We often find that incoming clients are on the fence about buying or renting in the area. The DC area is a very transient one, and many people find themselves packing up to leave just as quickly as they arrived. The decision of whether to rent or buy is a difficult one; renting is essentially hassle free, but without the possibility of appreciation and no tax benefits. Consider this: DC and the surrounding area average a 34% higher rental rate than a comparable mortgage. So if you find yourself loving a home for rent at $2,000/month, that same home sold to you and financed through a typical mortgage would be only $1,300-1,500/month! Here is a great Rent vs. Buy Calculator to start determining what would work best for you!
The Washington, DC, region is one of the strongest housing markets in the country, and as such you can typically expect your break even horizon to be 4 to 5 years. Why is this important to you? Over the course of a standard 2 to 3 year lease, with a monthly budget of $2000, you will have spent anywhere from $55,000 to $85,000 in total rent and utilities. This money might be better used to build equity and then either sell for a profit or use as a rental investment property. We can help you think through the decision of renting vs. buying, and then to find the best home to reach your financial goals. Contact us for a no obligation consultation!
Continuing our “Best of” Series, we have posted below links to some of our most useful relocation resources for clients. Even the most seasoned mover usually has the same same concerns and surprises when arriving in the DC metro area:
Commuting – DC is forever making “Worst Traffic” lists. You can NOT assume that 1 mile = 1 minute for commute times around here. Triple that ratio is a more accurate assessment. We do, however, have an extensive, if crowded public transit system including metro (subway), bus lines, MARC and VRE trains, and soon, lightrails. Before choosing a neighborhood, log on to a mapping site like this one that will show you the traffic cameras along your route (be sure to check it during what you expect would be your normal commuting hours). And of course, a dry run of your commute will teach you quickly what to expect.
Renting vs Buying – The toughest decision is whether to rent or buy. A good rule of thumb is that if you plan to be in the area less than 3 years, the closing costs on the purchase and sale will make it difficult to break even on a purchase (depending on your tax bracket, since a large chunk of home ownership costs are tax deductible, while rent is not). So a better way to think about this question is actually “How long do I need to stay in this property to break even?” One of the best rental calculators out there is this one from the New York Times, which answers that “How long?” question nicely.
No doubt you’re excited about what the next four years holds for both our country as well as your own relocation.Washington, DC, Northern Virginia, and suburban Maryland are fantastic places to live, as you will soon discover.Obviously there are lots of other factors to consider in choosing a new neighborhood: schools, taxes, amenities, and lifestyle just to name a few. There are lots of great places to live in DC, MD and VA. Here are a few other tips to get you started:
2)Carefully consider your commute time in choosing where to live.Most transferees to our area are shocked by the commute time—it can easily be 30 minutes to go just 3 or 4 miles, so don’t just look at a map and decide “it’s not that far.” This area’s congestion is among the worst in the nation.Our public transportation system is very good though; our subway system (known as Metro) is fantastic, though very expensive to live near.And don’t forget VRE and MARC trains.If you’re willing to commute by rail, you can get a lot more for your housing dollar.Commute times also vary widely based on whether you choose to live in the District proper, Maryland, or Virginia.
3)Get ready for sticker shock.Despite the national downturn in housing, prices in the Washington, DC, area have held up much better than other parts of the country, especially in close-in areas with under-an-hour commute times or along a metro line. For example, a one bedroom condo in North Arlington along the orange line will run you in the high $300s.But there’s some good news: there are definitely some pockets of under-valued homes right now—areas that were hit disproportionately hard by foreclosures and short sales in recent years, and in my opinion are primed for a comeback due to their proximity to public transportation and/or area demographic and employment trends. Keep in mind, though, that foreclosures and short sales, while attractive in terms of pricing, come with a host of other challenges that may be particularly difficult for someone on a tight timeline.
Looking for more info on area schools, government, crime stats, or cultural events?Check out my web page here.There’s an amazing array of activities and events in this area.I send out a list every month as part of my monthly real estate newsletter.(You can sign up on the right hand side of my blog here.)