Dive Brief:
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Though eight in 10 millennials in Washington, DC, say they plan to purchase a home in the future, the majority cannot afford to do so at this time, according to Apartment List, which polled 24,000 U.S. renters born between 1982 and 2004 about their homeownership plans.
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It would take the average DC millennial 11.6 years to save up a 20% down payment, the report found, compared to the 24 years their peers in San Francisco, San Diego and Los Angeles need. That’s considerably higher than the 5.5 years in Kansas City, MO, and 6.2 years in Las Vegas.
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Millennials' ability to save for a down payment is being compounded by rising rents in the District. In the last year, rents have increased among properties near 61 of the 91 stations in the region's Metro rail system, with some areas seeing jumps of more than 10%, according to RentHop.
Dive Insight:
The nation's capital isn't alone when it comes to renters' struggle to buy a home. Seven in 10 renters across 20 U.S. markets reported their inability to afford a down payment as the primary factor holding them back from owning, according to a recent report from Zillow. Putting 20% down on a median-priced U.S. home requires more than two-thirds of a buyer's median annual earnings — but it can cost nearly twice that in the nation's most expensive markets.
In DC, the top three barriers to homeownership among renters are affording a down payment, qualifying for a mortgage and existing debt, the Zillow report found.
That's unsurprising in a market whose workforce includes a sizeable share of young professionals who often opt to rent as home prices in the city continue to climb. Those prices were up 4.2% year-over-year in March, slightly under the national average of 5.8% for the month, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price Index.
Apartments and condominiums — an ownership option with a lower barrier to entry than single-family housing — are a major focus of the District's current development boom. Real estate data provider Recity expects DC to add 15.5 million square feet of residential and commercial space this year. Of that figure, nearly two-thirds will come in the form of mixed-use developments. Since 2012, DC has added 23,000 residential units, with 50,000 more in the pipeline for the coming years.
Much of this development is concentrated in three neighborhoods — Capitol Riverfront, NoMa and Southwest — according to a report out last fall from the Washington, DC Economic Partnership and CBRE. There, transit-oriented projects offer housing, office space, retail and other amenities in a walkable format.