Rent or Buy at City Vista?
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.
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