DC's residential construction boom puts pressure on affordable housing

Dive Brief:

Washington, DC’s homelessness rate is the highest in the U.S. and more than double the national average, with 124 homeless individuals for every 10,000 residents, the The New York Times reported, citing a new report from the U.S. Conference of Mayors. As of January 2015, 8,350 people in DC experienced homelessness across shelters, transitional housing and the street, while an additional 17.3% of residents lived in poverty.
The report, which focused on 32 cities across 24 states, found that the largest increase in the rate of homelessness between 2009 and 2016 occurred in New York City, by number and percent, where the figure is 49% for an additional 24,180 people. Washington, DC, reported the fourth-largest increase at 34.1%. Overall, the rate of homelessness nationally has dropped 12.9% from 2009 to 2016.
Referencing a separate report from the D.C. Fiscal Policy Institute, the Times noted that DC’s lowest-income residents allocate more than half of their income to housing costs and cited median gross rent from 2011 to 2015 at $1,327. Many low-income individuals obtain housing on the private market, subjecting them to the effects of rising rents district-wide as a result of the city's residential construction boom.

Dive Insight:

The residential construction market in the nation’s capital continues to flourish, driven by a continual tide of young professionals moving to the area for the job opportunities it provides.

Last month, the Council of the District of Columbia approved legislation that will levy a tax on apartments in the city’s downtown business improvement district. It comes in response to recent population growth in that part of the city — from 1,200 residents in 1997 to almost 10,000 residents and 6,500 units today.

In November, a report from the Washington, DC Economic Partnership and CBRE forecast that 6,524 residential units will have been delivered in the city by the end of 2016, the best since the group started tracking the data in 2001. It is expected that 8,250 units will be delivered in 2017. Slightly less than half of the units currently under construction (14,800 as of August 2016) are located in three neighborhoods that are experiencing a population shift: Capitol Riverfront, North of Massachusetts Avenue (NoMa)/Union Market and Southwest

In NoMa, Toll Brothers' Apartment Living multifamily business unit recently secured a $130 million construction loan to build a 525-unit luxury apartment. It follows the start of work by Skanska on a 12-story, 326-unit apartment building in the neighborhood, the first phase of the company's three-building Tyber Place project.

Both projects tout amenities including rooftop pools and fitness centers, with a pet spa in one and a day care in the other. These large-scale projects are two examples of the influx of multifamily construction in the city’s genitrifying neighborhoods. And the trend is impacting housing affordability across the city, the Times reported.

The Greater Capital Area Association of Realtors put the median home price in the district at $549,000 in November – consistent with a year ago but up considerably from $395,000 reported in 2011. Inventory, meanwhile, was at a 1.9-month supply. The average rental price rose 2.16% year-over-year to $2,828.98 in the second quarter of 2016.

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