RENTAL MARKET FLEXES ITS MUSCLE

The Washington metro area continues to perform stronger than any apartment market in the nation, Delta Associates said in its first quarter report. For D.C. with its large rental market, this could help prop up the sales market for condos, particularly one bedrooms.

The region’s stabilized vacancy rate for investment grade (Class A and B) apartments declined to 2.3%. This is less than one-half of the national vacancy rate. Rent increases continue, at 6.8% since March 2005 for all investment grade product – and even higher than that for select product types: 7.1% annually for Class A garden apartments. Net Absorption, at 4,300 Class A apartments over the past 12 months, has been running consistently 1,000 or more units higher each year than deliveries, so vacancy is declining and rents are rising.


In particular, Delta pointed to the following factors for a strong rental market:

A booming job market.

A transient work force that has produced a large pool of Class-A renters by choice.

A strong condo market that while moderating, continues to remove existing rental stock through conversions and switches.

High barriers to entry that have kept the pipeline of on-coming apartment supply in check.

High cost of for-sale housing that has disqualified some potential apartment renters from home ownership.

INVENTORY GROWING notes the WaPo.