According to research from real estate website Zillow, if residents in DC and the surrounding areas are planning on living in a home for more than 3.5 years, buying makes more financial sense than renting.
In an attempt to create a better rent vs. buy index than what is currently out there, Zillow created a “Breakeven Horizon”, or how long it takes for owning to become financially advantageous over renting, for markets across the U.S. While typical wisdom recommends staying in a recently-purchased home for at least five years to overcome transaction costs, Zillow said that the market conditions in each individual city may lower or raise this number.
In the DC metro area, Zillow determined that, on average, home owners can reach the break-even point in 3.5 years. However, the total number of years varies based on the city. In suburbs like Chevy Chase Village and McLean, it will take more than 7 years to break even. Potomac, Bethesda and Arlington are at about 5 years, and DC is at 4.5 years. Several cities in Maryland have break-even points under two years, with those in Prince George’s County taking the very lowest spots.
Zillow determined their breakeven horizon by taking into consideration a host of factors, like price and rent projections for each city, maintenance costs, transaction costs and tax deductability.
While most of the country’s housing markets seem to favor buying, some cities in California have astronomical break-even points that approach 30 years. You can check out Zillow’s data here.
This article originally published at http://dc.urbanturf.com/articles/blog/rent_or_buy_if_you_plan_on_staying_at_least_3.5_years_buy/5859
Most Popular... This Week • Last 30 Days • Ever
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
The project would replace a concrete plant and would deliver the neighborhood's first... read »
Loan recasting is a growing practice- so what is it?... read »
The 25-acre array will produce a quarter of the university's current annual energy co... read »
This year will likely go down as the year that prices for houses in DC reached new he... read »
The preferred mortgage product among most home buyers is the fixed-rate mortgage. How... read »
STAY DC provides rental aid and utility payment grants to at-risk District residents ... read »
The planned 8-unit development would be located on K Street right along the Potomac R... read »
Landmark Theatres is in the final stages of negotiations that would have it operating... read »
The 12,000 square foot replica of 1600 Pennsylvania Avenue went under contract last w... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
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. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro