Area rental prices have been rising with the record temperatures over the past month and properties have been scarce.
The shortage of inventory and a high demand for all types of housing are driving up prices for rentals and properties for sale. Even with low interest rates, would-be homebuyers prefer to remain on the sidelines and wait out a slow-moving economy in a rental.
"Job security and demographics are playing a big role in driving up the demand in the rental market," said Ryan Price with the Center for Regional Analysis at George Mason University. "The D.C. area is experiencing job growth, overall economic uncertainty, looming federal budget cuts, and the pending election -- factors that are likely prompting many to hedge the uncertainty by renting."
Sally Hamidi of Citylights Realty Group said inventory is low on both the buying and renting sides of the market. "We're seeing record rent prices. People are paying top dollar."
In some cases, rents can be higher than the price of a mortgage. A two-bedroom, two-bathroom apartment in the 20009 zip code of Northwest, which includes Adams Morgan and Mount Pleasant, rents in a nice building for $3,750 per month. Foggy Bottom and the DuPont Circle area, two of the highest-priced neighborhoods, have rents approaching $4,000 per month.
The average rental price of a two-bedroom apartment in Washington is $3,299. In Bethesda, it is $3,019 and in Arlington, $2,841 according to rentbits.com.
The competition is fierce.
"I had 20 to 30 people waiting outside for one open house," Hamidi said. "People are showing up with checks and paying above the rental asking price. They are ready to jump on the apartment and complete the paperwork as fast as they can."
Hamidi sees a lot of young, newly graduated and newly employed people entering the rental market, looking to share apartments and houses. There is more flexibility in a group situation.
Eric Murtagh of Evers & Company said renting was more prevalent a few years ago after the market collapse. While more people are looking to buy now than before, "once you experience real financial pain, there is a greater level of caution," he said.
Consumer confidence still drives the decision. Lending restrictions, job security and a sense that it is cheaper and more comfortable to rent are factors that people weigh.
"It's a speculative call depending on where you think the market is headed," Murtagh said. "Are you better off punting for two or three years in a rental and waiting it out?"
Hamidi said there is new apartment construction at the Naval Yard, on U Street and in Columbia Heights, which will help ease the rental inventory shortage in the long term. As for buying vs. renting, it depends on the person.
"In some neighborhoods it just makes more sense to rent," Hamidi said. "It depends on your financial situation and your level of commitment. Some people are committed to buying."