Brian Vent, 29, moved to the suburbs of Virginia from Texas in 2009. He moved to Virginia in search of work after finishing a two-year Navy flight program. Since he moved to the area he has rented two apartments, and now lives in a house in Vienna with a couple of roommates. Vent favors renting for several reasons. He cites the flexibility it gives in an uncertain economy, explaining that “If something were to happen with the economy or my job, I could move again at the snap of a finger.” According to Vent, renting is a financially responsible thing to do.
According to a Fannie Mae survey released last week, more than half of all renters polled cited “financial benefits” as the foremost reason they choose to rent. In January, 54 percent of renters said that they’d rent again next time they move, a number that has now increased to 59 percent. Out of all of those surveyed, renters and homeowners alike, 33 percent said that they were more likely to rent their next property than buy it.
Of those renters who plan to own next time around, 50 percent probably won’t have enough income to get a mortgage on a median-priced home. Many people in the market to rent or buy have bad credit, do not have enough money to make the large down payment required by lenders, and/or have additional properties they previously owned before moving to the Washington area that they can’t get rid of.
Many of those moving to the D.C. area are shocked by the high rents they are met with when they arrive. Ari Zimmerman studied at Indiana University, and paid 600 dollars for what he characterized as a “stunning” four-bedroom apartment. He moved to D.C. post-graduation to pursue a job on Capitol Hill, and now faces a rent of 1,500 dollars a month for his three-bedroom U-Street apartment.
Because so many people want to rent, landlords are able to raise rent while cutting back on concessions. According to Joan Caton Cromwell, an agent in Chevy Chase, renting in the area is much different than it was just a few years ago. Cromwell witnessed a bidding war over a D.C. condominium. Three years ago, the condominium was unoccupied for several months. This spring, it flew off of the market in no time. “I immediately had three applications, and I could have taken more,” said Cromwell. “We got a couple to sign a two-year lease because they wanted it so badly, and they’re paying $200 more a month than the last tenant. That is $2,500 without parking, which was included in the rent before.”
There are about 12,500 more apartments occupied by renters through the end of this year than there were at the same time last year. A survey completed in the third quarter showed 16 percent of apartment projects with waiting lists. Of those without a waiting list, many had only 1 or 2 units available.
With the slowdown of the economy, developers slowed the expansion of apartment projects. This slowdown has left a large gap between the demand for rental apartments and the supply thereof. As vacancies continue to be few and far between, rents continue to climb. According to Grant Montgomery, vice president at Delta Associates, rents will continue to rise in the next two years, due to the lack of new openings and opportunities for renters to get their hands on the rental spaces they demand.
For all of the individuals whose situations we discussed above, neither renting nor buying is the ideal option. Some see renting as the most fiscally responsible decision because it is the most sound option in the short-term. But when looking at the bigger picture, people are not always satisfied with the effects of their short-term decisions. A rent to buy option would be extremely valuable in such cases. If someone like Brian Vent thought he might end up staying in D.C. in the future, a rent to buy transaction would allow him the flexibility he values. For any hesitant renter looking to make a decision in his long-term interest, the option to rent to buy a property will surely satisfy his needs.
Should Washington area residents rent or buy? We think they should rent to buy.
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