Anyone who studies the rental market in D.C. knows that it fluctuates throughout the year in average rental price, volume of rentals and days a property stays on the market (DOMM) before it rents. But what’s interesting is how much that cycle reflects the sales cycle.
In previous articles in this column, I’ve written about the two sales cycles throughout the year, one peaking in May-June, the other peaking (but not as much) in October. From five years of quarterly rental data reflected in the chart here, it appears that the rental market has one cycle peaking in the third quarter. This is the quarter with the highest average rents ($2841), the greatest volume of rental transactions (504), and the lowest number of DOMM (38.25). Conversely, the fourth quarter has the lowest average rents ($2607), the lowest volume of rental transactions (300), and a higher number of DOMM.
When you think about it, it’s not surprising that summer is the time when most renters are moving: families want to arrive before the start of the school year, as do many adults attending graduate or post-graduate programs or joining a think tank.
This trend holds true for different types of housing, though with some fluctuation in actual rental prices:
Detached housing varies the most between late summer and fall-winter (from $3930 to $3217, a spread of 22 percent)
This is followed by attached/row houses (from $3143 to $2827, a spread of 11 percent)
The least fluctuation occurs for garden-level apartments, which range from $2095 in the late summer down to $1885 in late winter-early spring (but also a spread of 11 percent)
What are the implications for landlords and renters?
Similar to the sales cycle, landlords will get their highest rents in the third quarter, when there are the most renters looking for a home, and their lowest rents in the fourth quarter, when there are the fewest renters. So it’s better to list your property for rent in the second or third quarters.
And for renters? It’s just the opposite: even with the smaller inventory of rental properties in fall-winter, you will still pay less for a rental home then, instead of trying to rent a place in the third quarter when rents are higher and the number of renters looking for property is greater. Happy hunting!
Ted Smith is a licensed Realtor with Real Living | at Home specializing in mid-city D.C. Reach him at TedSmithSellsDC@rlathome.com and follow him on Facebook, YouTube or Twitter. You can also join him on monthly tours of mid-city neighborhood open houses, as well as monthly seminars geared toward first-time homebuyers. Sign up at meetup.com.