In the last 5 years DC added 180 new apartment and condominium buildings with 22,348 units

The new units are essential to DC’s ability to absorb a growing population, but they are not the whole story

From 2012 to 2017 DC’s inventory of apartment and condominium housing units grew by a net of 22,348 according to CoStar, a real estate information firm that tracks developments in the District and many other locations. This 13.7% increase in housing units is a major element in the growth of DC’s population over that time, a relationship that will be looked at shortly. But first, a few details on the recent changes to the District’s stock of apartment and condominium units.

graph 1

table 1

  • Of the 22,324 net increase in units, 20,128 (90.1%) were in 95 apartments and 2,196 were in 84 condominiums. The average size of condominium buildings was much smaller, 26 compared to 212 for apartments. Condominiums therefore accounted for 47% of the buildings, but just 10% of the units. (In 2017, condominiums accounted for about 19% of the combined total multifamily units— condominium, apartment, and co-op—in the city.)
  • The number of new units delivered over the five years was 23,099, but 775 units, about one-half percent of DC’s stock of multifamily housing in 2012, were demolished or otherwise went out of existence.
  • The number of vacant apartment units increased by 2,374 over the past 5 years, and the vacancy rate rose from 6.5% in 2012 to 7.3% in 2017.
  • New construction at the end of 2017—11,179 apartment units and 1,614 condominium units—essentially continues the pace of recent development activity. It will take two or more years for all of this existing construction to deliver new units to inventory, and the amount of this new construction is more than half of the net increase in units that occurred over the previous 5-year period of 2012 to 2017. For apartments current construction is 56% of the prior 5 year net increase in units, and for condominiums the percentage is 74%.

Detail for each of these points are in the tables in Appendix 1.

Apartments, condominiums, and DC population dynamics

The number of occupied apartment and condominium units grew by 19,930 from 2012 to 2017. This is almost 2,400 less than the 22,348 net increase in inventory, but in percentage terms the gain in occupied units—12.9%—was greater than that of population over that time (9.2%).

table 2

table 3

Newly occupied apartment and condominium units clearly represent a major element in the demographic changes occurring in DC. Available data does not, however, make it possible to know exactly how much of the 58,342 growth in DC’s population from 2012 to 2017 was accommodated by the net increase in occupied apartments and condominiums described in the CoStar data. A judgment on this depends on the additional number of households associated with the increase in population—and this can only be estimated.

Definitions further complicate the task of trying to compare Census and CoStar information. For the Census Bureau, a household is equivalent to a housing unit occupied by DC residents. The resident household can be a single person, a small family, a large family, or a group of unrelated persons who share the unit. To be classified as occupied by CoStar, however, a unit need not only be occupied by a DC resident household (as defined by Census). Occupied units from the point of view of a property owner can also involve second homes, short-term rentals, corporate accommodations for employees and guests, units in transition waiting for a new owner or tenant to move in, or ones undergoing repairs. The growth in occupied units as defined by CoStar can thus easily exceed the increase in households as defined by Census.

That said, a reasonable place to start in connecting population increase to change in apartment and condominium occupancy is with the Census. In 2000 the ratio of population to households was 2.30, a ratio which fell to 2.27 in 2010. In that decade, the number of households grew faster than population (7.4% compared to 5.8%), and the ratio of the increase in population to the increase in households was only 1.80, suggesting that one of the features of population growth at that time was small households.

What of the period between 2012 and 2017? Was the increase in small households so great that the number of households grew faster than population, and the population/household ratio continued to get smaller? Or did population grow faster, resulting in a rise in the ratio? Among the factors contributing to this latter result would be more children and more people doubling up due to affordability issues.

Assumptions about an appropriate population/household ratio makes a big difference in assessing how many new households population growth has brought—and how much of that growth was accommodated by occupancy growth in apartment and condominium buildings. As noted above, the 2010 average population/household ratio was 2.27. That ratio applied to population growth over the 2012 to 2017 period yields an estimated growth in households of 25,701, a number that exceeds CoStar’s estimate of the increase in occupied units by 5,771.

The 2012-2016 American Community Survey 5 year estimate pegs the population/household ratio at 2.38. Applying that higher ratio gives 4,583 as the amount by which household growth exceeded the increase in occupied units. With ratios a little higher or lower than these averages new household growth exceeds the growth in occupied units. Only if the population/household ratio rises to 2.93 does the new household estimate equal that for the growth in occupied units. Under a range of plausible assumptions it appears likely that the District of Columbia added more households over the past five years than could live in newly occupied units in new apartment and condominium buildings. If this is the case, this means that other components of the housing stock—structures with four or less units—must have been able to absorb some of the increase in population.

