Cold Sales Give Renters a Break
Friday, January 5, 2007
As home sellers grew more frustrated with the slow local real estate market in recent months, they abandoned their for-sale signs and put their homes up for rent. That has increased choices and cooled prices for tenants in one of the tightest and most expensive parts of the country.
"This is the first sign that the cooling housing market is having an impact on the rental market," said Gregory H. Leisch, chief executive of Delta Associates, an Alexandria research firm that is scheduled to release a report today showing more vacancies in the region's apartment complexes.
The report links the shift in the market to the surge in condos, townhouses and single-family houses for rent -- both by sellers-turned-landlords and by investor-landlords who snapped up condos during the market boom.
As competition for tenants intensified, apartment rents did not rise as sharply in the past three months of 2006 as they had earlier in the year, the report said. But they did rise, increasing 4.7 percent to an average $1,410 per month from $1,302 a year earlier.
Yvonne Carter, a cardiothoracic surgeon at Georgetown University Hospital, didn't know this when she was looking for somewhere to live a few months ago, but she considers herself lucky because she found a great place quickly.
In previous years, her choices may have been limited to apartment buildings. But in October, she spotted a condo for rent by the owner at the Alta on Thomas Circle in Northwest Washington. The Alta, with loft-like apartments, big windows and stainless-steel kitchen appliances, is one the many luxury condos that popped up around the city in the recent building frenzy. Carter snagged it at less than the asking rent.
Most appealing to her, however, was the landlord's accommodating style. He held the unit for her for more than a month. He allowed her to bring her dog at no extra cost. And he offered underground parking, again free, she said.
"All those things made a condo much more attractive than the apartment," Carter said.
Carter's landlord, Maurice Philogene, said he has bought at least 20 condos since 2001, with the intention of renting them out for the long term. Philogene, a software engineer, said he planned to live in the unit Carter now rents but changed his mind. He cut Carter a break on the rent because she signed a two-year lease. The unit, he said, is "pricey -- it was nerve-racking to cover the mortgage."
Other landlords got caught in the condo glut, including Sudarshan Goel of Arlington. Goel said his two grown children bought him a condo at the Monroe in Arlington as a retirement gift two years ago, at a time when people were lining up to buy new condos. When the condo was ready in November, Goel and his wife decided they didn't want to move and figured it would be easy to sell.
But the climate had changed: Fewer than 700 new condo units were sold in the fourth quarter in the region, according to Delta, compared with 1,327 in the third quarter and an average of more than 3,000 units per quarter in 2005.
"My Realtor advised us to rent the condo for a few years, which is what I'm trying to do," Goel said. "Eventually the condo market will improve. But at this time, it is oversupplied."