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Circle Stats

2014 Year End Market Conditions Report

Eric Guggenheimer - Sunday, January 4, 2015

Was 2014 A Good Year?


The answer to the question is, “yes!”   When we measure success in the rental market the bellwether statistic is rental income.  Rents continue to rise year over year - with Fairfax County’s average rent settling in at $2,212.33  for all of 2014.


That’s an 8% increase from 2011.  (Highest average ever in Fairfax)


Average Rents

2011    $2,047

2012    $2,121

2013    $2,201

2014    $2,212


Some of the other data we look at represents more forward-looking information which gives us some insight into the following month. The most revealing statistic is ACTIVE INVENTORY - which provides a snapshot as compared to the previous year. The higher the inventory the longer it will take to rent a property prior to the spring market.


We are able to glean from the active listings and the units rented how many MONTHS SUPPLY of rentals exist.


We use Months Supply, along with Active Inventory in combination with DAYS ON MARKET to establish a possible trend in the following month.


Active Supply of Rentals for  December

2013    1148

2014    1334


Units Rented in December

2013    428

2014    492


Months Supply in December

2013    2.66

2014    2.71    


Average Days On Market in December

2013    50

2014    50


Housing Sales : How they effect the rental market


One other statistic we look at is the UNITS SOLD number, which provides us with insight to consumer preferences.   When we see spikes in Sales we do see a slight dip in demand for Rentals as these consumers are now purchasing rather than renting.   But, you can’t always make the leap that the purchasers are choosing not to rent until there is visible evidence in consumer demand shift.   In other words, we have to see demand drop below norms for rentals.

In December there was a spike in sales but we also saw a spike in rentals as well.  We do not see a dip in demand for 2015 due in part to the nature of Washington, DC and the overall perceptions in the local media that there are not enough rentals to meet demand in the future.

We don’t necessarily agree with this in total and our market is very different based on the property location.  The demand is greater inside the beltway, with less demand outside the beltway depending on county, proximity to transportation, and traffic.


Units Sold in December

2011    907

2012    981

2013    904

2014    1122   


Summery Statement

It’s always difficult to predict the future.  We can only look to the past for reference and then establish an opinion based on our overall feeling of the local economy and conversations with our peers.


Economic Summit with Dr. Stephen Fuller of the George Mason University Center for Regional Analysis


I attended the economic summit with Dr. Stephen Fuller of the GMU Center for Regional Analysis in December.  Dr. Fuller was a bit pessimistic regarding the local economy based on several factors.   His cautious views are based on the GDP output for our region and the demographic trends as our population ages.  His opinion is highly regarded in our region and he is a “go-to guy” for the media on the local economy.   It was an insightful forum.


Circle Property Management Charts


December Year End Report

http://www.circlepm.com/documents/Charts/December%202014/December%20End%20Yr%20Market%20Report%202014.pdf


December Year End with Sales

http://www.circlepm.com/documents/Charts/December%202014/Year%20End%20Sales%20Market%20Report%202014.pdf


GMU Center for Regional Analysis


Washington Metro Area Gross Regional Product, 2001-2013

http://cra.gmu.edu/pdfs/studies_reports_presentations/GRP_Sep2014.pdf

 

The U.S. and Washington Area Economic Performance and Outlook

(Washington DC Starts on Page 13)

http://cra.gmu.edu/pdfs/Current_Indicators.pdf


Regional Data Main Page

http://cra.gmu.edu/data/


Message from the Broker Eric Guggenheimer

Our market remains stable in the Washington area and we do not see any headwinds which would lead us into a softer market.  Our first quarter is still unpredictable at this time but will depend on weather as to when the spring market will begin.  I do feel optimistic for 2015 and look forward to working with all of our clients.


Thank you again and Happy New Year


Eric Guggenheimer, ARM



Note: the larger than usual spike in sales






About The Author

Eric Guggenheimer - SFR, ARM ® » Principal Broker, Certified Property Manager, IREM, ARM, NARPM, NVAR, NAR, VAR