Reston Town Center Housing: A Rental Glut Appears Inevitable

RAYMAX REAL ESTATE

 

Reston Town Center Housing: A Rental Glut?

 

This is a seller’s market, not a landlord’s market

 

*** This is an update of an article written one year ago. It was true then; it is more appropriate today.

 

Background – We have been in a strong seller’s market in most of the Reston Town Center for 2 – 3 years now. Supply of homes for sales has been tight, demand high, and listings generally get absorbed quickly. Unfortunately, in many cases, one must question whether the listing  prices were too low.

 

For many years, many homeowners have chosen to rent their homes rather than sell. The sound logic behind this was that rentals were relatively scarce in the Reston Town Center area, and supply was easily absorbed. So it made sense to ride out a period of low prices by renting one’s residence.

 

The Dynamics of Rent Vs. Sell are shifting for many people – There was a rapid rise in rent  in 2011 and 2012 which generated the expected market response: more people trying to rent their homes; new construction funded in large part by REIT and Wall Street money, and resistance to higher prices from potential renters.

 

Today’ Low Inventory – In a rising market marked by increasing interest rates, one would expect more homes to become available for sale and a movement away from rental inventory. The opposite has been occurring for several years now, and the imbalance in inventory is reaching chronic levels. Potential landlords scramble to find new renters to generate cash flow, often on vacant homes  and often with the added burden of high condo fees, while potential buyers are scrambling to find homes to own and willing to pay premium prices. Construction is complete in one new major rental building, and will be complete later this year on another. Listings for rentals in the Reston Town Center no longer get absorbed quickly, unless “priced well.”  Future vacancy rates are likely to rise, which inevitably will lead to “rental specials” in upscale buildings which will pressure the individual, “one-off”, condo owner to reduce his/her unit’s rent to keep it generating a steady cash flow.

 

Conclusion – We are likely to have a dynamic spring sale market in 2014. Potential sellers who have been reluctant to sell are realizing that sale prices are increasing, and that they may be able to sell at higher price points than previously anticipated. Interest rates are likely to stay manageable, but still a longer term fear which keeps many buyers in a mind set of wanting to buy now. The strategy of renting one’s home until the market comes your way was yesterday’s sound strategy in the Reston Town Center. The market already has come your way. With rents likely to spiral in the opposite direction, it may be a good time for many to pull the trigger and sell.

 

I welcome any calls or comments from residents. I look forward to meeting and discussing the market in any level of detail you desire.

 

Ray Wedell, Realtor

RE/MAX Gateway

Chartered Financial Analyst, CFA

703-855-7299

www.RayMaxInternational.com

raywedell@comcast.net

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About RayWedellRealEstate

Real estate professional with Samson Properties. Chartered Financial Analyst, CFA
This entry was posted in rental housing glut Reston, Rental Housing Glut Reston Town Center and tagged , , , , , , , , , . Bookmark the permalink.

2 Responses to Reston Town Center Housing: A Rental Glut Appears Inevitable

  1. Nancy says:

    This is very informative and interesting.

  2. Reblogged this on Ray Wedell and commented:

    I posted this blog in 2013, and re-blogged early in 2014. It is now Labor day, 2014, and the predicted rental glut has become a reality. I doubt that you had been reading about this possibility earlier in the year.
    Here is a summary: There are now 28 active rental listings in the Reston Town Center from individual owners trying to rent their units. In addition, there are unknown vacancies and rental specials being offered in major competing rental buildings: The Metropolitan; The Avant; and the upcoming Harrison (under construction, but taking applications).
    There were 14 new listings put on the market in August. Thirteen (13) are still active. This in a market which used to absorb new rentals in days, not weeks or months.
    There are ten (10) rental listings from July which are still on the market.
    This is not a cause for extreme alarm for those who hold units in the RTC which they are looking to rent. However, it is beyond simply an early warning sign that rents will not only stabilize, but drop in the immediate future.
    A number of potential sellers have approached me with the question: “Maybe I should just rent out my home instead.” There are multifaceted answers to this question which we should discuss, not the least of which is the slower absorption of rentals in the Reston Town Center.
    I welcome any and all inquiries.

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