"Promoting housing affordability by combating exclusionary housing policies"

 

CFC # 41863 (Combined Federal Campaign) 

Rent increases continue lower in EHI’s local emphasis area—the Washington, DC, region—than in other major metropolitan areas

 

Rent increases (“rent growth”) for housing in the Washington, DC, metropolitan area continued well below the national average, for the year ending in October 2016, even though rent growth nationwide was decelerating mildly. During that period, DC-area rent growth was:

  • about half the national averages of 5.7% overall and 6% for “renters-by-necessity” (which includes Americans who lack the wealth to buy homes, such as low- and moderate-income people), and
  • the lowest of all but one of the nation’s 30 largest metros.

(Those figures were reported by Yardi Matrix, a major, commercial real estate research and data platform focused on the apartment market industry.) The lower-than-average rent growth in the DC area, a trend now in its fourth year, is gratifying to EHI, because the DC region is where EHI has concentrated its local advocacy. For example, during EHI's first five years, one affordable housing unit per day was added to local plans in its home county (Fairfax County, Virginia), following EHI's advocacy,. For more, click on EHI's FIRST FIVE YEARS

That recent trend is a dramatic change. Nowhere did rents rise faster, between 1980 and 2014, than the D.C. region—where they climbed 86 percent (adjusted for inflation), while renters’ incomes rose only by an inflation-adjusted 33 percent (according to a major new analysis by Apartment List). The new, lower rent growth in that region is especially helpful to low- and moderate-income people, because most of them rent, and housing costs generally consume much more of their incomes.

It also bears noting that the DC region is bucking the national trend toward less affordable home purchase prices. Home prices became less affordable in 63% of counties nationwide, for the year ended in September 2016—according to RealtyTrac. But the situation was much better in the DC area. While the District saw a 4 percent decline in affordability, Montgomery County and Arlington County each saw a 5 percent improvement in affordability from third quarter 2015 to third quarter 2016. Fairfax County saw a 2 percent improvement, and Alexandria saw a 1 percent improvement.

As to the rental market, DC-area housing demand fundamentals continue quite strong. Yardi’s observations about the recent deceleration in rent growth nationwide appear fully applicable to the DC area:

The deceleration is far from being a sign that the sector is overheated. Fundamentals in most markets continue to be strong. Occupancies of stabilized properties are not far from cyclical highs, while the growing population coupled with strong job numbers is producing above-trend household formation that leads to demand for apartments. Some 26 of our top 30 metros are above the 2.3% long-term average for rent growth, and we expect that to continue in most markets.

To read EHI’s full update, click on DC-AREA RENT INCREASES CONTINUE MODERATE THROUGH OCTOBER 2016. To access background information on recent rental cost trends in DC and nationwide, click on EHI HELPS ITS HOME REGION TO MUCH-IMPROVED RENTAL HOUSING COST RECORD (June 2016).