Last week, UrbanTurf reported on a massive 1,555-unit residential project planned near the Rhode Island Avenue Metro, the biggest residential development to be announced in DC in quite some time. A commenter asked a question that many out there are probably wondering: How will DC’s population keep up with the rampant pace of building and development going on in the city?
Mayor Bowser’s claim yesterday that the city’s population will reach 800,000 in the coming decades notwithstanding, UrbanTurf wanted to provide an educated answer to the reader’s question. So we reached out to David Versel, formerly of George Mason University and now part of Delta Associates consulting and publications practice, to get his expert opinion.
UrbanTurf: The construction of new multi-family projects in the DC area seems to be ramping up from its already frenzied pace. Are there signs that the supply is on the verge of outpacing demand?
David Versel: The high number of new multi-family developments is a market response to the sustained pace of unit absorption. The metro area has absorbed more than 16,000 apartment units over the past 12 months, which is more than double the 10-year average. Even with all of the new units coming on the market, the sustained demand has resulted in new units finding renters and rates remaining stable.
UrbanTurf: What evidence can you provide that demand will continue to keep up with supply?
Versel: There are three major reasons why demand for apartments in the Washington area should continue to grow at a healthy rate over the next few years. First, job growth has been very strong so far in 2015, and is expected to increase through at least 2017. Second, the combination of rising home prices and flat wages has limited the ability of many would-be homebuyers to purchase homes. Third, millennials are expected to form more households in the next 5-10 years as they move out of their parents’ homes or roommate situations.
A look at expected payroll growth in the DC area.
UrbanTurf: What are the potential dark clouds that could result in a slow down for the multi-family market in the DC area?
Versel: The ongoing wave of demand will continue to keep the apartment market in Washington and its suburbs in equilibrium for at least the next 2-3 years. However, if and when job growth slows down or home sale prices decline, the apartment market runs the risk of becoming oversupplied.
This article originally published at http://dc.urbanturf.com/articles/blog/why_demand_will_keep_up_with_building_in_dcs_apartment_market/10152
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