A condo that recently hit the market in Shaw.
Trulia’s most recent Rent vs. Buy report calculates that it is now 28.4 percent cheaper to buy a home in the DC region than to rent — a slimmer margin than the 35.4 percent value of buying a home last fall.
The DC area is not unique in this position, as the economic benefit of buying, as rents have dropped, has diminished in all 100 of the country’s largest metropolitan areas. While home prices have steadily increased nationwide over the past four years, rents have gone down by 3.5 percent between spring 2016 and spring 2017. In the last year, median home prices in the DC area rose by 4.3 percent while median rents dropped by the same percentage. Currently, there are metropolitan areas (most of which are in California) where mortgage rates are close to making the buy-or-rent question a wash.
As always when considering this analysis, it is key to understand the methodology Trulia used to determine the comparative financial benefit of purchasing as opposed to renting. The calculations are based on the standard that buyers put down a 20 percent down payment, have a 30-year mortgage in the 4.1 percent range and are expected to stay in their homes for at least seven years.
It also factors in the assumption that people are in the 25 percent tax bracket and itemize their federal tax deductions. Additional expenses such as renovation and maintenance costs, property taxes at the average metro property tax rate, utilities and insurance (for both buyers and renters) are also included.
For those skeptical of the report’s assumptions or interested in a more tailored assessment, Trulia has a rent-versus-buy calculator to allow users to plug in specific numbers.
This article originally published at https://dc.urbanturf.com/articles/blog/trulia_buying_28_cheaper_than_renting_in_the_dc_area/12607.
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