Last week’s business column in the Blade discussed the developing status of Washington as a hip place to live, and certainly the increasing number of young people between 25-35 moving here would seem to support that.
One decision faced by these newcomers (and not-so-newcomers) is whether to rent or buy a place to live. Initially it makes sense to rent while you get the feel for different parts of the city where you might like to ultimately live. But once you decide you’re going to be in Washington for four years or longer, it probably makes sense to start thinking about buying a place–even a starter place from which you might move up.
I say “four years” because that is the average amount of time it will take for you to recoup your initial investment in buying–and later selling–a home. It will cost you around 3 percent in additional costs (mainly for title-related expenses) on top of your purchase price to buy a home. And when it comes time to sell, it will cost you around 8 percent of the selling price (mainly for commission expenses) to sell your home. So it’s going to cost you around 11 percent to buy and sell a home; assuming 2-3 percent a year in appreciation, you should be able to recoup that extra cost in around 4+ years.
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