market metrics
Residential Leases in the NVAR Region By Dr. Terry Clower and Dr. Keith Waters
GIVEN THE CONTINUING DECLINE in properties available for sale across Northern Virginia, it’s likely that Realtors® are increasingly having to advise clients on the availability and costs of renting a home while trying to enter the homeownership market. The data examined in this article comes from Bright MLS and thus represents those homes sold or newly rented for a given time period. It does not reflect ongoing rentals covered by existing leases. It also only includes those properties that are listed through Bright MLS. Still, the snapshot of data offers insights into the regional housing market and provides data and information that can help prospective buyers make the best real estate investment decisions. To put the data on residential leases into perspective, there were 1,549 residential units sold in December 2019 in the NVAR region (Table 1). The number of new residential leases in the NVAR area totaled 738 units, or about 32% of the total residential transactions (Table 1 and 2) in December 2019. The relative proportion of transactions that were residential leases was similar across most area jurisdictions (around
Table 1. Leased Residential Properties and Sold Residential Properties – Dec. 2019 PROPERTY TYPE
ALEXANDRIA
ARLINGTON
FAIRFAX COUNTY
FAIRFAX CITY
FALLS CHURCH
TOTAL
Residential Sales
181
206
1,118
34
10
1,549
Residential Lease
83
130
508
14
3
738
Total
264
336
1,626
48
13
2,287
Source: Bright MLS and GMU Center for Regional Analysis
30%) with Arlington being somewhat higher (38.7%) and Falls Church having relatively fewer (23.1%) leased properties transacted last December. Falls Church, which is one of the smaller jurisdictions in the NVAR footprint, had only 13 property transactions (sales and new leases) in December. Fairfax County had 508 residences leased in the last month of 2019, accounting for 68.8% of total NVAR area residential leases. Examining the composition of closed residential units over time reveals that leasing’s share of all closed residences increased year-over-year in the NVAR region (Table 2). The share of all closed residential units accounted for by leased residential units increased 3.9 percentage points from 28.4% in December 2018 to 32.3% in December 2019. Among the
Table 2. Residential Leases as Share of All Closed Residential Properties – Dec. 2018 and Dec. 2019 ALEXANDRIA
ARLINGTON
FAIRFAX COUNTY
FAIRFAX CITY
FALLS CHURCH
TOTAL
Dec-18
29.5%
29.6%
28.2%
20.0%
18.2%
28.4%
Dec-19
31.4%
38.7%
31.2%
29.2%
23.1%
32.3%
Year-over-Year Change
+ 1.9
+ 9.1
+ 3.1
+ 9.2
+ 4.9
+ 3.9
Source: Bright MLS and GMU Center for Regional Analysis
12
MAR+APR 2020
jurisdictions in the NVAR region, the two largest year-over-year market share increases occurred in Fairfax City and Arlington County – likely the result of low inventories of residential units for sale. In Fairfax City for December 2019, the share of closed residential units that were leased increased 9.2 percentage points over the previous December. In Arlington County, the share of closed residential units that were leased increased from 29.6% in December 2018 to 38.7% in December 2019, an increase of 9.1 percentage points. The share of closed leased residential units in Alexandria increased by the smallest amount year-over-year, increasing only 1.9 percentage points, which is interesting given the level of investor interest in Alexandria homes since the Amazon HQ2 announcement in 2018. The remainder of this analysis focuses solely on leased residential units. Among property types, townhouses and apartments accounted for the majority of leased residential units (Table 3). In December 2019, there were 279 apartments leased in the NVAR region, accounting for 37.8% of leased residential units. There were 277 townhouses leased in the NVAR region
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