Renting vs. Buying – What is My Best Option in the DC/Baltimore Area?

Do you live in the DC/Baltimore area and pay monthly rent? It might be time to start thinking about buying a home, depending on where you’d like to live. When weighing the option of renting vs. buying, economics is just part of the decision. If you are struggling with this choice, here is what you need to know.

Settling in the DC/Baltimore Area

If you are at all familiar with DC/Baltimore real estate, you probably know that it can be costly and competitive. It’s the same situation whether you are renting or buying. The area is popular with transplants who arrive for work and school opportunities and finding a place to live can be challenging.

Fortunately, there are tons of options. DC alone has a lot of trendy neighborhoods, such as Adams Morgan, DuPont Circle, and Georgetown. But families can find a lot of desirable choices in cities like Fairfax (VA), Bethesda (MD), Silver Spring (MD), and Hyattsville (MD), all with access to public transportation.

And let’s not forget about Baltimore. Nicknamed the “City of Neighborhoods,” Baltimore is home to hundreds of diverse districts like Hampden, Canton, Fells Point, and Federal Hill, as well as wonderful suburbs in Baltimore, Howard and Anne Arundel Counties (i.e. Towson, Owings Mills, Columbia, Ellicott City, Glen Burnie and Annapolis)

Renting vs. Buying – What’s the Best Choice?

Whether you want to live in a historic home, something brand new, or just get a roof over your head, choosing where and how you live is a big decision. Finances should certainly be part of the equation, but there are other considerations as well. When deciding between renting vs. buying in the DC/Baltimore area, here are some of the questions you may wish to ask yourself.

Where Do You Want to Live?

Location should be a primary factor in your rent vs. buy decision. In high-priced real estate markets like Washington D.C., renting might be the only affordable option. But, in an area like Baltimore, it’s considered a better financial choice to buy a home over renting one. In addition to comparing monthly mortgage payments vs. rents, don’t forget to consider other factors like good schools, safe neighborhoods, shopping, recreation, walkability, and proximity to public transportation.

What is Your Financial Situation?

For most people, purchasing a home involves obtaining a mortgage loan. While today’s mortgages no longer require a 20 percent down payment like those in recent years, you will need some financial resources to get to the finish line. Specifically, you’re going to have to come up with the money to cover a down payment, closing costs, and moving expenses.

Qualifying for a mortgage also requires that you have an established credit history and a steady income source. If you don’t have steady employment, you may need to stick to renting until your financial situation improves.  

How Long Do You Plan to Stay in Your Home?

As a general rule, if you plan to stay in your home for less than five years, renting is probably going to be the better option. In hot real estate markets with rapid price appreciation, that period might be a bit shorter.

But you’ll want to think of homeownership as an investment and commitment that returns value over the long term. Also, some homeownership assistance programs will require that you remain in your home for at least five years, or you will be charged a payback penalty.

What Are Your Preferences and Lifestyle?

Renting vs. buying are vastly different when it comes to responsibility and lifestyle preferences. For example, is your idea of a good time repairing a leaky faucet or replacing floors? For some people, it is. Or would you rather leave maintenance and upgrades to someone else? Do you travel frequently, where you won’t have time to lawn upkeep?

There are responsibilities with homeownership but also some benefits. As stated before, if you plan to own your home long-term, you can make upgrades that better suit your preferences and lifestyle. These might include adding a back deck or remodeling a kitchen.

But there is also a certain freedom that comes with renting. You can try out different neighborhoods until you find the one that feels like “home.” Many people find that their living preferences change over time.

Contact United Title For All of Your Title Services

If you decide that owning is the right choice for you, partnering with a title company you can trust is a vital part of the home buying process. United Title provides a wide range of residential real estate services, including purchase agreement services, escrow services, title services, and more.

To learn more about how we can smooth your home buying process in the DC/Baltimore area, reach out to our team by calling (410) 544-5441. You can also fill out the contact form on our website.

Is the Residential Housing Market Cooling Off?

Whether you’re searching for a home as a potential buyer, are thinking about listing your home for sale, or you simply pay attention to residential real estate trends, you probably know that the residential housing market has been hot for the past 18 months or so. Even before the COVID-19 pandemic struck, housing supply nationwide was relatively low; when the pandemic hit and cities and states enforced lockdowns, the supply diminished even more.

While housing supply has been part of the problem, it’s not the only one: the Federal Reserve has kept interest rates low—something that traditionally attracts buyers and helps to stimulate sales—and residential home prices have soared. Typically, in the fall, the market cools off as families with children prepare for back to school and everyone gets ready for the holidays. Will the same be true this year? Is the residential housing market finally cooling off? 

Housing Market Trends Over the Past 18+ Months

An article published in The Washington Post analyzed the housing market and residential real estate trends in 2020/2021 in the Washington DC area. Consistent with trends in other major cities throughout the U.S., prices in the residential real estate market in the DC area remained sky-high through this past summer (2021) after a hectic housing demand crunch in 2020.

In fact, in June of 2021, the median home price in DC reached $700,000—the first time the median home price has ever been so high. That same month, the average home for sale closed at just over 100 percent of its listing price.

The competitive market has led to many buyers making offers that are well over listing price; as explained by one real estate team that works in the Greater Washington DC area, sometimes, homes go for hundreds of thousands of dollars over asking price; it’s also not uncommon for a single home for sale to garner dozens of offers.

Things weren’t much different for the Baltimore real estate market. Rising home prices, fewer homes on the market, and consumer jitters contributed to a record home sale pace during the summer in the area.

 What Are the Numbers Doing Now?

While the market is still hot, September and October numbers seem to suggest that the market is cooling off. The number of listings that went under contract in September 2021 was down nearly four percent compared to August 2021; the median amount of time that a home for sale spent on the market also increased slightly for September compared to August. There was also a slight decrease in the median sale price. Another good sign is that while the number of homes for sales remains low, new listings increased by about 15 percent in September 2021. 

What to Expect from the Residential Housing Market in the Future

While it’s likely that home prices in the Washington DC and Baltimore metro areas will remain high, it does appear that the market is cooling off. One expert says it’s likely that price growth will fall throughout the end of the year, but that inventory isn’t likely to fully recover until next spring (2022). Interest rates, which have been sitting at a record low, should also increase, which will help to douse the flames on a fiery market and slow demand. 

Tips for Buying a House in Today’s Market

If you’re a potential buyer, one of the best things that you can do to prepare for a cooling residential housing market is to get your finances in order now. If a deal does come along and you don’t have your finances ready to go, you could miss out.

Don’t want to wait for things to cool off? If you’re ready to buy now, it is still possible to purchase a home in the DC-Baltimore area, even while demand and prices remain elevated. Some tips for navigating the residential real estate market as a buyer include:

  • Work with a trusted lender who can help you to understand the true costs of buying a home
  • Get all your finances in order as soon as possible
  • Take comfort in the record-low interest rates
  • Be prepared to offer a higher-than-normal earnest money deposit, down payment, or both
  • Know that there’s little room for negotiations from the buyer’s side right now
  • Do your due diligence—don’t waive things like a title check and home inspection 

Contact United Title Company for All of Your Title Services

At United Title Company, we provide a range of residential real estate services, including title services, purchase agreement services, escrow services, and more. To learn more about how we can help you during a residential real estate transaction, reach out to our team by phone today at (410) 544-5441. You can also fill out the contact form on our website.