Trulia’s most recent Rent vs. Buy analysis calculates that it is 26.8 percent cheaper to buy a home in the DC area than to rent — a slightly slimmer margin than last spring.
While this percentage in favor of buying holds true nationwide, the tide is decidedly swinging the other way in some of the most expensive housing markets, including the San Francisco area, where million-plus median home prices make renting a smarter option for those staying seven years or less. Meanwhile, the value proposition for buying in the DC area may be narrowing as median rents have held steady year-over-year while median home prices have increased by 4.2 percent.
Trulia's methodology is a key factor in these conclusions, with a home purchase factoring in an assumed 20 percent down payment and a 30-year mortgage with a 4.1 percent interest rate; buyers are also expected to stay in their homes for at least seven years. It is also assumed that homebuyers itemize their federal tax deductions at the 25 percent tax bracket and incur expenses such as renovation and maintenance costs, property taxes at the average metrowide rate, utilities and insurance. For renters, renters' insurance of 1.32 percent of monthly rent is factored as an expense.
As always, those skeptical of the report’s assumptions or interested in a more tailored assessment can utilize Trulia's rent-versus-buy calculator to see how specific circumstances tip the scales.
This article originally published at http://dc.urbanturf.com/articles/blog/trulia-buying-27-percent-cheaper-than-renting-in-the-dc-area/14276
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