COVID-19 has taken a massive toll on many different industries, and the real estate industry is not immune. However, even in the midst of a global pandemic, there has been an increased demand for new homes and the housing market has remained strong.
Specifically, in Northern Virginia, rental growth in the suburbs has taken off since the onset of the pandemic, causing rental prices in these areas to increase by as much as 10-15%. This has left real estate consultants and rental property owners among others wondering why this trend has emerged and how they can capitalize on this growth.
While it may seem that these trends evolved in spite of COVID-19, in reality we can see ways that the pandemic has actually sparked and influenced this shift. The pandemic has caused both economic and lifestyle changes that have led more people to seek the suburbs and avoid renting in more urban areas. According to Realtor.com’s 2020 Cross Market Demand Report, 51% of property searches on their site from people living in metro areas like Washington, D.C. were for homes in the suburbs near those areas.
As such, rental prices in the suburbs and exurbs of North Virginia have increased, while areas close to Washington, D.C. have seen rental prices drop or remain stagnant. Here are a few economic and lifestyle changes caused by the pandemic that are affecting rental prices in Northern Virginia:
Increased Need for Affordable Housing
According to the U.S. Bureau of Labor Statistics, job losses in the United States due to COVID-19 have been the highest they have ever been since the Great Depression. The pandemic wreaked financial turmoil on Washington, D.C. with nearly 180,000 people having filed unemployment claims just one year after the first reported COVID-19 case in D.C. Near the beginning of the COVID-19 pandemic, the unemployment rate in Washington, D.C. jumped from just over 3% to nearly 10%. With the negative financial consequences of the pandemic, the rental market began to shift.
With many people losing jobs due to the pandemic or needing to dip into their savings in order to make ends meet, less people have been able to afford homes in the heart of Washington, D.C. Although rental prices in these areas have decreased or remained stagnant during the pandemic, renting homes in these areas is typically costly, and it comes with a steep cost of living.The Center on Budget and Policy Priorities reports a growing number of people having difficulty paying rent or covering household needs.
As such, areas in the exurbs and neighboring suburbs, where renting homes is traditionally more affordable and the cost of living is lower, has become an increasingly popular choice, especially because many people no longer need to commute to the office every day.
Increased Need for Space
Safety concerns and mandatory stay at home orders for non-essential workers during the COVID-19 pandemic has led to an increase in remote work, a trend that is likely here to stay. This has caused homes to shift from the place where people spend their evenings and nights to being where people spend almost all of their time. As working from home started to become a reality and people were required to spend more time at home, it has influenced the factors that both homeowners and renters value in a property.Instead of using the home for relaxation and rest after leaving work, picking kids up from school, and squeezing in a work out at the gym, people have had to convert their homes into spaces for all of these activities.
Renters need homes that can accommodate exercise equipment, provide office space for remote work and meetings, and offer learning space for kids taking their classes over Zoom. While most families love spending time with one another, the sharp increase in time spent at home has also led people to look for homes with enough space for family members to spread out and have alone time.
According to research conducted by Zillow during the pandemic, roughly 31% of employed Americans able to work from home would consider moving so they could live in a home with designated office space and 29% would consider moving in order to live in a home with more rooms. There is an increased desire for more spacious homes, which pushes people away from urban areas and into the suburbs.
Decreased Commute Time
When your daily commute is the 20 steps it takes to get from your bedroom to your at home office, it no longer matters if your home is outside of the city limits. Areas close to Washington, D.C., which offer smaller and more expensive housing, are popular because they provide a minimal commute into the city.
As remote work started to take off and many people realized they would be able to work from home either permanently or for the next several months to a year, rental properties in Washington, D.C. became less desirable because their commute to the “office” became nonexistent. Instead, people have looked to suburbs in Northern Virginia like Fairfax, Gainesville, Haymarket, Aldie, and Ashburn, where renting a home is cheaper and the homes are more spacious.
According to a Zillow analysis, people who live within a 15-minute commute to downtown metro areas like Washington, D.C. typically pay more per square foot. If the commute to work is no longer an issue because people are working from home, more affordable housing options in the suburbs and exurbs become increasingly popular.
Lack of Access to Community Amenities
Living in areas close to Washington, D.C. means easy access to amenities like gyms, libraries, theatre, free museums, parks, and movie theaters. While these amenities are usually a draw, many of them were forced to shut down to the public during the COVID-19 pandemic.
When people were looking for housing during the pandemic, these amenities became less important in the housing search since there was no telling when they would open to the public at full capacity again.
Desire For In-Person Schooling
Although teachers across the nation have been working tirelessly to help students learn during the pandemic, learning through Zoom or Microsoft Teams is less than ideal. On top of its difficult learning circumstances, remote schooling also prevents students from being able to have the social benefits that come from interacting with their teachers and peers.
In order to help their children avoid social isolation and further their education during the past year and a half, many parents looking for homes have sought out housing in areas where their children could experience in-person schooling. This meant looking to the suburbs. Unlike areas close to Washington, D.C. where most schools were closed or utilizing a hybrid schedule for the majority of last year, suburban areas were more likely to offer in person learning. In fact, school districts like Loudoun County Public Schools near Aldie and Ashburn, Virginia were some of the few that offered in-person schooling during the fall of 2020.
Rental Price Changes
As more people flocked to the suburbs instead of seeking out areas in Washington, D.C. it caused rental prices to decrease in areas near the District and rental prices to increase in more desirable suburban areas.
This is great news if you are looking to rent out a home in any Northern Virginia suburbs. The demand for rental homes in the suburbs is steadily increasing, and it shows no signs of stopping anytime soon. You can see exactly how much money you could stand to make by renting out your property by requesting a free rental analysis.
While this may seem like a tumultuous time to rent out a property because of the ongoing pandemic, it can be a lot easier if you work with a property manager. The right property manager can aid with rent collection, communicating with your renters, property maintenance, and other hassles so that you can make a profit without losing any sleep.
Here at RentSimple, we offer guaranteed property management services in Ashburn, Gainesville, Aldie, and Haymarket, Virginia and the surrounding suburbs. We know the appropriate rates to charge for each suburb, how to find tenants in the midst of the pandemic, how to take care of your properties, and how to compassionately collect rent during this challenging time. Our North Virginia property management will ease any burdens of being a landlord and help you see great returns on your investment.
See why countless other landlords trust us to manage their rental properties when you reach out to us today to learn about property management in Ashburn, VA; property management in Gainesville, VA; property management in Aldie, VA; and property management in Haymarket, VA.