Development in the District and its suburbs has boomed in recent years, but a recent report shows that the DC area has become pricey due to its slowing rate of expansion since the 1970s.
As BuildZoom chief economist Issi Romem explains, there is an inverse relationship between growth in housing prices and outward expansion in metropolitan areas. Although U.S. cities have expanded into surrounding areas at a steady clip since the post-World War II era, they have done so in two different ways: expansively or expensively.
Expansive cities have developed at an accelerated rate, coupling their economic strength with strong population growth. Conversely, expensive cities have sharply reduced their rate of outward expansion in recent decades leading to higher property values.
A snapshot of development in the DC area in the 1970s
A snapshot of development in the DC area in the 2000s
DC offers a clear example of the development dynamic of expensive cities, wherein an inelastic housing supply has led to a reactive style of development in response to rising property values.
“[Expensive cities like DC] create jobs and opportunities that attract many people, but when these people compete with each other over a limited housing stock the highest bidders prevail, raising home values and rents,” the BuildZoom report stated. “A key implication of housing cost escalation is that it sorts people into and out of these cities based on their financial ability, churning out a population that is increasingly well off. Because affluent residents tend to ratchet up land use regulation more than others, the process results in an even more constrained housing supply that raises property values further in a vicious cycle.”
In the DC area, stringent building and land-use regulations are also coupled with the development challenges posed by natural topography. The cycle of rising housing prices, inelastic supply and slow-rolling development will continue unless the area gets more creative and expansive in its growth.
Click here to see more data and analysis from other cities around the country.
This article originally published at http://dc.urbanturf.com/articles/blog/how_dcs_development_rate_has_made_it_expensive/11122
Most Popular... This Week • Last 30 Days • Ever
DC's homebuyer assistance programs can be a bit complex. This edition of First-Timer ... read »
The most detailed rendering yet has been unveiled for the 310-unit redevelopment of t... read »
A look around DC to find the most equity-rich neighborhoods.... read »
Just a month after setting a new high in March, the value of a house in DC skyrockete... read »
The National Capital Planning Commission will consider approval of the final master p... read »
Our guide for amateur landlords who don't really know what they're doing.... read »
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
When you buy a home in the District, you will have to pay property taxes along with y... read »
The eight-bedroom, 35,000 square-foot home known as The Cliffs hit the market Wednesd... read »
Brookfield Properties is moving forward with development plans for additional sites i... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro