Whether you are thinking about buying or building new rental properties in Washington, D.C., or expanding your current portfolio of rental units, the question, will the DC housing bubble burst? probably has crossed your mind.
It’s a good question. Property and property management in Washington, D.C. continues to see high demand. A look at area trends will provide a framework for the question.
Area trends
Just a year ago The Washington Post reported that average home prices were so high that there was concern. The Post’s research and analysis noted that neighborhoods m
atter: those neighborhoods that are close to jobs and transportation also have less available housing stock. “With robust rental demand and strong job growth, the Washington area has been an attractive place for investors,” the Post reports.The Post’s conclusion? Prices for housing will enjoy a steady but more moderate growth owing to two essential trends over the next few years:
- High-wage business sectors in the area will lose jobs while lower wage sectors will grow; and
- Demographically, there will be more one-person households and younger households.
Trends in multifamily units
In a classic case of one-the-one-hand, on-the-other-hand, GlobeSt.com is reporting that one side of the debate argues that the current stock of apartment units and those under development taken together are not sufficient to meet a real demand for apartments in the D.C. area.
The other side of the debate, says GlobeSt.com, is being fueled by a new national report: “According to new statistics from Axiometrics that were reported by SNL Financial in a note, new development activity poses risks for these markets.”
GlobeSt.com seems to be placing their thumb on the side of the scale that weighs in on demand outstripping supply, calling the demand for apartments “insatiable” owing to these trends: “more stringent mortgage underwriting has made home ownership more difficult; young adults are not inclined to own homes anyway; there is a trend to urban living.”
Remember that Washington Post trend about younger, single-person households? That trend supports the argument that the need for more multifamily units will continue, as NAREIT suggests in GlobeSt.com, “for years to come.” Why? “As the job sector steadily improves, …young adults will continue to emerge from their parents’ basements, seeking to form their own households.”
The article also quotes David Brickman, multifamily executive vice president at Freddie Mac, who says: “Given current trends in renting and multifamily rental-housing inventory, apartment demand should exceed supply for years to come.”
Brickman’s blog post even advises that “there is a growing need to direct ‘flexible’ capital into renovating, preserving, and, in some cases, transforming the nation’s aging rental-housing stock.”
RM Properties, a local expert in property management in Washington, D.C., can assist you with more information about area trends. We always are ready to help protect your investment. Please contact us to learn how we can assist you – info@rmprop.com.