There’s a lot of things I love about D.C., but high rent is not one of them. According to Elizabeth Razzi’s Post article, D.C.’s price-to-rent ratio is 13, which makes it a favorable market for home buyers. When you think about it, the idea that after 13 years, you’ll have spent enough in rent to have bought an entire home makes buying seem especially lucrative.
After I saw a pretty sobering presentation last week about housing in D.C., including this graph, which shows the inflation-adjusted median rent in the district, I crunched the numbers, but the result wasn’t especially encouraging.
Consider a hypothetical young couple. They both have modest careers and earn $100,000 a year, combined. Using the traditional 30 percent metric, they can afford to pay up to $2,500 on rent and utilities per month. It also means they could afford monthly mortgage payments for a house that costs roughly $350,000 (the exact price depends on the interest rate and other factors). Now, that amount of money won’t buy this couple a rowhouse in Dupont Circle, but it might get them a decent condo or house in an up-and-coming part of the city.
[Continue reading Rob Pitingolo’s post at Extraordinary Observations.]
Rob Pitingolo blogs at Extraordinary Observations. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.