Buy versus rent is an age-old equation for young adults. When mortgage rates were cheap a couple of years ago, the choice was close to a tossup for many potential buyers. But not today.
A recent Redfin survey found almost 1 in 5 millennials don’t think they will ever own a home, with most citing the lack of ability to save for a down payment and being unable to afford monthly mortgage payments at current rates.
Whether the decision to buy or rent is made solely on the numbers, renting in the D.C. region is currently considerably less expensive.
A separate Redfin study found the average rent is 48.2% cheaper compared to the costs of a median-priced home in the D.C. region, including monthly mortgage payment, property taxes and insurance — $4,234 versus $2,858.
The gap may get wider.
“It is becoming more difficult to become a homeowner in the Washington area, as home prices are still rising and mortgage rates are above 7%,” said Lisa Sturtevant, chief economist for listing service Bright MLS. “The good news is renting may become more affordable in some local markets, as more rental units have been coming online.”
The D.C. region ranks No. 6 in the nation for new apartment units that have delivered in the past three years; and No. 9 for new apartments that will deliver in 2023, according to RentCafe, which analyzed Yardi Matrix data.
Renting has advantages. While renting does not have the potential to build wealth like homeownership does, many who can afford to buy if they wanted prefer to rent.
“Renting allows for more flexibility. It allows you to be more footloose, to change jobs or change cities. It also takes the burden off the individual renter for any sort of improvements or maintenance,” Sturtevant said.
The D.C. region is among the most active for renters. In August, Arlington, Virginia, ranked as the top rental market for apartment searches, according to RentCafe.
