The spring real estate rental market has arrived. Or has it? Residential rental values seem to be holding firm – but for how long? Are vacancies renting? How does one find a new home while conforming to the current stay-at-home orders?
We have all been holding our breath to see what the effects of the current pandemic are going to be. While most of us are anxiously waiting to see what the future will bring, there are those who need to move or need to find tenant to fill a vacant rental unit, and there may not be time to wait.
Typically, the best time to fill a vacant residential rental unit on Capitol Hill is during the late spring/early summer market. This has been the case in each of the 25 years that I have been listing and renting apartments and houses on the Hill. More units come on the market during this time of year providing tenants with more options. More tenants move during late spring and early summer than any other time, so landlords are usually able to place tenants more quickly.
This trend lends some predictability to the rental market on which landlords and tenants have come to rely. So, what happens now during the COVID-19 crisis? Are tenants still moving? During this time of heightened anxiety and social distancing, how are they going to be able to safely find new homes to rent? Are landlords going to be able to fill vacancies while the city is under stay-at-home orders? Are rental rates going to rise or drop? Should decisions to move be postponed?
Unfortunately, it is still a little too early to discern any new trends in the market that will shed much light on these questions. Nonetheless, if you are a landlord hoping to fill a vacant unit or a renter hoping to move, you will have to make decisions on what information is available. Luckily, there are some resources to help.
Housing is a crucial industry to any municipality, and the mayor has deemed real estate agents as “essential” employees. As such, agents are permitted to market and show properties provided that the manner in which they do so conforms with COVID-19 best practices and social distancing requirements. That means that agents should be showing only vacant properties and should make video and self-guided tours available to potential tenants. Renters looking for a new home should inquire if these options are available before scheduling an appointment to view a home.
Also included as “essential” employees are construction workers, landscapers and cleaners. Therefore, landlords should still be able to find contractors who can prep their rental units for turnover. Contractors who may be uneasy about working during the stay-at-home orders should be more comfortable working in vacant units.
The most frequent questions I field from landlords are: are there tenants who are currently looking to move right now? Are rental rates dropping? How long will it take to find a tenant for my vacant rental unit? I have been carefully reading discussion boards on professional associations and monitoring websites such as Rent Café, Zillow and Zumper to get a sense of how the local market is reacting to the pandemic. However, while one can find information about this year’s first quarter, reliable data lags by at least a month – and we have only been feeling the dramatic effects of the pandemic locally for 6-7 weeks at the time of this writing.
Based on the volume of calls received by my office and from what I glean from discussion boards, tenants are still moving, though at a slower pace than in the preceding spring markets. In my office, rentals were down about 40 percent in April over the preceding year, and I expect that this will continue through May. This projection is based on the volume of responses my agents are receiving in response to their advertising, new applications, and move-out notices.
Since mid-April, we have been seeing a slight increase in the number of move-out notices from our tenants. Move-out notices provide a slight advance notice of market activity. An increase in move-out notices usually means that we are about to experience an increase in market activity. This recent increase is consistent with the trend that we typically see at this time of year, though we are still receiving fewer notices than usual at this time of year. I interpret this to mean that while the market remains slower than usual, we are still about to experience at least a slight increase in rental activity.
If you are hoping to move within the next few months and are uncertain if it is safe to proceed, or if you are a landlord anxious because you have a coming vacancy, it might be useful to know that there is still a market to accommodate you. I recommend contacting a professional familiar with industry best practices. And, of course, stay safe and healthy!
Michael Frias is the principle of Tiber Realty Group, LLC., firm has been managing Capitol Hill properties for over two decades. Visit tiberrealtygroup.com to find out more.