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Young, But Not Wealthy: A Look at Who is Renting DC’s New Apartments

by Nena Perry-Brown

Young, But Not Wealthy: A Look at Who is Renting DC's New Apartments: Figure 1
A new apartment building planned across from Nats Park.

The 21st century thus far for DC has been primarily characterized by how development has spurred gentrification. However, there may be a missing component to the narrative that it is wealthy people who are creating demand for the city's new luxury apartments. 

A new analysis from District, Measured examines how the proliferation of younger, single individuals with below-median income may have a closer relationship with the growth of the luxury rental market in the city.

Young, But Not Wealthy: A Look at Who is Renting DC's New Apartments: Figure 2
Quantity of Class A and Class B apartments delivered annually. Click to enlarge.

The District, Measured analysis compares the demographic data of two cohorts: tax filers in 48 Class A and Class B buildings that delivered between January 2000 and December 2012, and tax filers in 40 Class A and Class B buildings that delivered between January 2013 and December 2015. 

The data regarding tenants of newer buildings may surprise some. It turns out that residents of these buildings tended to be single, 1.3 years younger than and earn 12.3 percent ($9,884) less than residents of the older set of buildings. Overall, the difference in residents earning between $20,000-$250,000 annually in either cohort was statistically insignificant — it's more that residents earning more than $250,000 tended to live in older buildings.

Young, But Not Wealthy: A Look at Who is Renting DC's New Apartments: Figure 3
Average effective rents in Class A and Class B buildings built after 2000. Click to enlarge.

Residents of the newer buildings also tended to report business income in addition to traditional income, implying that they need to supplement their salary with entrepreneurial endeavors. Taxpayers in newer buildings had an average income of $70,297 and a median income of $55,897; taxpayers in older buildings had an average income of $80,181 and a median income of $58,742.

"Conventional wisdom assumes that these newer buildings are attracting primarily high-income residents," the report states. "However, we find that compared to older buildings, the city’s newest and pricier apartment buildings built during the recent residential construction surge (2013 and after) tend to attract a higher percentage of new residents to the city, and also attract a higher percentage of single, young residents with income below the city average."

The study uses data from CoStar combined with 2015 individual income tax data associated with 88 Class A and Class B buildings, containing 21,203 units, constructed since 2000. 

This article originally published at https://dc.urbanturf.com/articles/blog/young-but-not-wealthy-a-look-at-who-is-renting-dcs-new-apartments/13992

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