apartment therapy changing the world, one room at a time

heck no. I rent! DC is a city of fairly transient people, too, and unless you're settling in for the long haul (in which case you're probably in MD or Northern Virginia), I've thought it was long the wisdom that you were better off renting, especially in a market like this.

I can't comment about DC, but my experience as a 10 year house owner, and now an apartment renter, is I prefer renting - I'm living in the location I want and never have to think about roofs, plumbing, and dampness in the basement. Yahoo!

This article makes me feel so much better about not being able to afford to buy here!

Every now and then, I start thinking I should put some money together and buy my own place (because that's what you do in America, right?) and then it never fails - a friend's roof needs fixing, the furnace needs to be replaced, etc., and I realize I'm perfectly happy renting!

Arlington is better than DC anyway....thus I own in Arlington :)

Renting is paying off your landlord's mortgage...

Interesting study. The study assumes 4-year ownership of the house if buying, so I wonder how my plans for living in this home for at 20 years affect the figures.

I'm firmly in the homeowner category, but realize it's not for everyone.

That is one way to look at it Lori. Another is renting is keeping the money that would be tied up in a house in the bank and using the interest to slash/eliminate the cost of renting.
I think the "is it better to rent or own" question can only be answered personally, based on finances, priorities and your living preferences. Another important issue I think is your ability to save, owning a house is for some forced savings which can be helpful. But if you are a natural saver that advantage is lost.
In selling my house I was nervous that I would miss it. Luckily I haven't.

I used to own in Northern VA then sold, in large part because of my worries about the housing downturn. This year, without my mortgage tax deduction, I will owe a considerable amount of money. Even though I have lowered my monthly expenses, my taxes have gone up close to $15,000 which is much more than I have saved renting. Depending on your income level the deduction can actually make it cheaper to own since a $1800 monthly mortgage will really be like paying $850 in rent after your tax deduction on the mortgage interest. Something to think about.

Yikes VeryKim! That is really substantial. I am in Toronto - Canadians don't have a mortgage tax deduction (canadians who have found away around this let me know :-)

It seems to me that the cost they cite to rent a two bedroom apt ($1324) seems absurdly low compared to the equivalent cost of owning ($2627). I suspect they aren't comparing apples to apples... and that whether buying is worth it depends alot on what part of the city you're looking in and, as someone else pointed out, how long you're planning to stay there.

In almost any market, if you sell the house within 4 years, you probably won't increase your equity if you consider things like realtor and legal fees etc.

actually buying is very worthwhile at this moment if you are currently renting, have good credit, and savings for a down payment. Unfortunately for those who foreclosed or forced to relocate because they lost their job and found another in a different city (thus forced to sell in a poor market) but good for a potential buyer is that there are a lot of good deals right now. Or you can take your chances and wait for prices to hit rock bottom but who really knows when that is...

I don't own and I won't anytime soon since I could relocate tomorrow to another country lol. But the good thing of buying is you can renovate and modify as you like.

I think it's also important to note that they're talking about the "metropolitan area", which includes most of the surrounding suburbs. Prices in NoVa especially went crazy in the housing bubble, and, in my opinion, aren't likely to be gaining in value over the next few years. However, in DC itself (especially the neighborhoods that are in the middle of gentrification or just a couple of years post-gentrification), I think values are probably going to continue to increase, making buying a home in the city a bit of a better investment (in general, of course). There was a great article in the Atlantic a few months ago about how people are ditching the suburbs for cities - http://www.theatlantic.com/doc/200803/subprime
So anyway, how the value of the home will hold up over the long term is obviously a factor in whether to rent or buy, and I think that's different throughout the DC metro area.

"Renting is paying off your landlord's mortgage..."

After 4 years of a 30 year mortgage, you'll only pay down around 5% of the principal of your mortgage. If housing prices remain stable, and you sell after 4 years you will only have enough money to pay the realtors fees and make yourself zero money. You'll also have to pay closing costs.

Seeing as housing prices aren't increasing, not sure now is a great time to buy if you aren't sure you'll want to live in the same place 5 years from now.

I bought in August of last year and am happy I did. I do not expect my place to make me tons of cash in the next few years. I will be happy if it stays the same. My quality of life is so much better now that I am not renting. I used to live in a building that rented to section 8 (very common in the DC area). Although our rent was twice that of our neighbors we got the same crappy service.

Rosie, I bought 1 mile from the Reston Town Center mentioned in the article and I am so happy with it. I feel like I have the best of both worlds. My property took a hit (about $60,000 decrease) before I bought and it has stayed the same since I bought, so I feel ok.

I agree with Rosie. This is a little misleading, since the "DC Metro area" they used is the SMSA, which includes parts of West Virginia, as well as huge parts of MD and VA. So it includes the loss in real estate value in the exurbs, which has been much greater than in DC itself and the inner suburbs. And probably that discrepancy will continue in light of the price of gas.

$1300 for a 2 bedroom apt?! Where????

Owning gives you a freedom you can never have as a renter. I was an owner for many years, and enjoyed the benefits of being able to do what I want to my space without having to worry about it being somebody else's. I also enjoyed the tax write-off of not just my mortgage interest, but all of my charitable donations.

Having left Chicago for Manhattan, owning is out of the question for me (especially at $1,300 a square foot for my nabe) and I resent sending in a check each month to a landlord that doesn't care about the appearance of the property. If it meets legal requirements, it is good enough... aesthetics be damned!

I also miss that fact that I cannot piggyback my mortgage tax write-off as I am not likely to come close to having enough deductions to itemize and take advantage of that small added incentive to give to charity. I will still give to charity, but I am not likely to do things like pay for a rental car to haul donations... instead I will just put the stuff out to the street and let them either get taken or tossed.

Buy in an up and coming neighborhood in DC like Southwest or the near Southeast and plan to live there for awhile, and you'll be happy. But flipping in DC may be a thing of the past.

Or buy apartments and rent them to everyone who thinks that renting is better, for if you're smart about it those renters will pay the mortgage for you and you'll own an apartment for the cost of the down payment.

Housing returns are negligible if you figure in all factors. This article was written in 2005, so the numbers are even worse now. From Robert Shiller, Yale economist:

"...all of that increase occurred in two brief periods: the time right after World War II and since 1998.

Other than those two periods, real home prices overall have been mostly flat or declining. Moreover, the overall increase, including the booms, is not very impressive -- 0.4 percent a year."

link to the above article:

http://money.cnn.com/2005/01/13/real_estate/realestate_shiller1_0502/index.htm