Tips for LGBTQ buyers, sellers during holidays

Even if federal salaries disappear, the impact will not be limited to the Belt and Road. We are located in close proximity to area property owners, Petworth rowhouses, Crystal City condos, and people renting out homes spread across Montgomery and Prince George’s Counties. Landlords rely on stable rents from tenants employed by the very facilities that are now being downsized or, worse, closed.

This fall, Washington’s economic identity is being tested again. Thousands of federal workers who accepted “deferred retirement” packages will soon lose their income entirely. And with an extended government shutdown looming, even those still on the payroll are facing paycheck delays. For landlords, the combination of uncertainty and a sudden drop in income threatens to destabilize an already tenuously balanced rental market.

test of resilience

Rosie Allen Herring, president of United Way of the National Capital Area, recently said: washington post“This region is going to be hit hard by people who have lost their jobs and can’t find new employment and are now in need. It’s a full-circle moment to be a donor and find yourself in need now, but it’s very real for this region.” ¹ This reversal captures a broader moment. The D.C. economy, built on federal payrolls and charitable giving, is now facing a stress test of both compassion and cash flow.

For homeowners, adaptability determines who weathers the storm. Those who are able to continue receiving rent, retain their tenants, or find replacement tenants without falling into similar financial hardships will likely come out on the other side with a manageable financial mess. Those who plan, communicate and remain financially flexible will be able to occupy their real estate and maintain their reputation.

Regions built on federal payrolls

According to the Bureau of Labor Statistics, approximately one in 10 jobs in the Washington metropolitan area is tied directly to the federal government. That number increases exponentially when you include contractors, nonprofits, and think tanks that rely on federal funding.

This concentration means that when the federal government sneezes, the D.C. housing market catches a cold. The Brookings Institution recently reported that since January, the region’s unemployment rate has risen eight times faster than the national average, while local job growth has leveled off. ¹ On a more anecdotal note, I spoke with a property owner this year who was looking to rent out his Washington DC property because he had to move to another area for work.

as post “Federal jobs are being cut at a higher rate in this region, and both the number of homes for sale and the percentage of residents with poor credit scores are growing faster than other parts of the region.” ¹

For homeowners, it’s a flashing warning light. When certain well-paid tenants lose a steady government paycheck and face bleak prospects for re-employment, rent collection becomes difficult and rent levels can decline year after year.

Human aspects of policy shocks

The people behind these statistics are often civil servants with long years of service. post Profiled former State Department official Brian Naranjo, he said he had “thrown out unsuccessful resumes in more than 50 positions since resigning in May.” “It’s terrible,” Naranjo told the paper. “There are a lot more people than usual working in very specialized jobs.” ¹

Another displaced worker, former Department of Homeland Security employee Jennifer Malenab, 42, said she canceled daycare and family vacations while she searched job sites. “This is not where you want to be as a 42-year-old with a family,” she said. ¹

When these households lose a steady wage, they not only cut back on spending, but in the case of renters, their landlords may be delayed in receiving rent, be asked to pay in part, or even be served with an eviction notice prematurely. Some tenants will move out of the area entirely. That outlook is already visible in the rise of “for sale” properties and increased moving truck activity in northern Virginia and suburban Maryland.

What happens if the rent is not received?

If you miss a rent payment, even temporarily, the financial impact can be immediate. Many small landlords rely on rent to pay for their mortgage, property taxes, insurance, and routine maintenance. Even a temporary loss of income can deplete reserves, delay repairs, and strain your ability to meet loan obligations.

Owners of large apartment complexes are no exception. If multiple tenants in a building lose income at once, cash flow can be significantly reduced. During the brief government shutdown in 2019, some Washington, D.C., landlords offered short-term payment plans to furloughed workers in hopes of eventually receiving back pay. However, in the current situation, where many positions have been permanently cut and salaries may not be restored, landlords face much greater uncertainty and cannot assume that repayments will be guaranteed.

In the District of Columbia, the Rental and Housing Commission advised landlords to continue operating in strict accordance with established legal procedures and to avoid informal or selective payment arrangements that could be construed as discriminatory under the D.C. Human Rights Act. Courts in Virginia and Maryland have granted temporary continuances if a tenant files federal furlough or income disruption documentation, but it is up to the court, not the landlord, to determine eligibility for relief.

How should landlords proceed?

• Rather than delaying action, continue to file nonpayment lawsuits through normal legal channels.
• Allows courts to apply continuance or relief provisions if the tenant qualifies due to federal employment status or income interruption.
• Avoid making selective accommodations based on a tenant’s job type or federal employment status, as this may violate equal treatment or source of income protections.

landlord with single tenant or Consistent written policy By offering payment plans to All tenants are confirmed to have experienced income disruption There should be no risk of discriminatory treatment.

Changes in vacancies, concessions, and demand

In addition to rent arrears, landlords are facing challenges from another direction: weak demand. As fewer jobs are created and unemployed and underemployed tenants move out of Washington, D.C., the supply of available rental units will increase and landlords will be forced to compete more aggressively on price and amenities.

Market data is already pointing in that direction. According to real estate agency Multiple Listing Service (MLS) trends reported by the Washington Business Journal, the number of rental properties across the District of Columbia increased by about 14% in September from a year earlier. Landlords offer free parking, monthly discounts, or flexible leases to retain quality tenants.

Areas that were once buffered by federal stability, such as Silver Spring, Falls Church, and Alexandria, may now experience higher rates of tenant turnover. “We used to say federal employees were the safest tenants in America,” said one Arlington property manager. “Now we’re rewriting that rule.”

Decrease in labor force, softening of market

In addition to layoffs, the region is grappling with a broader identity crisis. “Yeshim Sein, executive director of the DC Policy Center, put it bluntly: ‘Aside from federal jobs, we’ve relied on tourism. But foreign tourists don’t come. And we relied a lot on universities bringing in talent to stay here and be part of our talent pool. And that’s kind of gone, too. So where are we now? We just don’t know.’1

This uncertainty can affect real estate values ​​and investor sentiment. When employers move, renters follow. If enough mid-career professionals retire, rental demand will first weaken, and then the average rent that landlords can demand will begin to decline. We are already seeing this in the current rental market. Rent that seemed reasonable a few years ago is now hundreds of dollars off. After several years of having a tenant, landlords looking for new tenants are finding that they need to lower rent levels to secure the tenant.

Strategies for landlords: Stay solvent and continue to support

Survival in times like these depends on both prudence and empathy.

1. Communicate early. Encourage tenants to disclose financial hardship before falling behind on payments. Properly documenting a written payment plan can help you maintain your credit and prevent eviction.

2. Consider legal protection. Understand the rules in Washington, D.C., Maryland, and Virginia regarding furlough continuation and source of income discrimination. Consult your attorney before changing lease terms mid-cycle.

3. Build reserves and credit access. Set up a home equity or business line of credit to cover the shortfall. It’s always helpful to have cash on hand as a buffer against the impact of a disruption in income.

4. Monitor policy developments. State and local governments are assisting those affected by layoffs. Landlords benefit indirectly through tenants who take advantage of these programs to help pay their monthly expenses.

5. Contact your Congressional Representative Demand that the federal government be reopened. And in Washington, D.C., even if you can’t vote, you can still benefit from representation. They can influence important decisions.

Scott Bloom He is the owner and senior property manager of Columbia Property Management.