“One thing we learned through the last decade is that owning is not for everybody,” says David Stevens, president and CEO of Mortgage Bankers Association.
Trulia calculates the value of buying versus renting based on a 4.5 percent, 30- year fixed-rate mortgage, with 20 percent down for an individual in the 25 percent tax bracket living in the home for 7 years.
Stevens cautions that the 34 percent value may not hold up in every community in the D.C. metro area.
“That will vary around the entire Washington D.C. metropolitan area. In some counties, in some communities, around D.C., that may not be the case. In some, it will be the case,” Stevens says.
When deciding whether to buy or rent, Stevens recommends potential homeowners think about their commitment to the area. People who require mobility and who may have to relocate in a relatively short period of time might consider renting.
“It’s a lot more difficult, obviously, to get out of owning a home than getting out of a lease,” Stevens says.
Individuals who qualify for a mortgage and have a long-term view of the community would be wise to consider that interest rates are at historic lows and home ownership builds equity.
“Historically, and I say this in general terms because there are recession periods, those who have been homeowners tend to have greater wealth,” Stevens says.
There also is a significant tax break to owning a home – the home mortgage interest deduction.
“In Washington D.C., where there’s a shortage of affordable rental housing, that can make home ownership look very attractive,” Stevens says.
But responsibilities certainly go with being a homeowner.
“It isn’t over when you just purchase the home. You have to maintain it. You have to do upgrades to the home, take care of the yard – a lot of the things sometimes a landlord will handle for you,” Stevens says.
Stevens says it’s an opportune time to buy, but it should be done thoughtfully, and the advice of a real estate agent or mortgage professional can help you decide whether to buy or rent.