Buying a home in D.C. is cheaper than renting, report says
WASHINGTON (WJLA) - There’s no argument that life in the DMV is expensive.
Median home prices float about the national median price. U.S. Census Bureau data shows rental prices are among the priciest in the country.
But Donna Evers of Evers & Company, a local real estate brokerage firm, says when you factor in tax breaks and low mortgage rates, it’s actually cheaper to buy.
“When you take into account mortgage deductions and all these other things, you're way better off buying,” Evers says.
A new report from real estate company Trulia says in metro D.C., it’s 31-percent cheaper to buy than to rent. Compare that with the New York and Los Angeles markets where it’s just 21-percent cheaper.
With 30-year fixed mortgage rates hovering around 4.5 percent, Evers says buyers are snapping up property, making the D.C. area a seller’s market where prices are steadily rising.
“We have a shortage of product, we have a tremendous increase of buyers willing to buy,” she says. “In other words, demand is way up, supply is down and that has an effect on prices, too.”
Evers says the area is coming off a white-hot summer and the residual heat should carry into the fall and winter, when buying usually cools.
“Prices have been going up,” says Jed Smith, an economist at the National Association of Realtors. “They’re going to level off, but they're going up.”
Smith says he believes the housing lull is all but over and doesn’t foresee another catastrophic collapse at least within the next 20 years.
“People are conservative now and they'll continue to be conservative, so I don't think you need to be worried about a bubble,” Smith says.
Smith says mortgage rates will likely tick up, adding that home and rental prices usually go up together. In the long run, Smith says, if it’s in your budget, it’s almost always cheaper to buy, adding that at the end of a 30-year mortgage buyers will walk away with substantial value. At the end of 30 years of renting, he says, renters will be left with a “pile of receipts.