Six years after buying his condo in Cleveland Park, Brian Long has found himself back in once-familiar territory: scouring Craigslist.org’s apartment listings.
“I’m planning to sell my place and then rent,” the political consultant says.
Is this the real-estate equivalent of a mid-life crisis — trading in the old ball and chain for something with less commitment? While the move may seem unusual, it’s becoming more common for buyers to go back to renting, at least temporarily.
Inventory of condos and homes is low, down 40 percent from two years ago. In this market, an owner could sell in a few days, but it could take them months to find a new place, says Tyler Jeffrey, a Realtor at Beasley Real Estate.
Because housing choices are so limited, “If I’m a buyer, I’m kind of starting off behind the eight ball,” he says.
With demand for housing in the D.C. area so high, many owners are selling their homes quickly for a higher price and hope to pay less later when there is more new housing to meet demand.
In between, they rent for a few months — or even a year — while they search for their next home and wait for prices to come down, Jeffrey says.
“If you are a seller and you’re OK with renting, this is a really good time to sell your property,” he says.
Eventually, Long wants to buy a place in bustling Logan Circle, but renting in that neighborhood first will give him a better sense of the area — and time to close on his current condo.
“Rather than owning two places, it made sense for me to sell this place, then take time to find the right place,” he says.
After buying a three-bedroom townhouse in Silver Spring in 2005, Will Ansah, 34, decided to ditch his digs to move into the city.
Not ready to buy again, he rented in D.C. for two years. Now he’s back in downtown Silver Spring — so he can be closer to the Beltway — leasing a one-bedroom with den.
“I wasn’t sure where I’d end up,” says the risk-management consultant. “So it made sense to rent the last two-and-a-half to three years.”
Ansah has since had difficulty selling his townhouse, which he now realizes was probably a bad buy. Until he does, he’s hesitant to buy again.
Plus, there are a few perks to being a renter again, he notes. “I like the concierge service,” he says. “There’s very little maintenance with renting.”
Long said he plans to buy again but agrees that renting has its upside. “It’s really nice when your dishwasher breaks, and you can call someone to fix it,” he says.
From Owner to Tenant
If a seller needs time to find a new place but doesn’t want to rent, one option is a “pre-settlement occupancy agreement.” It’s better known as a “rent back” clause. This option allows the seller to basically pay rent to the new owners to stay in the house until a specific date. It’s becoming more common, says Gerard DiRuggiero, a broker at UrbanLand Company.
“It was written into the closing papers. You negotiate it with the new buyers,” says advertising account executive Kathy Siciliano, 58, who sold her studio in Northwest D.C. recently and rented it back for a month before moving.
Generally, an owner will rent back for up to two months, but longer terms are possible, says Andres Delgado, a real-estate agent with Keller Williams.
While new homes are being built again, DiRuggiero says, “it’s going to be hard for buyers for the next couple of years.”
In this market, it’s a great time for sellers to take advantage of easy sales and put off becoming buyers again for as long as possible.
Some Leases Keep It Short
Short-term rentals offer options if you’re not ready to commit to a new home or neighborhood yet. After political consultant Brian Long sells his condo in Cleveland Park, he hopes to find a short-term or month-to-month furnished rental in Logan Circle and put his stuff in storage until he finds the perfect new condo.
“I don’t want to sign a year-long lease,” Long says.
There are a growing number of shorter-term rental options in new apartment buildings, but these come at a premium, says Gerard DiRuggiero, broker and managing member at UrbanLand Company. At The Lexington at Market Square (400 Eighth St., NW; 202-347-6161) in Penn Quarter, for example, a three- to five-month lease is an extra $250 a month, while a six- to 11-month lease is an additional $150 a month.
Furnished short-term rentals through companies such as Attache Property Management and The Lansburgh are generally intended for people in town temporarily for work, or as part of a work relocation package. A short-term studio apartment from Attache can cost upward of $2,500 per month.
Rather than swallowing the higher cost of short-term rentals, Tyler Jeffrey, a Realtor at Beasley Real Estate, recommends sellers sign a year-long lease and factor the cost of potentially breaking that lease into negotiations with the new buyers. After all, it could take a few months to find your next home, or longer than a year.
“You never know in this market how long it’s going to take,” Jeffrey says. E.B.