- The Washington Times - Tuesday, March 29, 2005

Apartments are getting snapped up by renters in the Washington area as fast as new homes are being sold while the population swells from job-seekers. Demand for apartments is strong despite the fact rents are well above national averages.

The Washington area’s vacancy rate of 3.1 percent is less than half the 6.6 percent national average, according to Delta Associates, a real estate research firm.

Although the casual observer may think that the apartment market is weakening because many complexes have vacancy signs and are offering incentives, vacancy rates in the Washington area are lower than last year’s 3.4 percent.

“It’s still the strongest apartment market in the country,” said Harvey Singer, a Delta Associates researcher who is preparing a quarterly report on the Washington area’s apartment market. The report is scheduled to be released this week.

Apartment rents have risen steadily since 2001 in the Washington area along with an improving economy and job growth.

The average rent for an apartment in the Washington area is $1,255 per month, compared with $865 nationwide, according to Delta Associates.

Rents in the Washington area increased an average 4.9 percent last year. At the same time, home values increased 27 percent to a median price of $371,000, according to the National Association of Realtors (NAR). Home prices have doubled since 1999.

Meanwhile, renters moved into about 5,500 apartments in the Washington area.

“That is more than any other major city in the country,” Mr. Singer said. “That’s almost one in every 10 apartments in the country came from this [metropolitan area].”

With the escalating cost of homeownership, renting is the only alternative for some residents.

“With prices going up the way they have, 15 or 20 percent, it really does price a lot of people out of that market,” said Cris Helle, property management director for the Tower Cos., a Bethesda real estate development and a management company.

Rents tend to be highest in the District, followed by Northern Virginia. Suburban Maryland has the lowest rents in the area.

More than half the apartments have one bedroom. About 20 percent are studios, and the rest are larger.

Renters commonly note the convenience of having the property owners take care of repairs and upkeep.

“If the heat goes off or the water starts leaking, it’s not your problem,” Mr. Helle said.

Compared with the costs to own a home, apartment living can be a good deal in the Washington area compared with other cities.

In the Washington area, renters paid about 59 percent as much as they would for home mortgage payments last year, according to Torto Wheaton Research, a real estate market research firm. In Atlanta, they paid 92 percent as much to rent as to own a home. In New York, renters paid an average of 71 percent as much as homeowners.

However, renters missed the income-tax savings homeowners get from deducting the interest on their mortgages.

Nevertheless, Karen Kossow, director of sales and marketing for KSI Management, a Centreville, Va., property management company, said renters have other advantages over homeowners.

“[Homeowners are] not getting quite the savings from a tax benefit they think they are,” Miss Kossow said.

Property taxes, interest on mortgages, upkeep costs and condo fees can raise homeownership costs more than the cost of renting, she said.

In addition, apartment complexes increasingly offer amenities such as swimming pools, fitness centers and shopping, which are not included with home purchases.

“They’ve become more of an expectation than an extra,” Miss Kossow said.

Despite any bargains in the rental market, real estate agents expect the market for home sales to stay strong.

“The traditional price appreciation on a house has been 1 or 2 percent above the inflation rate,” said Lucien Salvant, NAR spokesman. “So you gain in equity when you stay in a house, which you don’t have when you rent an apartment.”

LOAD COMMENTS ()

 

Click to Read More

Click to Hide