It is still cheaper to buy a home than rent one in DC (along with 78 percent of the 50 largest cities across the country), according to a report published today from real estate search website Trulia.com. The Trulia report comes just a couple days after the release of a Harvard University study that revealed that the number of “renters who spend more than half their income on housing is at its highest level in half a century.”
Trulia’s Rent vs. Buy Index, which launched in June 2010, calculates the price-to-rent ratio using the median list price for two-bedroom properties compared with the median rent for two-bedroom apartments, condos and townhomes listed on its site. The index uses a rule of 15, which means that if the median list price divided by the annual median rent produces a score of 15 or less, the city is considered a good place to buy. The index is separated into three categories: The first includes cities with scores ranging from 1 to 15, which are considered places where it is more expensive to rent than to buy; the second, with scores of 16-20 are places where renting or buying is more situation dependent; and the third, with scores of 21 or higher, are places where buying costs are significantly greater than renting.
DC, along with cities like Chicago, Minneapolis and Raleigh, scored a 13 on the Trulia scale, which means that the website has deemed it a place where it is much less expensive to buy than to rent. (In January, Trulia reported that DC had a score of 12, so the city has inched slightly closer to the “15 point” threshold.) For comparison, New York with a score of 39 (up from 31 in January) is a city where you should continue to rent, according to Trulia.
While the index does provide some perspective on the rent versus buy debate, an individual’s decision as to whether they will buy a home requires taking a number of variables into account (property taxes, down payment, interest rates) for the total cost of ownership, a point that Trulia acknowledges.
“We created the index to determine which cities have overpriced rent and which have underpriced,” Daisy Kong of Trulia told UrbanTurf in January. “The decision to buy a home is a very personal one and the index should just be used as a guide in that process.”
To see how DC compares to other cities in the country, check out this interactive map based on the index findings.
This article originally published at https://dc.urbanturf.com/articles/blog/trulia_still_cheaper_to_buy_than_rent_in_dc/3401.
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