Cold Sales Give Renters a Break

Some developers who planned condos are switching their buildings to rentals. In the fourth quarter, developers announced they have or will switch 5,915 such units, according to Delta.

Condos aren't the only part of the market where there are more rentals. According to Delta, the number of condos, townhouses and houses listed for rent rose 23 percent in November from a year earlier on the region's multiple listing service, commonly used for for-sale properties but also for rentals handled by real estate agents.

Big landlords said the shift has affected them to varying degrees.

"It's not catastrophic or injurious, but it's material," said Tim Cutrona, senior regional property manager for AIMCO, a national company that manages 12,000 apartments locally. He said his company received 30 percent fewer inquiries about its units in the last quarter of 2006, compared with 2005. Some properties went from being 99 percent occupied to 96 percent, he said.

"We are offering specials to move what we call aged inventory, apartments we've been sitting on for more than 30 days. I would not have been doing this last year at this time," he said.

Thomas S. Bozzuto, chief executive of the Bozzuto Group, a home builder and apartment manager, said his Greenbelt company is not offering rent specials that are out of the ordinary for this time of year, but he's acutely aware of the market dynamics.

"The nonprofessional rental market is clearly having an effect on the conditions that we're seeing in the marketplace, but it's by no means disastrous or even depressing," he said. "What this is doing is making it possible for people who are less concerned about amenities or service and more focused purely on price to have a choice."

In its report, Delta said that even with the fourth-quarter results, the region's apartment market remains one of the nation's strongest, with low vacancy rates that rival those in New York and Los Angeles.

Still, the area's vacancy rates are the highest they have been since 2003, edging up to 2.9 percent from 2.5 percent a year earlier and from 1.4 percent in the third quarter, Delta reported. The company measures vacancy rates only in larger buildings, not in small buildings or individual units.

If the overall housing market remains cool and more sellers become landlords for another few quarters, apartment hunters might start seeing lower rents, researchers at Delta and some apartment management companies say.

"Brokers say that come spring, the housing market will be back, and if they're right, then this phenomenon with the apartment market is a one-time blip," Leisch said. "If they're wrong and the housing market stays cool, which I'm betting on until fall of 2007, then the phenomenon will likely continue."