table 5

Taken as a whole, the DC housing stock does provide room to accommodate some of the growth in population in units other than those in new apartment or condominium buildings. The Census Bureau’s American Community Survey estimated that for the 5-years 2012 through 2016 there were 306,711 housing units in DC, and that 160,750 (52.4%) of those units were in structures with 5 or more units. In other words, almost half of DC’s housing stock is in smaller buildings. Over the past 5 years more than 1,000 permits have been issued for projects with less than 5 units, and many smaller buildings can be reconfigured to accommodate more units.

table 4.PNG

In this connection, in the prior 5 year period— 2007 to 2012—larger buildings appear to have played a smaller role in accommodating population growth than in the most recent five years. From 2007 to 2012 Co-Star’s estimate of occupied units grew more slowly than population (6.9% versus 10.7%). The ratio of new population to the estimated increase in occupied apartments and condominiums was 6.1. (See Appendix 2. for more details.)

table 6

With the current pace of construction for apartment and condominium buildings much like that of the past few years, multi-family apartment and condominium projects will undoubtedly provide the largest share of the additional housing needed for DC’s growing population—provided, of course, that a sufficient number of households can afford to live in them. But the connection between increases in population and changes in the housing stock is a complex one, and DC’s changing demographics involve more than simply building large new apartment and condominium buildings for new people.

Appendix 1

Gross and net changes to inventory.

table 7

Apartment share.

table 8

Vacant units.

table 9

New construction.

table 10

Appendix 2

table 11.PNG

About the data. Data on DC multi-family housing buildings and units are for apartments, condominiums, and co-operative apartments of all classes in structures with 5 or more units as reported by CoStar, a real estate information company. The data was accessed toward the end of April. Population data and data from the American Community Survey are from the US Bureau of the Census. The housing and population data are all subject to revision by the source as more information becomes available.

This analysis looks solely at the statistical relationships between changes in DC population, households, and housing units.  It does not address issues related to affordability or homelessness.

An earlier version of this blog was included in the April 2018 District of Columbia Economic and Revenue Trends report issued by the Office of Revenue Analysis of the District of Columbia Office of the Chief Financial Officer.



High-Income Residents: Are They the Driving Force Behind DC’s Premium Apartments?

In a recent post, we concluded that the premium apartment rental market is the more popular and ascendant segment of the city’s housing market in the context of the current trend in net population growth. To further elaborate on this topic, we profile the tenants in the city’s Class A and Class B apartment buildings built after 2000 based on income tax data characteristics. The full research paper can be found here.

Economic Profile of Tenants

Table 1 tells us that in 2015 half of the residents who were income tax filers in the 88 Class A and Class B large and mid-sized apartment buildings that were built after 2000 had annual reported income of less than $57,428 and were under the age of 31.5. And, the vast majority of these tenants were single tax filers (unmarried and no dependents) and were relatively new[1] to the city.


[1] We classify a new resident as someone who existed in the city’s income tax data in either 2013, 2014, and/or 2015, but did not exist in 2012 or prior.

Who is more likely to live in new apartment units?

Our data shows that there was a tripling in the number of premium apartment units delivered in 2013 compared to 2012. To better evaluate the data, we divided the buildings into two groups. The first cohort is comprised of all 2015 tax filers found to be residents in multifamily buildings that delivered between January 2000 and December 2012 (relatively older premium multifamily buildings). The second cohort is comprised of all 2015 tax filers found to be residents in multifamily buildings that delivered between January 2013 and December 2015 (newer premium multifamily buildings).  We then fit a statistical model to the data to determine the characteristics of new buildings versus older buildings.

Using T-tests, we find that the newer buildings tended to have units that were an average of 88.3 square feet (10.5 percent) smaller and cost 17.5 percent more per square foot (Table 2). We also found that individual tenants in newer buildings tended to have income that was on average of $9,884 (12.3 percent) less and 1.3 years younger than renters in older buildings.


Using a statistical model to differentiate the characteristics of tax filers living in a newer building in 2015 versus older buildings, we calculate the probability that certain factors affect the choice of residing in newer apartment buildings instead of older buildings.

While the tenants in new and older apartment buildings are generally very similar, we were able to again tease apart a few distinctions in the two populations as well as a few contributing factors for their housing choices.


We find that income has almost no influence on whether a resident chooses to live in a newer or older apartment building (for every $100,000 increase in income, the probability to choose a newer building increases only about 4 percent). Age is also an important factor in determining how likely a resident will choose newer or older apartment units. Younger residents are more likely to reside in newer apartment buildings. For each additional year in age, existing residents are 0.8 percent less likely to reside in newer buildings, while this percentage is 0.2 percent for new residents. We also find that tenants commonly supplement their traditional wage/salary income with additional business income from entrepreneurial or other self-employment endeavors.[2]

Given that 83 percent of all tenants in these buildings are single filers (as shown in Table 1), we find that long time city residents who are head of household tax filers (unmarried income earning adults with dependent children) are 23 percent more likely to live in newer buildings compared to married residents. This is possibly due to the city’s affordable housing efforts to place low-income households in these new buildings via affordable housing programs.  And finally, single residents are more likely to reside in newer buildings compared to married filers, especially when they are relatively long-time residents.

