Last weekend, I hosted an open house in Kalorama. My property, a newly listed studio condominium, much larger than your average micro-efficiency, was full of charm and priced just above $220,000, very reasonable for the Kalorama market. This was truly a first-time buyer’s dream place. With each passing walk-in, I made two observations. First, half of my walk-ins were middle-aged investors hoping to purchase a property to lease to young D.C. residents. Second, the other half of my visitors were young millennials who could barely fathom the concept of home buying in Washington, D.C. Clearly, there was something lost in translation about purchasing in Washington, D.C.
Last week, Harvard University released a report from its Joint Center for Housing Studies that documented the proportion of renters in the 85 most populous metro areas compared to those that could afford to buy in those markets. The results, 44 percent of all renters aged 25-34 (the “late millennials”) can afford to purchase a similar property in the D.C. area. Compared to other large cities such as New York and San Francisco, where 30.3 and 17.1 percent of older millennials are able to buy respectively, the D.C. metro area seems to be a better place for late millennials to buy.
These findings are similar to reports from early 2014 when Trulia reported that buying property is overall 34 percent cheaper than renting in the D.C. metropolitan area. Within the city itself, it is 27 percent more costly to rent than to purchase property. Sure, the argument can be made that the Washington, D.C. metro area is quite expansive when compared to that of other large metropolitan areas. However regardless of its metro area, Washington is still seeing a discrepancy between those who are able to buy yet choose to rent.
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