Why Are DC Rents Increasing?

By
Real Estate Agent with Keller Williams Capital Properties DC AB15253
https://activerain.com/droplet/5bSF

According to DC Biznow, the DC Rental Market improved in the 1st Quarter of 2018.  D.C.’s apartment market absorbed more Class-A units over the last 12 months than at any time in its history, leading rents to rise again after three consecutive quarters of decline. The decline has been due to a signficant increase in the number of apartments available for rent.

The District absorbed a record 4,286 Class-A rental units over the last four quarters, according to Delta Associates’ Q1 market report, a 93% increase from the previous 12 months.  “I think it reflects the fact that the city continues to be a strong magnet for newcomers, and the level of deliveries in the marketplace has not been detrimental to the D.C. marketplace in terms of rent growth and absorption,” Delta Associates President Will Rich said. 

This strong absorption brought D.C.’s Class-A rents to an average of $2,541 at the end of Q1, up 1.2% from the same time last year. This pickup reverses a trend of three consecutive quarters of year-over-year rent declines that had D.C.’s apartment rents down 3.9% at the end of 2017.  Now it appears that there is improvement in the DC rental market this year.

Last Year's Decline in Rents - Why?

Last year’s decline in rents had been attributed to the rapid pace of multifamily construction, with 4,789 apartment units delivering in 2017. That number was down slightly to 4,656 for the 12 months ending March 31, but is expected to pick up over the next year. Delta Associates projects 5,866 Class-A units will deliver over the next 12 months, a sharp increase that could lead to more rent declines.  “I don’t think the D.C. market is out of the woods yet,” Rich said. “We’re still seeing a lot of new product coming online, there will be an increase in the next 12 months, so while absorption is really strong in the District and rent growth has turned positive, there’s still a lot of new product to be absorbed.” 

The DC Waterfront is Booming

The D.C. submarket with the strongest demand was Capitol Hill/Capitol Riverfront/Southwest D.C, with 1,711 units absorbed. The next best was NoMa/H Street with 1,187 units absorbed.  These two areas can claim to be responsible for the DC Rental Market improvement in the 1st quarter of 2018.

Those two submarkets, which also have the most new apartment construction, experienced rent owth of 2.6% and 2.3%, respectively. The two apartment buildings that opened at The Wharf, The Channel and Incanto, are already nearly half full, absorbing 221 of their collective 449 units since the Southwest D.C. development’s October delivery, according to Delta Associates. 

“Most of these buildings that are coming online in these submarkets are larger-scale projects with a large amount of amenities at a price point that is lower than what you’d get for comparable products in more established submarkets,” Rich said. “So you’re seeing an influx in residents coming into these two submarkets and renting in these new apartments.”

Demand Outside the Beltway is Weaker

Demand was not as strong in the suburbs. Northern Virginia absorbed 3,680 Class-A units over the last 12 months, down 34% year over year. Suburban Maryland absorbed 2,966 Class-A units units during the last year, a modest 1% increase from the year before.  Even with declining absorption, Northern Virginia’s Class-A rents increased 0.5% to $1,944 in Q1.

 

Suburban Maryland’s Class-A rents averaged $1,824, a 1.1% increase.  Metro-wide Class-A rents increased by 0.8% year over year, well below the long-term average of 3.9%. Delta Associates predicts regional rents will continue at this pace in the near term, with 1% growth through 2018. It then expects a pickup in the following years with Metro-wide rents increasing by 2.5% and 3% in 2019 and 2020, respectively.

Call the Lise Howe Group for Rental Help! 

If you have just moved to the DC metro area and need help finding a rental, be sure to give the Lise Howe Group a call. We look forward to getting you settled in your new apartment or home. We can be reached at 240-401-5577 or email us at lise@lisehowe.com.

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Rainmaker
3,562,407
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.346.1799 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Lise Howe ,

Now this is a comprehensive report on the rental market in the DC Metro area! You and your team are the ones to call! to find the availability of rentals!

Apr 20, 2018 05:59 AM #1
Rainmaker
4,811,455
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

This is good information to share.

Have a great Friday and an outstanding weekend.

Apr 20, 2018 06:21 AM #2
Rainmaker
4,473,259
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

Good morning, Lise Howe anyone who is searching for a rental in the DC area would be wise to call Lise for guidance.... she has a firm handle on the status of that market...

Apr 20, 2018 06:37 AM #3
Rainmaker
950,820
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Lise Howe - Your clients will appreciate your in-depth knowledge of the DC rental market and pick you to represent them. 

Apr 20, 2018 07:09 AM #4
Rainmaker
2,587,640
Nina Hollander
Coldwell Banker Residential Brokerage | Charlotte, NC - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Hi Lise... I pay no attention to our rental market here (no money to be made in it for real estate agents as we might be lucky to earn $150 at the end of a transaction). But I do know that no matter how much they continue to build rental units here we still don't have enough to satisfy demand causing rent increases. And as homeowners have no problems selling their homes, they no longer rent them out so that source of rentals is also very tight.

Apr 20, 2018 08:39 AM #5
Rainmaker
1,624,737
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Lise - you have your finger on the pulse of the DC market.  Those interested in the DC market should contact you.

Apr 20, 2018 11:41 AM #6
Rainmaker
2,563,175
James Dray
Fathom Realty AR LLC - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Lise.

A 93% increase, that is something to shout about for sure.  While we have a lot of multi-family construction going on, I don't believe we are at that level.

Apr 21, 2018 02:00 AM #7
Rainmaker
4,186,762
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

You always provide good information about your housing market. 

Apr 21, 2018 03:54 AM #8
Rainmaker
4,481,641
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Lise.  Thanks for the information and update about the rental real estate market in DC.

 

Apr 23, 2018 04:55 AM #9
Rainmaker
2,745,184
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Lise,  Great information to know for the D.C. market.  I figure some of the White House people would want to rent just for a month or two in fear of no job.

 

Apr 24, 2018 08:13 AM #10
Rainmaker
1,796,878
Patricia Feager
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

Hi Lise Howe  - I enjoyed your in-depth look at why rents are increasing in DC. I've been watching what's going on in my area too and I'm convinced, America is experiencing triple the population or more than anyone could have predicted five - 10 years ago.  

Apr 25, 2018 12:23 PM #11
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Lise Howe

Assoc. Broker and Attorney Licensed in DC, MD, VA,
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