Over the last 6 months I have received a lot of questions about the strength of the rental market in Northern Virginia (NOVA.) The question is typically coming from a landlord that in the past have rented their unit quickly and for top dollars but now is having issues.
At Soldsense we do a lot of rentals for owners and property management clients (for Red Umbrella Management) and we have also seen an overall slowdown in rental appreciation. To sanity-check this anecdotal evidence we can look at one community we have been tracking one community in Tysons Corner for years, The Gates of McLean.
Here is a chart showing the average rent for the last 10+ years with 2015 and 2016 YTD.
The graph doesn’t really show a crash in rental prices (the sample size for 2 bedroom units is still too small to draw any conclusions.) It could possibly indicate an overall stagnation though. Using MRIS data the average days on market has remained flat the last few years (In 2016 year to date the average days on market was 37, essentially the same as in 2015 and 2014.)
I do expect a slowdown of the rental market in the Tysons Corner and Merrifield areas over the next few years. Multiple new (and large) apartment buildings are being built around the new metro stations and town centers. I do believe those new shiny units will force existing “small-time” landlords to update their units to stay competitive. The only alternative may be to accept a lower rent.
The new apartment buildings likely will have a higher price per square foot. However, the corporate owners of those buildings will want to lease their units – especially initially – even if it means giving away free iPads or free months’ rent.