Former President, Barack Obama made the decision that buying is better than renting. The Obama’s had been leasing their place in Washington DC and had many surprised when they decided to purchase the home at $8.1 million to officially call it home.
The Obama’s moved into a nine bedroom, 8.5 bath and 6,441 square feet mansion found in the neighborhood of Kalorma. Since the move in, the neighborhood has become the place for the new political elite. Including Ivanka Trump who is moving into an extravagant rental not too far away, Jared Kushner and Secretary of State Rex Tillerson taking up a $5.6 million Colonial Revival close by.
The former First Family, initially decided to stay in the DC area so Sasha, their youngest daughter, who at the time was a freshman at posh Sidwell Friends, could finish her remaining high school years there. This made sense for them with her having just three more years left. Renting appeared to be a good route, giving them no problem picking up and moving to their next destination after graduation.
However, it looks like the Obama’s will be sticking around DC longer than expected. Wondering why?
Generally, you consider purchasing a home if you plan on staying put for at least 5 years. Being that Sasha now has just two and a half years left at Sidwell Friends, their decision to purchase is surprising.
"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.
Even so, other experts and real estate agents we spoke with say there are other possible reasons the Obama’s thought it would be smarter to buy versus rent even if they do plan on living there for a brief period. Here are a few things to consider.
Reason #1: They’re committing to DC
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.”
With that said, you can make your conclusions from that statement. Despite everything, Bruce Ailion, an Atlanta Realtor says, “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."
Also, it may indicate that our former President is not ready just yet, to get away from the political life.
Reason #2: 2.5 years, in some markets, is long enough to make a profit.
Depending on the neighborhood, home prices and rent levels varies based on how fast the two are going up. 2.5 years may not be enough time to make a profit on a home purchase. But the neighborhood is a hot market.
Reason #3: They needed renovations
Anyone that owns a rental understands that landlords dislike even the smallest change, anything from drapes to nails being put in the walls. With that said, the Obama’s needed a lot more renovation that that.
Reason #4: It’s a smart move to try before you buy
"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 post-presidency plans weren't defined. Also, it gave the Obamas a chance to make sure the house is the right fit for their unique needs."
Before investing in a mansion worth $8.1 million, it makes sense to test it out before completely committing to the property.
Reason #5: This mansion will sell for a premium (I mean, he is the former President!)
"It was always a little perplexing why the Obamas would ever rent if they planned to stay for anything longer than a year," say’s Washington, DC, real estate agent Rachel Valentino.
Valentino’s reasoning is that they purchased at market value and when they are ready to sell, the home has the “celebrity factor” and it being a piece of history, buyers are willing to pay a significant amount more.
Reason #6 Profits aren’t everything
Sometimes when purchasing a home, we should not always think of it as just a monetary transaction. If you like the home enough, sometimes it’s okay to purchase because you fell in love with the home.
John Castelli, Realtor
(773) 851-7636
- Enhancing Property Appeal: The Role of Auto Detailing in Real Estate
- Why You Should Work with a Real Estate Agent
- Unlocking the Advantages of First-Time Homeownership in Chicago's O'Hare Region
- Unlocking Long-Term Gains: The Value of Owning a Home in the Chicago Area
- Why Your Chicago Home Didn't Sell: Insights and Solutions