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Former President Barack Obama has decided that buying beats renting. The former first family have surprised many by purchasing the Washington, DC, house they’ve been leasing and living in since January, coughing up $8.1 million to call the place their own.
After vacating the White House, the Obamas had moved into the 6,441-square-foot, nine-bedroom, 8.5-bath mansion, located at 2446 Belmont Road NW in the tony neighborhood of Kalorama. The neighborhood has since become the place for the new political elite, with Jared Kushner and Ivanka Trump moving into a luxe rental a couple of blocks away, and Secretary of State Rex Tillerson snapping up a $5.6 million Colonial Revival down the street.
The reason the Obamas decided to stick around DC in the first place was so their younger daughter, Sasha, then a freshman at posh Sidwell Friends, could finish up high school there. With only three years to go, renting seemed to make sense so that the Obamas could easily pick up and move once she’s done.
But apparently, there’s been a big change of heart. Why?
On its surface, their decision seems a bit puzzling, given Sasha now has only two–and-a-half years to go. In real estate, the general rule is that it makes sense to buy a home only if you plan to stay put for five years, because this allows time for your house to appreciate, which helps you recoup hefty closing costs.
“People who sell after a year or two of ownership will often find that they have lost money on their purchase,” explains David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School.
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Nonetheless, real estate agents and other experts we spoke to say there could be plenty of reasons it’s smarter for the Obamas to buy rather than rent, even for this short span of time. Here are a few possibilities to ponder.
Reason No. 1: They’re making a commitment to DCrealtor.com
As presidential spokesman Kevin Lewis explained in a statement, “Given that President and Mrs. Obama will be in Washington for at least another two and a half years, it made sense for them to buy a home rather than continuing to rent property.”
Granted, you can read a whole lot into that “at least” if you want. After all, as Atlanta Realtor® Bruce Ailion explains, “Many buyers think they will only be in a property for two to three years and end up living there three to seven years. That is common.”
And it might be an indicator that our former commander in chief isn’t ready to shed the political life quite yet.
“Perhaps they want to keep a foothold in Washington, DC, for other reasons with regard to political advocacy and involvement,” says Florida Realtor Cara Ameer.
Reason No. 2: In certain markets, 2.5 years is long enough to make a profitWhile 2.5 years might not be long enough to profit on a home in general, that rule varies widely by neighborhood, based on rent levels, home prices—and how quickly both are going up. And this is one hot neighborhood.
It isn’t known exactly what the Obamas were paying in monthly rent, but estimates hover at around $22,000. It’s entirely possible that the former first couple did the math and determined that buying made far more financial sense, and that mortgage payments would be less of a monthly nut. (To find out what’s best for you, you can crunch the numbers in an online rent vs. buy calculator.)
Reason No. 3: They needed to renovaterealtor.com
As anyone who owns a rental knows, landlords often frown on the slightest changes, from nail holes in walls to curtains. Barack Obama, however, needed way more done than that.
“I expect the U.S. government made substantial upgrades to accommodate and protect the former president and his family,” says Ailion. Even if Obama’s landlords were accommodating to these upgrades, the fact remains that the Obamas, as tenants, would have to ditch these fancy renovations once they moved. If they owned, they could at least factor these upgrades into the asking price and eventually make a profit off them. After all, doesn’t just about everyone want a home that comes with a top-notch security system?
Reason No. 4: It’s smart to try before you buyrealtor.com
“In the case of the Obamas, it makes a lot of sense for them to rent and then purchase,” says Texas Realtor Wendy Flynn. “Renting first was a good idea because their postpresidency plans weren’t defined. Also, it gave the Obamas a chance to make sure the house is the right fit for their unique needs.”
If you were going to purchase an $8.1 million mansion, wouldn’t you want to make sure it’s perfect by giving it a test run?
Reason No. 5: This home will sell for a premium—he’s a former president, after all!“It was always a little perplexing why the Obamas would ever rent if they planned to stay for anything longer than a year,” contends Washington, DC, real estate agent Rachel Valentino.
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Her reason: “While they’re buying at market value, they can eventually financially benefit on the back end, where a buyer will pay significantly more for the celebrity factor. We aren’t Southern California, where every house has that star appeal. So, I can only imagine what a buyer will eventually pay to own a piece of history.”
Reason No. 6: Profits aren’t everythingrealtor.com
“One lesson we can draw from this story is that buying a home should not always be seen as a financial transaction,” says Reiss. “Sometimes we buy a home because it’s best for our family at a particular time. Sometimes we buy a home because we fall in love with it. And sometimes those are the best reasons of all to buy a home, profits be damned.”
The post Former President Obama Finally Buys the DC Home He’s Renting: 6 Smart Reasons Why appeared first on Real Estate News & Insights | realtor.com®.
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