Rent or Buy? Which is right for you? A new index out this week from Trulia compares several major cities on the rent to buy issue. The index is derived by taking the median list price on for sale properties and dividing it by the annual median rent for apartments.
The price-to-rent ratio for the District of Columbia (not including Northern Virginia*) is 13. Las Vegas, one of the worst for sale markets in the country came in with a ratio of 6 and New York City hit a ratio of 39 making renting a clear winner.
***While the index focused strictly on the District of Columbia we know Northern Virginia would reflect the same or similar ratios.
At first glance it looks like buying may be a no brainer but there are multiple factors to take into consideration including pocket book and life style.
- Do you plan to stay in the area for work or school for at least five (preferably 10) years?
- Is there a family in your future?
- Do you have a down payment?
- Can you qualify for a loan?
- Are you prepared for routine maintenance and emergency repairs? (No more calling the landlord when something breaks!)
On the flip side, renting in this area is challenging. According to the Washington Post, “. . . the Washington-area market has the lowest vacancy rate of any major metro area in the U.S. except New York City.”
This means landlords can charge higher rents, ask for large security deposits and even specify that rent be paid through automatic deposit. And they do. The issue is further compounded by the number of federal employees, contractors and political appointees who cycle in and out on a regular two to three year schedule.
Buying IS a big step but it can have long term rewards. If you are even considering buying rather than renting, call me at 703.927.4554 and let’s sit down and talk about your options.