In 2013, rents rose in the most expensive U.S. cities (San Francisco, New York City, Boston, Los Angeles), including Washington, D.C., but they did not rise as much in D.C. as elsewhere. Two years ago at this time, the vacancy rates here were so low that it was hard to imagine the balance of supply and demand getting level. But over the last year, a number of new Class A (luxury) apartment projects has filled the market with new units and that number is expected to increase for at least the next three years. In 2009, the number of new apartment units in the pipeline stood at 16,606; by the third quarter of 2013, there were 36,098 new units and counting.
More rental housing choices drives down rental prices, and that’s what the rental market figures show comparing 2013 to the preceding year 2012:
In 2013, the number of days that the average two-bedroom was on the market before renting stood at 42.44, 1.10 percent higher than 2012 (1.56 percent higher if we compare just 4Q2013 to 4Q2012). The longer a property is on the market, the more the market pressure pushes the perceived value down. We start to see this phenomenon at work in 4Q 2013, where the average rental price for a two-bedroom apartment was $2552.85 — the lowest it’s been in the last two years.
Further, notice that the rental volume is only .97 percent higher for 2013, suggesting a slowing down in the rental market. More apartment choices in the market should only increase this slowdown of the rental pace and a softening of rental prices.
That’s good news for renters. In January, Urban Turf, the real estate web site and blog, published an article about what $2,800 (approximately) will rent you in D.C. For $2,900, you could rent a two-bedroom rowhouse on a charming alley on Capitol Hill; for $2,695, a spacious three-bedroom townhome in the H Street corridor; for $2,895, an elegant two-bedroom coop in Kalorama. Those could all be good options for a couple, a small family or a group home for singles.
The spring market will also bring more choices as properties begin to turn at the end of their leases. So between that and the constant influx of newly constructed apartments, it’s a great time to rent if you still aren’t ready to buy. More about this comparison in my next column.
Ted Smith is a licensed Realtor with Real Living | at Home specializing in mid-city D.C. Follow him @TedSmithSellsDC, TedSmithSellsDC.com, Facebook, or Youtube. You can also join him at free monthly seminars for first-time homebuyers or monthly tours of open houses in a different neighborhood each month. Sign up at meetup.com.