The DC area could be a renter’s market, at least for a spell, by later this year.
A report out Monday from Delta Associates analyzing the regional apartment market in the first quarter of 2012 states that, despite a strong first quarter for landlords, the delivery of new apartment projects and rising vacancies will put downward pressure on rents in the region by the end of the year.
As we reported in January, the rent increases that have made DC-area residents shudder in recent years began to slow down in late 2011 and that trend continued in the first quarter of 2012. Rents for Class A and B apartments rose 2.1 percent for the 12-month period ending in March, and Class A rents rose by just 2.3 percent, compared to an increase of 6.9 percent during the preceding 12 months.
The vacancy rate (3.8 percent) is unchanged from what was reported for the 4th quarter of 2011. This rate is the second lowest for any metro area in the country (behind only the Big Apple), and is “powered by the extremely tight Class B market at 2.2% vacant, made up of older more modestly priced units” according to the report. But that will change in the coming year.
Courtesy of Delta Associates.
Approximately 8,000 new apartment units are coming online in the DC area in the second and third quarter of 2012, far outpacing the absorption rate for this period. As a result, Delta Associates vice president Grant Montgomery told UrbanTurf that by the end of 2012, renters could start seeing their rents fall as a result.
“If by the end of 2012, you haven’t seen your rent decline, chances are you will by the end of 2013,” Montgomery said.
But take advantage of the drop in rents while you can. The demand for rentals will catch back up with supply in 2014 and 2015 and rents will start increasing again.
- Class A apartments are typically large buildings built after 1991, with full amenity packages. Class B buildings were generally built in the 1950s, 1960s and 1970s, with more limited amenity packages.
This article originally published at http://dc.urbanturf.com/articles/blog/dc_will_be_a_renters_market_by_late_2012/5365
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