With a median home value of $530,000, the DC real estate market is more expensive than many. That’s why it’s critical to determine what works best for your situation.
If you’re just passing through, renting may be a better option. But if you’re willing to manage a property from a distance, buying and living in a home for a short period may be best because you can rent it out later.
Still undecided? Check out Financial Freedom’s technical breakdown on when to rent and when to buy.
Unlike other areas of the country, DC has a very transient population. While it’s true many people stick around for the long term, many are just passing through. Temporary government appointments, military personnel, and short-term government contracts all contribute. If you know you’re not going to be around for the long-term, renting is an easier option with less commitment.
Self-employed professionals and contractors don’t always know their income in the long term. While contractors can expect a predictable paycheck while on contract, once the term ends, you’ll be stuck with a mortgage payment no matter what. If cash flow is an issue, owning a home will make it harder for you to downsize when times get hard.
Even if you have a pretty hefty retirement fund, DC’s high cost of living can wipe that out quickly. If you can buy for cash and still have plenty to live on, then owning may be for you. Otherwise, renting is a better option. The fixed costs (though rents do rise) will make it easy to budget. Renting also provides you with the flexibility to downsize or move into your RV and travel.
The past few years have seen some of the lowest rates for a long time, but lately, rates have risen slightly. Because of Washington homes’ high sticker price, try to buy when rates are at a low and rent in the meantime.
Some of the top public schools in the country are located in the DMV metroplex, making raising a family here an easy decision. If you’re looking to settle down, the suburbs are an affordable and more spacious alternative to living in the city.
Even if you’re not starting a family or already have one, buying makes sense if you plan on spending at least a decade in the area. Rents rise every year, but mortgage payments don’t.
Rock-bottom mortgage rates are a perfect reason to buy a home. Rates have been holding low for quite some time, so it’s best to look as soon as possible.
High rent is a fact of life in the Nation’s Capital. Since rent tends to increase by a percentage every year, take advantage of fixed mortgages where your payments never change over time.
There’s no one perfect answer for the rent vs. buy question. It all depends on your situation. Take your time to explore your goals and your financial picture before deciding. If you’re still unsure, a rent/buy calculator may help you determine what’s right for you.
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