It was recently revealed Washington DC is the forth most expensive place to rent in the country following only Boston, New York City and San Francisco. Rental rates in the Nation’s Capital are expensive when compared to other areas of the country. The average rental price surpasses Los Angeles by more than $500, coming in at $2,699 per month.
As one of the top tenant placement real estate agents in Washington DC, I’m often asked if it makes more sense to rent or buy. Right before the New Year, I crunched the numbers and came up with a surprising conclusion.
The median rental price for a one-bedroom in Washington DC is $2,190. Assuming you have a down payment of 3.5% to purchase a home, you could afford a home up to $350,000. This would allow you to purchase an entry level 1 bedroom condo in greater Washington DC or a slightly larger home further away from Downtown DC.
The average two bedroom in DC is $3,110. Again, assuming you were to purchase using FHA financing and a 3.5% down payment, you could afford a home up to $500,000. Now you could potentially acquire a newly renovated home in DC with 2-4 bedrooms possibly with parking. Or you could acquire a condo in one of the neighborhoods with a high walkscore.
Finally, you may qualify for a homebuyer grant depending on your income. If you make less than $85,000 per year, then it is a strong possibility that you may qualify for a first time home buyer grant up to $90,000. And you may need to contribute no more than $500 to the transaction meaning you could move into a home for less than a security deposit for a rental. If you make more than $85,000 but less than $123,000, you may qualify for a $45,000 home buyer grant even if you have previously owned a home again eliminating the need for the 3.5% down payment.
So after crunching the numbers, I’ve concluded you should seriously consider purchasing a home in Washington DC if you plan to live here longer than 3 years. Prices continue to rise year-over-year and combined with the additional tax advantages, it could be a very smart investment.
Feel free to contact me with additional questions or a free consultation to review your situation. I can help you find the perfect rental or the perfect home to buy.