A home for sale on Capitol Hill.
Buying remains cheaper than renting in the DC area for those that can put a sizable down payment on a home, according to a new report out by Trulia.
The real estate website determined that buying is 32 percent cheaper than renting in the DC region, and 59 percent cheaper than renting in DC proper. The last time UrbanTurf reported on this metric, the percent in favor of buying had actually dipped from 30 percent to 17 percent.
The above-average margin of savings that area homebuyers see relative to renters is seen more in Prince George’s County, in places like Bladensburg (46.1 percent) and Fort Washington (39.8 percent), than in Montgomery County or Virginia, where the margin is anywhere from 44.2 percent in Montgomery Village to 9.4 percent in Great Falls.
Understanding Trulia’s methodology is key to interpreting the data, as it is based on a set of assumptions and comparing the median monthly costs for purchasing and renting.
Trulia’s analysis assumes a 20 percent down payment on a 30-year, fixed-rate mortgage financed with a 3.86 percent interest rate, and that the buyer will live in the home for at least seven years. It also assumes that homebuyers are in the 25 percent tax bracket, and calculates the net present value of making a home purchase rather than investing that money elsewhere. Costs also factor in renovations, average metro property taxes, utilities and maintenance for homes, as well as insurance and one-time costs for either type of housing.
If you’d like to take a crack at the numbers yourself, Trulia has a rent-versus-buy calculator, so that users can alter the assumptions and see whether the conclusions are consistent.
This article originally published at http://dc.urbanturf.com/articles/blog/trulia_buying_32_cheaper_than_renting_in_the_dc_area/11132
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