Will investing in Airbnb Washington DC be lucrative in 2022? What does the real estate market look like?
Washington DC is home to one of the hottest real estate markets in the world. This housing market experienced murky times during the 2020 pandemic. Prices broke records, listings seemed to attract over a dozen offers, and buyers sometimes had to pay six figures over the asking price. However, with the latest trends, things have taken a corner and stabilized over the past year.
The Washington DC housing market offers a perfect environment for both traditional and short term rental strategy investments. With Airbnbs becoming more popular, do they still present a great investment opportunity in Washington DC?
In today’s article, we look at some of the 2022 Washington DC real estate market trends and whether the Airbnb business will remain profitable.
Washington DC Real Estate Market Trends
As we’ve mentioned, the Washington DC housing market was in a crazy frenzy during the pandemic years. Demand for real estate hit record rates, while the supply remained low. This drove competition and prices up too.
As for 2022, the market still hasn’t picked up where 2021 left off. Many experts and realtors would call Washington DC a seller’s market; sellers are still in control of the market.
Here are some trends to expect in the Washington, DC in 2022:
Return to Downtown
While the pandemic seems to have calmed down, its effects will largely shape the real estate market. Remember, many people were forced to stay within the confines of their homes as COVID-19 measures and lockdowns took place.
As a result of this, many people moved to the suburbs and rural areas. Downtown condos and businesses suffered a great deal.
In 2021, many people started coming back to the downtown areas. This is set to continue in 2022, as more people are pushed back to their offices and workplaces.
While multi-family homes across the city remained with high vacancy rates, you can expect to see them get occupied during the year. However, there’s a catch here for investment property owners.
Remember, many people moved to the suburbs in search of larger spaces. Many tenants moving back downtown still prioritize space and city living. Due to this, studio and one-bedroom apartments may not perform well as they did before.
Interest Rates
Many homebuyers who started their investment journeys in 2020 and 2021 did so due to the historically low-interest rates. However, this year is going to be different.
Interest rates are expected to rise. Many real estate investors will have to find properties earlier this year before the rates have risen. Every half-percent increase in interest rates affects buying power by 5%, which can be a big deal when you look at average price points. This will motivate buyers to get out there sooner.
Property Pricing
As we mentioned, the Washington DC real estate market is still in the sellers’ hands. However, they’ll have to ensure that the prices are right to avoid having their properties sit in the market for too long.
The modern-day buyer is enlightened and carries out tons of research before making a decision. Many are aware of the cut-throat competition in the market. They also use data, such as Airbnb comps, to identify the homes that go for way more than the asking price. Due to this, many buyers won’t make an offer if the listing price isn’t affordable.
Why Invest in Airbnb Washington DC in 2022?
Washington DC is one of the leading markets in Airbnb demand. This is due to its constant flow of visitors from around the world and other US states who attend conferences or visit the White House.
Airbnb in Washington DC is a great accommodation option, especially for families and groups traveling during the week. Many forego hotels since hotel prices spike on weekdays in order to handle the influx of travelers (mainly business travelers). This makes Washington DC Airbnb a cheaper option for families and larger groups.
Here are some vital Airbnb Washington DC data from Mashvisor:
- Median Property Prices: $727,294
- Average Price per Square foot: $642
- Airbnb Rental Income: $2,967
- Airbnb Cash on Cash Return: 1.87%
- Airbnb Daily Rate: $149
- Airbnb Occupancy Rate: 64%
- Days on Market: 115
- Walk Score: 61
The above data shows that investing in Airbnb Washington DC is a lucrative business. The occupancy rate is above average meaning that you’ll experience a constant flow of Airbnb guests all year long. The monthly Airbnb rental income is also higher than the traditional rental income.
2021 Washington DC Real Estate Market Performance
As of December 2021, the median home price in Washington DC was $660,000, an increase of 4.8% from $630,000 in December 2020. All DC Metro area counties, except for Arlington, experienced similar increases. Arlington County’s median price was $670,000, an increase of 0.6% from $666,000. Alexandria City’s median was $605,000, an increase of 0.8% from $600,000. Maryland in Montgomery County jumped 9.8% from $482,500 to $530,000.
Areas that were further from the metro area experienced huge jumps. Fairfax City’s median prices climbed by 11.3%, while those of Loudoun County were up by 12.9%. Prince William County’s median prices increased by 10.8% year over year.
The average listing price for condos and attached homes in Washington DC in December 2021 was $687,000. This was an increase of 7.36% from $687,000 in 2020.
Washington DC investment properties spent an average of 61 days on market, which was an increase of 16 days year over year. The sale-to-list price ratio was 100%, meaning that homes sold for approximately the asking price.
Many of these changes were COVID-fueled.
How to Calculate Airbnb Washington DC Profitability
While we’ve seen that Washington DC is a great market for investing in the Airbnb business, it’s not a given. You need to go out of your way and look for data and analytics to support your decision. Remember, the modern-day real estate investor makes data-based business decisions.
Mashvisor’s Rental Property Calculator is the answer to your business needs. This tool is designed to help real estate investors find lucrative rental properties for the Airbnb business and help them also carry out an in-depth Airbnb analysis on the current performance of the housing market in a certain location.
