The blog DC Home and Condo Prices has conducted an analysis on whether you should rent or buy at City Vista. He suggests the break even point may be 9 years.
I do squabble with one of his assumptions. New apartment buildings price units to fill the building up fast. The apartment rates at City Vista are below market. They also are offering great incentives. This will change after the building fills up. Because the rates are below market, the yearly rent increases will be higher than the 3% Keith factors into his model. The increases will likely be more like 8% until the City Vista's rate catch up with the surrounding market. I've lived through this in Ballston at the beginning of the decade. I had two consecutive years of $100 rent increases on a $1200 1BR. The property management company will assume that inertia will keep a substantial percentage of people from moving. Afterall, moving every year because you feel rent increases are too high will have its wasteful costs as well. Moving trucks, service installation fees at your new address, etc will cut into any rent savings.
I will acknowledge that renting from City Vista (or DuMont) could be more financially advantageous than buying over the next 2-3 years given this economy. But buying a home is generally more forward looking than a 3 year time horizon.
5 comments:
It's also worth point out that Keith is using the "from prices". Marketing ads can state that 1 BR are priced "from $1985" but the bulk of the 1BR inventory could still be over $2200.
good point, ex: 2246 for a 2br seemed pretty low, especially with the incentive. on the site its 2246-3650 (sq footage 792-1298)..
http://www.thevatcityvista.com/floorplans.asp
also i wonder how much negotiating room there is now with the asking prices? the next few months of recent sales will prove interesting.
how about this fact, most people have whatever they dont put down in the stock market or in investments, personally I bought at yale in july had I not I wouldnt be able to afford any place right now because of what I would have lost in the market.
housing prices in dc will increase in the future
As I was accruing my downpayment I steered it into MMAs and CDs rather than stocks. I've always believed in the notion that you don't put money in the market that you will need in the next 5 years.
city vista buying prices are also not what he referenced. the sales team is saying they are selling 1brs for less than $380k.
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