Owning a home builds equity and long-term wealth. In contrast, renters pay monthly without gaining ownership. For members in high-rent areas like D.C., buying can be more cost-effective in the long run.

Is it better to rent or to buy? This is a common question, especially in high-cost areas like Washington, D.C. While renting may seem cheaper month-to-month, buying a home can build equity and long-term wealth. In fact, the median net worth of U.S. homeowners is about $396,000, compared to just $10,400 for renters. That staggering 40x difference is largely due to home equity and appreciation that homeowners benefit from over time.

 

Let’s break down the costs of renting vs. buying in the D.C. area:

• Monthly Payments: As of 2025, the average rent in Washington, D.C. is around $2,300 per month (for a modest apartment). For roughly that payment, you could potentially purchase a condo or small home. For example, a $400,000 condo with 10% down might result in a total monthly mortgage payment of about $2,300 (including taxes and insurance). Instead of that $2,300 disappearing as rent, as a homeowner, a portion of it would go toward principal, meaning you’re building ownership.
• Equity Buildup: When you pay rent, you accumulate zero equity – your money goes to your landlord. When you pay a mortgage, you are buying a bit more of your home each month. After 5 years, a homeowner paying ~$2,300/month on that $400,000 condo might have paid down over $20,000 of their loan principal. Additionally, if the home appreciates in value (which historically, real estate in D.C. tends to do), you gain home equity from rising property value. Even modest appreciation of say 2% per year could add tens of thousands of dollars to your net worth. Renters miss out on this wealth creation.
• Stability & Predictability: With a fixed-rate mortgage, your principal and interest payment is locked in for 15 or 30 years – it won’t increase, giving you stability. Rent, on the other hand, tends to rise over time (D.C. rents were increasing ~9% in 2024). Homeownership shields you from these rent hikes. You also can’t be forced to move because an owner sells the property – you are the owner.
• Costs of Ownership: Buying does come with additional costs that renting doesn’t – such as property taxes, homeowner’s insurance, and maintenance. It’s important to budget for these. However, remember that part of your mortgage payment (interest) may be tax-deductible, and owning gives you the freedom to improve your home’s value (renovations, etc.). There are also intangible benefits: the pride of ownership and having control over your space.
• Break-even Horizon: Generally, the longer you stay in a home, the more financial sense buying makes. If you only need housing for 1-2 years, renting might be cheaper due to upfront buying costs. But if you plan to stay put for say 5+ years, buying often wins out when you consider equity gained. Our Rent vs. Own Calculator can crunch the numbers for your specific scenario and show at what point the scales tip in favor of buying.
• Bottom line: In the D.C. area’s market, if you can afford the down payment and qualify for a mortgage, buying is a powerful investment in your future. Instead of paying ~$2,300 in rent monthly with nothing to show for it, you could be building equity in a home. Over the years, homeowners typically accumulate significant wealth through home equity – it’s one reason why homeownership is key to long-term financial security. Of course, individual situations vary, but IDB Global FCU is here to help you run the numbers and make the best decision for your circumstances.