog/plan_to_stay_in_dc_for_3-4_years_buy_dont_rent_says_zillow_study/8982