[2] On government tax forms, adjusted gross income is comprised of wages and salaries, business income, investment gains or losses and other income.

Several Ways DC is Changing

In sum, we find the following results. First, 64 percent of the tenants in all the apartment buildings in this study tended to be new to the city. Second, the newest apartment units are smaller and more expensive, and their residents tended to be slightly younger and have less income than residents in the relatively older buildings. Third, residents in the newest units are more likely to have business income as part of their total reported income, which suggests there is an increased tendency for these residents to supplement their traditional wage and salary income with additional income from entrepreneurial or other self-employment endeavors. Lastly and surprisingly, the analysis shows a relatively strong increase in probability for residents in the newer buildings to be head of household filers. This is possibly due to the city’s affordable housing efforts to place low-income households in these new buildings via inclusionary zoning and various housing subsidy programs.

Conventional wisdom assumes that these newer buildings are attracting primarily high-income residents; 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. It appears that both the city’s demographics and apartment rental market are continuing to evolve and change in significant ways. And, it is very likely these changes will have considerable implications on the residential and economic patterns of the city in the years to come.


The Data

Using data from CoStar, we identified 88 Class A and Class B large and mid-sized apartment buildings (containing 21,203 total residential units) from across the city that were built after 2000. The list can be found here. This study also uses 2015 individual income tax data for all DC tax filers who listed their home address as being in one of the 88 apartment buildings mentioned above.



The Rise of the Premium Apartment Rental Market in the District of Columbia

Although the District of Columbia’s population is growing continuously since 2006, the city’s housing stock is growing at a slower rate (Figure 1). Since the Great Recession, this slower rate of annual growth in the housing stock is likely due in part to accelerating land and construction costs per square foot, the decreasing supply of available land lots, zoning, and the lack of preservation of family-sized housing units. Consequently, the city’s housing vacancy rate, which used to exceed 10 percent is currently approaching six percent (Figure 2). In other words, roughly 94 percent of the city’s housing units are occupied, whereas in earlier years it was closer to 90 percent. These factors have profound implications on how certain housing market sectors are evolving.

 Figure 1

Figure 1

Figure 2

Figure 2









When ranked among the states, the District of Columbia’s home ownership rate of 39.8 percent was the lowest in the nation as of the fourth quarter of 2017, according to the U.S. Census Bureau[1]. (New York and California had the next lowest rates of 51.1 and 55.1 percent, respectively.) One of the many reasons for this is likely the high cost of homes and home-ownership in the city. In 2000, half of the homes purchased in the city were priced below $178,250. But, with the median single-family home price nearly quadrupling by 2017, half of the homes purchased in the city were priced above $690,000, (Figure 3). On average, the median sale price for homes in the city increased 8.3 percent per year, while the consumer price index for the Washington area only grew on average by 2.3 percent a year over the same period.

Figure 3

Figure 3

Additionally, the number of single-family home and condo sales have grown at an average annual rate of 4.9 percent between years 2009 and 2017 (MRIS[2]). But since the city’s population has increased by an average of 15,653 people (2.5 percent) every year since 2010 (U.S. Census Bureau), a key factor in the city’s robust residential development simply appears to be population growth. Home ownership rates and population levels between 2010 and 2017 are shown in Figure 4.

Figure 4

Figure 4

For the many residents who choose to avoid a down payment and closing costs of tens of thousands of dollars on the purchase of a new home in the city, renting is the preferred housing option. Between the years 2013 and 2017, the city added over 4,200 multifamily units per year on average, in premium buildings (Class A and Class B) alone, to help accommodate the growing population (Figure 5).

Figure 5

Figure 5

In 2017, the average effective rent for a one-bedroom apartment in the city was $2,184 and $1,834 for a studio apartment (Figure 6). And, while these rental rates may be unnerving to some, rental rates have generally grown over time in line with the area’s consumer price index, unlike the prices for newly purchased homes.

Figure 6

Figure 6

Despite the very high expense of buying and owning a home in the District of Columbia, the number of single-family home and condominium sales have grown at a healthy average annual rate of 4.9 percent between years 2009 and 2017. But residential property developers, on the other hand, delivered apartments in new Class A and Class B buildings at an even healthier average annual rate of 14.1 percent during the same period. With respect to all relevant city trends, the premium apartment rental market appears to be the more popular and ascendant sector of the city’s housing market.


[2] Metropolitan Regional Information Systems, Inc.