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Rent or Buy?
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And so they sold, at a 150 percent profit, and began renting in October.
Their thinking went like this: The 900-square-foot condo they owned in Dupont Circle would have rented for $2,000 a month. But to own it, a buyer would need to pay about $3,000 to service the monthly mortgage. "It's just totally disconnected," said Feldman, 40, managing director of Natsource LLC office in the District, an environmental asset-management company. "It just seemed unsustainable."
The Feldmans wanted to move anyway to a larger space, but rather than buy as they had originally planned, they chose to rent. Buying did not seem smart in an uncertain market.
They now pay their landlord $3,000 a month for a 1,400 square-foot condo, also in Dupont Circle, with a private rooftop deck. By Ben Feldman's calculation, if they were to buy it with no money down, they would be paying $1,000 more a month.
Sweeney, 35, said he realized at the height of the market frenzy last summer that the numbers were no longer adding up for him.
When he decided to buy his two-bedroom, two-bath condo in Falls Church in 2002, Sweeney estimated that he could, if he wanted, rent it out for about $1,200 a month, or about 1 percent of the $125,000 purchase price. That was reasonable, Sweeney thought, an indication of a market in the balance. But home prices kept going up. And up.
"The discrepancy between ownership and rent just went bonkers," he said. "I realized I could move out and take the cash and invest it, and defray the cost of living somewhere else."
So in June, Sweeney cashed in. He sold his place in three days, for $280,000. "I just said: 'This is weird. Things just don't go up 100 percent,' " he recalled. "Weird things make me scared. I ran away."
For Martin, 36, the tipping point came last fall after the landlord of her gated high-rise apartment building in Mitchellville told her that the rent would be going up again. That meant Martin, who wanted to switch to a month-to-month lease, would have to pay $250 more, or $1,640 a month.
"The rent was getting so much more expensive," she said. "It just wasn't a good trade-off anymore."
So she bought a townhouse for $282,000. Her monthly mortgage payment is about $1,800.
Both Martin and Sweeney believe they made the right choice.