Our Airbnb calculator helps you see different metrics, such as median price, monthly Airbnb rental income, cap rate, and occupancy rate. These are crucial factors that help you identify whether a particular property is profitable. You don’t want to invest in a property that ends up becoming a loss-making venture.
Mashvisor has a rental property calculator found in each property listing, which estimates the monthly rental income, expenses, cash flow, and other metrics based on comparable properties in the area.
What Brings People to Washington DC?
While most of the people who come to Washington DC are business travelers, it doesn’t mean that there are no other leisure attractions and activities that travelers can experience during their visit. There are a lot of activities that make the Airbnb business in Washington DC profitable.
To start with, you need to know that this city was planned to be the capital of the US. A lot of meticulous planning went into its design to make it a beautiful city with a myriad of attractions for tourists and travelers.
The Capitol Building
The Capitol Building is one of the most important places to visit in Washington DC. Not only is it a symbol for the city, but also for the United States. It houses two legislative bodies of the US Congress, with the Senate located in the North Wing and the House of Representatives in the South Wing. The building carries a lot of political and historical symbolism and is one of the tallest structures that’s visible from any point.
The Lincoln Memorial
The Lincoln Memorial is another major tourist attraction in Washington DC. The monument has seen many historical moments in the US, including Martin Luther King’s “I have a dream” speech. Visiting it is one of the key things to do in the city. Additionally, touring the place is free.
The National Mall
The National Mall is a large garden area containing a couple of museums and monuments, such as the Washington Monument. You can call it the most important place to visit in Washington DC since the previously mentioned attractions are also located within the National Mall. It will take you approximately 30 minutes to walk from Lincoln Memorial to the Capitol Building. The Washington Monument is only 20 minutes from the Capitol Building and 10 from the Lincoln Memorial.
History and Art
If you’re a history lover, Washington DC has a lot of activities for you to enjoy. The National Museum of Natural History has a stunning collection of taxidermies on a stage that simulates the species’ natural habitat. Besides the taxidermy collection, there are also other sections for plants, minerals, and fossils.
As for art lovers, the Smithsonian Museum of American Art will probably become a favorite. You’ll find works that revolve around all regions and artistic movements in US history. Other than that, there are several works from a generation of painters from the 19th century who captured the magic of American landscapes. Visiting the museum is free.
Kid-Friendly Activities
Washington DC is also not short of activities you can enjoy if you’ll be bringing your kids along. The National Zoological Park has close to 2,000 different birds, animals, and reptiles. The species live in habitats that simulate their natural environments as closely as possible. This is regarded as one of the best zoos in the world based on visitors’ experiences and its leadership in animal care and sustainability.
Rock Creek Park is the most ancient natural urban park in the National Park System. Other than being a perfect spot for hiking with your kids, you can also ride bicycles and skate on its playgrounds.
Washington DC is home to many cultural and historical landmarks that tell the story of the United States.
Airbnb Washington DC Ordinances
Laws and regulations surrounding Airbnb Washington DC were passed by the DC Council in 2018. However, it was not until December 2021 that the DC Department of Consumer and Regulatory Affairs (DCRA) said that it was ready to implement and enforce the regulations.
Primarily, the following are the ordinances surrounding Airbnb Washington DC:
- Any homeowner who wants to rent out their bedroom, basement, or entire property on Airbnb or any other short-term rental platform must get a license from the DCRA.
- Renting investment property that is not your primary residence for more than 30 days at a time is banned.
- Homeowners can rent out their bedrooms, basement, or attic on home-sharing platforms with no limits. However, they must live in the said property within the rental period. The laws limit the primary residence rentals to 90 days every year when the homeowner is not at home.
- There’s a hardship exemption that allows homeowners to be flexible. The homeowners have to show that their jobs or medical emergencies with family members keep them away from the District for more than 90 days a year. This ordinance can especially help military personnel and diplomats who’ll be gone for a large part of the year.
- Licensed hosts must secure their properties by installing smoke detectors and getting liability insurance for each unit that is available for rent.
- There are civil penalties that prohibit tenants from running short-term rentals.
- Airbnb guests are prohibited from using annual visitor parking permits. District residents previously complained that the permits were used for commercial purposes instead of personal guests and are taking up premium parking spaces.
As we always say, this list may not be comprehensive. We might haven’t exhausted all ordinances involving Airbnbs in Washington DC. Always talk to your attorney or real estate agent and visit the regulators’ office for further counsel.
Airbnb Washington DC Investing: Key Takeaways
We’ve successfully covered the Washington DC Airbnb topic comprehensively and given you an insight from an investor’s lens. Generally, Washington DC is a hot market for real estate investors who choose to pursue a short-term rental strategy.
Investing in real estate requires you to carry out some research and access data to support your decisions. Mashvisor is a one-stop shop for savvy real estate investors. We’ll give you access to everything, from Airbnb comps and Airbnb cash flow to the rate of return on investment.
Sign up for Mashvisor today and access your 7-day free trial, alongside a 15% lifetime discount. You can also schedule a demo with us to learn more about the platform.