At Long & Foster in Alexandria, where he specializes in rentals and investments, Bob Gering reported that, I just put a split-level house on the market in Springfield at $2,700, and it was gone within 48 hours.
In todays housing market, that incident is enough to make any homeowner sit up and take notice. It is all the more impressive because the average home stayed on the sales market for 65 days this June, according to the Northern Virginia Association of Realtors monthly sales report.
Rental success stories like Gerings are being reported throughout Northern Virginia.
A $700,000, six-bedroom brick house off Nutley Street in Vienna was snapped up in three weeks, listing Realtor John Nguyen reported. The reason was very simple: Instead of waiting around to be sold, it was leased for a year at $2,750 per month.
The owner thought that in these current market conditions, it was better to rent it out than to put it on the (sales) market and wait for several months, said Nguyen, at Long & Foster in Falls Church.
An even more impressive brick Colonial mansion on Hunter Mill Road was rented for $6,500 within seven days, according to Alan Cavacas at Coldwell Banker Residential Brokerage in Vienna. It would have been listed for sale in the $2 million range, he said. But in todays real estate market, People are waiting to buy.
The rental market is very active, said Sandra Wilkinson, owner of Wilkinson Property Management in Alexandria. If people bought houses during the sales boom of 2004 and 2005 and they now need to move, they fear they would be selling their homes for less than they paid. When it comes to luxury dwellings, many were purchased by investors, who are dealing with the same dilemma.
The rental market is pretty hot, agreed Bill Owens, a rental specialist at Long & Foster in Vienna. People are afraid to buy. They are waiting to see what will happen in the market. As a result, he added, rental prices are going up and waiting times are going down.
Sellers have just as much reason for going the rental route, he explained.
We see luxury homes for rent, because the owners are hoping to break even on the rental so they wont have to sell now and lose money before the market turns around.
In the highest luxury range, where sales listings would be $5 million or more, the rentals can reach $25,000 per month. Thats what Realty Direct of Falls Church is asking for a mansion for rent in Foxhall of McLean. Since that adds up to $300,000 per year or $3 million in ten years, the tenants are not likely to be planning to stay for that long. Or, as the MLS listing states, Ambassadors and CEOs looking for a $5 million home can rent this magnificent custom Colonial estate instead. He accordingly sent brochures to all of the embassies.
Lobbyists and defense contractors are also among the hottest prospects, said Gering, who is a former Chairman of the NVAR Property Management and Leasing Committee.
Luxury owners can also look forward to a hot rental market this August, he added … consisting of foreign diplomats.
The ambassadors will be bringing in their replacement staff, Gering explained. And, like everyone else, they want to be settled before the school year starts. And, like most Washington workers, they prefer locations like Great Falls, McLean and Mount Vernon.
Owners know they can get more money from embassy rentals, he said … but at the same time, they might be afraid of possible international complications.
To help Realtors deal with those concerns, he taught a special course in diplomatic leasing at the NVAR. One smart first step: finding a property manager with experience in this field.
This is good advice for anyone renting out a home, in any price range. This specialist can provide services ranging from finding and screening the clients to sending in plumbers to help them.
Not all luxury rentals are mansions. Developers traditionally turn upscale condos into rentals when the sales market turns down, he said.
That same trend continues throughout the country. In many areas, buildings constructed as condos are now being turned into rental projects, the National Association of Realtors reports. The demand for apartments remains strong, but new supply is essentially matching leasing activity.
For all price ranges, the NVAR has one simple rule: The rental and sales markets are inextricably linked. In general, when the sales market is hot, the rental market slows down, and the other way around.