Kevin Ogorzalek recently bought a condo in Pleasant Plains after years of renting and saving for a down payment. Despite its risks, he said he got a great mortgage rate and was attracted to “settling into a neighborhood to really call your own and not be just a transient renter.” (Linda Davidson/THE WASHINGTON POST)

Paying $700 a month plus utilities for a three-way share in Mount Pleasant might seem too good to give up to the average District renter. Not Kevin Ogorzalek.

Living in that apartment for the past five years was indeed a money saver for the 29-year-old Chicago native, but every dollar — $30,000 to be exact — was tucked away with the intention of one day buying a home. And Ogorzalek did just that last month, closing on a two-bedroom, two-bathroom condominium at 2910 Georgia Ave. NW in Pleasant Plains.

The $350,000 unit, near Howard University, offers sweeping views of the Basilica of the National Shrine of the Immaculate Conception and the Washington Monument. Ogorzalek, a program officer for World Wildlife Fund, was seduced by the location, but drawn into the new four-story building by the value.

“With the location, I could rent it if I needed to . . . move outside of D.C. and not take a bath on the mortgage. That really helped put my mind at easy about the purchase,” he said. “Plus the mortgage rate was pretty sweet.”

Ogorzalek is part of what some analysts and real estate professionals see as the beginning of the reversal in the trend toward renting that defined Washington’s housing market during the downturn. Record low mortgage rates and stable housing prices are enticing more young professionals to buy in the area, but is it really the best time?

A new analysis by research firm Capital Economics this week found that U.S. median mortgage payments have reached the same price as median rental payments.

In the Washington area, rents are going up, climbing 3.7 percent for the 12 months ending September and averaging $1,708 a month in 2011, according to Alexandria research firm Delta Associates. Local landlords have raised rents an average 3.7 percent a year since 2006. With low vacancy and limited supply, landlords will continue to have the upper hand until new projects are delivered in the next two years.

Meanwhile, condominiums saw a 3.3 percent decline in prices for new condos and a 3.9 percent decrease for existing units, according to Delta Associates. Area prices for single-family homes rose 2.4 percent, to $330,000, according to Real Estate Business Intelligence, a subsidiary of the local multiple listing service.

For many young professionals, buying a first home is part of the American dream. But that dream now has to factor in a number of other moving parts about whether it will pay off as an investment.

Mortgage rates on the average 30-year loan fell below 4 percent this month for the first time ever, which makes buying more attractive. But lawmakers looking to reduce the nation’s deficit are revisiting an idea to modify mortgage interest tax deductions, which could deliver a substantial blow to homeowners’ pocketbooks. Meanwhile, the outlook for improvement in the local housing market remains unclear. Economic indicators suggest that the recovery is limping along, and some economists warn of a dreaded “double dip” recession.

Moody’s Analytics considers houses in the Washington area still expensive relative to renting. The firm pegged Washington’s rent ratio — the sale price of a house divided by the annual cost of renting an equivalent property — at 16.7 for the second quarter, compared to a long-run average of 13. A ratio below 15 typically means owning is cheaper than renting.

“My guess is when you go to some of these areas where prices have really collapsed, like the outlying suburbs, you’re probably seeing ratios as low as 12,” said Dean Baker, co-director of the Center for Economic and Policy Research in the District.

But, he said, “anyone expecting values to return back to their 2005 or 2006 peak . . . we have a long time to wait before we get to that. House prices will more or less rise in step with inflation.”

The case for buying

Homeownership took a hit in the wake of the housing crisis, but the foundation remains, as illustrated by the moderate rebound in purchases. Pending sales of single-family homes in the Washington area were up 12.4 percent last month compared to the previous year and 11.7 percent ahead of the five year average, according to Real Estate Business Intelligence.

First-time home buyers in the District are eligible for tax credits if they purchase by the end of the year. Maryland has an ongoing tax credit for home buyers. Virginia does not offer a similar tax credit.

Lawmakers are considering increasing down payment requirements, which would make buying more difficult. For now, however, there are still incentives and programs to help property virgins.

At a recent housing fair in Ballston, Lyndsey McFail, 24, was surprised to learn she could make up to $120,000 a year and still qualify for the Virginia Housing Development Authority’s FHA Plus home loan for first-time buyers. Borrowers can put down as little as 1 percent of the sales price.

A part-time graduate student at Georgetown University, McFail lives at home with her parents in South Arlington and earns $42,000 a year as a marketing analyst. When graduation rolls around in May, she wants to be settled in a two-bedroom, two-bathroom home in Arlington County. She’s seen about seven condos in the range of $250,000 to $450,000. They were “okay.”

“The biggest challenge is finding something within my budget,” said McFail, who has saved $10,000 toward a down payment.

SunTrust Mortgage loan officer Richard J. Donohoe, said at the housing fair, “Some people are missing the opportunity to buy because of the initial payment shock.”

“People come back and say ‘I can’t handle $2,400 because my rent is $1,700.’ You have to do the math and say there’s a tax benefit . . . in the long run it’s better to buy in Arlington because values aren’t going down.”

Lynn Hackney, president of real estate agency Urban Pace in the District, said roughly 20 to 25 percent of her clients are putting 20 percent down on homes under $450,000. Most buyers in that price range, however, are coming to the table with 10 percent of the sales price.

Hackney said her clients are by and large bypassing FHA- backed loans, unless they’re looking to get “more space for the dollar” in a “transitional” area, such as Petworth or the Southwest Waterfront.

