Since 2013, Apartment Construction Has Outpaced Population Growth in DC

• July 14, 2016
• 2 Comments

by Nena Perry-Brown

Given recent data on how DC’s population growth has exceeded expectations in recent years, the findings in a new District, Measured post may come as a surprise.

According to the city’s Office of Revenue Analysis blog, the construction of new apartments in the city since the first quarter of 2013 has outpaced population growth during that time.

Over the past three years, the city’s population has grown by roughly 34,000 people, an increase of 5.3 percent. Meanwhile, the number of new apartments increased by 7.8 percent, or 12,805 units.

The contrast between the numbers and percentages somewhat belies the premise of the study, as there is no way to determine whether the newly-constructed apartments are appropriate housing for new residents — or long-time residents, for that matter.

The study also states that 33,000 jobs were added in DC between 2013 and the beginning of 2016, an increase of 4.4 percent, but that office construction has lagged behind, with space increasing only 0.8 percent over that time. This is likely due to a local job market increasingly skewed toward service sectors and white-collar employment becoming more flexible and less office-centric.

The study gleaned the number of apartments constructed using data from CoStar. Apartments monitored by CoStar represent approximately 55 percent of the city’s housing stock.

This article originally published at http://dc.urbanturf.com/articles/blog/since_2013_number_of_apartments_has_outpaced_population_growth_in_dc/11468

2 Comments

1. Fabrisse said at 8:28 pm on Thursday July 14, 2016:
   Why aren't rents at least remaining stable then? Supply and demand would seem to indicate that.

1. skidrowedc@gmail.com said at 12:30 am on Friday July 15, 2016:
   The problem, of course, is that 98% of the new apartment units are at the top of the market. Demand for apartments remains very strong in DC, but not necessarily at the highest price point. In a supply-limited, demand-driven economy like the District's, however, the market essentially cannot provide new real estate at any level other than top dollar. That's why "affordable" effectively equals "subsidized" -- with rare exceptions, there's just no other way to create it. What we're seeing is a rental echo of what happened in DC in the condo bust -- demand never dropped, but paying a premium of 40-50% for new construction became untenable. So the condos either converted to rentals or slowly dropped prices. Once they reached historic norms (5-10% premium), they sold. (This is very different than the recession story in most cities, or even in most DC suburbs, but parallel to San Francisco, parts of NYC, and a handful of other sought-after cities.) One can expect something similar to happen in the next few years with new-construction rental apartments in DC, the main difference being that most apartment developers can (and probably will) sustain losses for a while if necessary. This is especially true of deep-pocketed entities notably REITS. That's why--to answer Fabrisse's eminently logical question above--rents aren't dropping. In fact they're probably stabilizing, when incentives (free months rent, etc.) are taken into account. Landlords of the new buildings (as well as others who increased their rents commensurate to new buildings) are starting to feel the pinch, but so far they're living with it.