Caryn Marks, 31, understands the benefits and pitfalls of owning a condo in this shaky housing market. When she sold her one-bedroom condo on 15th Street and Massachusetts Avenue NW for $317,000 in the summer of 2010, she took a $3,000 loss.

“I didn’t owe on my mortgage or anything; I just didn’t make money on the deal,” she said. “I bought at the height in 2006, so I didn’t really expect to turn a profit.”

Marks, a health-care policy analyst, is back in the market looking for a townhouse with her fiance and is having a hard time closing on a place. “It’s unbelievable how many people are out looking to buy,” she said. “Everything is going into bidding wars.”

Last month, Marks and her fiance had their $500,000 bid on a three-bedroom townhouse in Shaw beat out by a $510,000 offer.

Since August, they have seen 75 townhouses throughout Shaw, Eckington and the U Street corridor. Many were shoddy rehabs with cheap finishes, but an equal amount were simply sold within a weeks of hitting the market.

“The lack of inventory in highly sought after neighborhoods is speeding up the sales pace,” Hackney said. “D.C., by most measures, is the number one real estate market in the country,” in terms of appreciation, sales pace and lack of inventory.

Still a shaky condo market

Sales activity may be picking up in some segments of the area, but recent data paint a less rosy picture of the actual rate of absorption, especially in the condo market.

Just 1,475 new condos sold in the 12 months ending in September, a 41 percent decline from the same period a year earlier, according to Delta. There are 2,950 unsold new condo units in the region, representing two years of inventory to work through.

“We’ve had a structural shift going on since 2007 in the ratio of those who rent versus those who own, going from 29 percent of households that rent to 34 percent,” said Gregory Leisch, chief executive of Delta Associates. “In 2010, that shift stopped and the housing market began recovering.”

New condos may not be flying off the shelf, but Leisch said older units are moving. Resales of existing units have grown 20 percent since 2007.

“What’s left on the new sale market are stale units that have been on the market for three or four years that haven’t sold. They are the ones that overlook dumpsters, have crappy floor-plans — the dogs,” he said.

The ratio of “fresh units,” those that have been on the market two years or less, began increasing in the fourth quarter, and it’s now up to 35 percent of the inventory.

“That will jump by the end of this year because of all the new product that has started construction. As soon as we dilute the dogs with fresh product, then prices will rise and sales will increase for new product,” Leisch said. “And that will happen beginning mid-next year.”

New FHA regulations on buildings, industry experts say, are also hampering condo sales. For instance, before a buyer can qualify for a low-interest FHA-insured loan to buy a condo, half the building’s units must be owner-occupied. Given the soft condo market, owners have been renting out units when they are unable to sell, throwing off the rental-to-owner ratio.

“You have a lot of people sitting on condos that think the price will go up, but they want to get some income,” Baker said. “Someone who shops around could probably get a really good deal renting.”

Washington, he said, is still a large draw for transient populations of young professionals finishing up degrees, completing fellowships or interning. A growing number may be settling in, but Baker said they should be ready to put down roots for at least five to seven years before buying.

“If you’re not going to stay at that place for a substantial amount of time, you have to consider the turnover costs — Realtor fees, closing costs, inspections, turnover tax,” he said. “You are likely looking at paying turnover costs that are 10 percent of the sales price.”

Reasons to rent

For some area residents, renting is not so much a choice as it is their only option.

“I hate throwing money away, but with the rent prices in D.C. so high, it’s really hard to save enough for a down payment,” said Ariel Delaco-Lohr, 29. “As much as D.C. is weathering the downturn, a lot of the jobs being created aren’t necessarily high-income positions. Rental properties are taking way more than 30 percent of a lot of people’s incomes, especially in their 20s.”

Delaco-Lohr, an account manager at a District nonprofit group, has been in Washington area for 11 years. In that time, she has rented four apartments, the most recent being a two-bedroom share in LeDroit Park for about $1,000 a month.

Now that her roommate is getting married, Delaco-Lohr has until the end of the month to find a new place. Most of the apartments she’s seen are older, small units inside the Capital Beltway, where options seem scarcer than when she was looking a year ago. Data from Delta Associates bear out her observations.

Renters filled 3,668 units in the third quarter, compared with 16,476 for the same period a year earlier, according to the firm. The frenzied pace of apartment leasing witnessed last summer has slowed amid low vacancy and limited supply.

Occupancy across Bozzuto Management’s portfolio of 89 apartment buildings in the region, including the Loree Grand at Union Place, is about 95 percent, according to the company’s president, Julie A. Smith. With such nominal vacancy and unfettered demand, the Greenbelt-based firm has pushed rents up 5.5 percent year over year.

“We’re seeing fewer concessions as well as continued demand for studios and one-bedroom, which are typically in short supply,” Smith said. “We’re still seeing people who might otherwise buy stay in the rental market. Our turnover associated with renters buying homes continues to go down. At some point that’s going to stabilize, but we’re not seeing that yet.”

Much of Bozzuto’s inventory, to be sure, is located near transit hubs in urban enclaves, allowing the company to charge an average $1,650.

Delaco-Lohr is not willing to pay those kinds of prices for an apartment. Her fingers are crossed for a studio she applied for in Adams Morgan renting for $1,250 a month.

“I’m a stickler for making sure that I’m putting money in savings no matter where I live,” she said. Maybe that nest egg will one day be enough to purchase a home.