The curious connection between DC population growth and new Class A residential buildings

The new buildings are clearly related to DC’s population growth, yet population growth slowed as building increased

According to the US Census Bureau, DC’s population started growing in 2006, and in the 13 years from 2005 to 2018 DC added 135,319 people, a 23.9% increase. Over that same time, according to CoStar, there was a net increase of 303 multi-family residential buildings containing 40,388 multifamily housing units, a 27.6% increase.

 

table 1

 

Of the increase in multi-family housing, 74.3% of the buildings and 84.3% of the units occurred in what CoStar classifies as Class A buildings. These are newer, well-located apartments and condominiums with modern amenities. About 80% of the Class A units are apartments (see the appendix for more detail). Over the 13 years from 2005 to 2018 there was a 446% increase in units in Class A buildings compared to a 4.6% net increase in all other units.

 

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That there has been a significant increase in multi-family buildings and units is not surprising to anyone familiar with all the cranes that have dotted the city for more than a decade. What may be surprising, however, is the extent to which a relatively large proportion of the residential construction, especially that of Class A units, lagged population growth and occurred as population growth was actually slowing. The proportion of the entire 2005 to 2018 population growth that had occurred by 2013 was much greater than proportion of new housing units that had occurred by that date:

  • By 2013 DC had added 60.8% of the population growth that occurred from 2005 to 2018, but only 44.2% of the net increase in all multi-family housing units over the entire period—and only 39.0% of those in Class A structures.
  • From 2013 to 2018 DC added 38.4% of the population growth that occurred from 2005 to 2018, but a much greater share (55.8%) of the net increase in all housing units in multifamily structures occurred then. The share of Class A structures added after 2013 was 61%.
  • In 2013, the year of the largest annual gain in population, DC added 15,706 people and 2,078 net new multi-family housing units. In 2018 population growth was less than half (6,764) of what it was 5 years earlier while the net increase in housing units in multifamily buldings was more than twice as much ( 4,408).

 

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From the CoStar data on housing it is not possible to explain all of the dynamics that link population changes in DC to housing market developments. Clearly until 2013 most of the increase in population did not find housing in new Class A buildings. As we approach 2018, however, a much higher percentage of the growth could be housed in such units.  In 2013 the ratio of population growth to net increase in multifamily units of all classes was 7.6.  In 2018 that ratio has fallen to l.5. This means that the entire net increase in population in 2018 could have been housed in new (mostly Class A) housing if the average household size was 1.5.

 

Going forward, an interesting question is how much of a limiting factor the availability of new Class A housing may to population growth in DC.  There are quite a number of factors at play and so it is difficult to draw a firm conclusion here.  For example, not all Class A units that are occupied (or rented) are necessarily occupied or rented by residents who would be counted by Census as part of DC’s population. This could involve persons whose primary residence is in another state, units owned for temporary housing of corporate personnel, or units owned for short term rentals. Also if persons now sharing units in DC move to newly constructed ones to live by themselves, occupied units would increase without any increase in population. The full story linking population and housing market changes must, of course, take account of all housing units in the city, not just those in Class A units in multi-family structures.

 

As noted above, most of the Class A buildings are apartments. More details on Class A residential buildings are contained in the appendix.

About the data: 

This is the second of two blogs dealing with  population dynamics in the District of Columbia in relation to the latest  US Census Bureau estimates of DC population.

The population information reported here is from the DC population tables released in December 2018 by the US Bureau of the Census in connection with population estimates for the 50 states and the District of Columbia as of July 1, 2018.  The data include revisions to the years 2010 through 2017, and all information is subject to further revision next year.

Housing data is from CoStar, a real estate information firm that tracks all private sector apartment and condominium housing units in multifamily buildings with 5 or more units. Information for each year is for the second quarter, which corresponds closely to the July 1 date used by the Census Bureau for estimating annual population numbers. CoStar data is continuously updated and revised as more information becomes available.

A version of this blog appeared in the January/February District of Columbia Economic and Revenue Trends report, issued by the DC Office of Revenue Analysis.

Appendix

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DC’s population topped 700,000 in 2018, but last year also saw the slowest annual increase in a decade

Natural increase, not net in-migration, has become the main source of DC’s population growth.

The US Bureau of the Census estimates DC’s population on July 1, 2018 was 702,455, an increase of 6,764 (1.0%) from the revised estimate for 2017. This is notable for several reasons:

  • 2018 is the 13th straight year of population growth. From 2005 to 2018 population grew by 135,319, a gain of 23.9%.
  • 2018 is also the slowest population growth in a decade. From 2008 to 2018 DC’s population grew an annual average of 12,222. Growth in 2018 was just 55.3% of the
  • decade’s average.
    graph 2

 

graph 1

 

  • 60.7% of the net increase in population from 2017 to 2018 was accounted for by natural increase of 4,104. (Natural increase is births minus deaths.) The rest of the net change was from international migration. For migration within the US, 936 more people left DC than moved here.

 

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  • DC’s population was larger than that of 2 states (Vermont and Wyoming), and last year’s growth was more than in 16 states (9 of which actually lost population).
  • In percentage terms, DC’s rate of growth was well above the US (0.6%) rate and above that for 36 states.

Additional details on recent growth, revisions to past years, population change since 2000, and comparison with the 50 states are included below.

 

Revision to the 2017 estimate. The July 1, 2018 DC population estimate of 702,455 is actually 8,463 higher than last year’s 2017 estimate. However, the increase over 2017 is now estimated to be 6,764 because revisions to population estimates in earlier years have resulted in a new estimate for 2017 that was 1,719 higher.   The current estimate for 2017, 695,691, is 1,719 less than the prior one (693,972).

As shown in the accompanying table and graph, the revision to prior years involved all the years from 2010 to 2017. The higher estimate for 2017 reflects the cumulative impact of increases and decreases since 2010. Although the level in 2017 was higher, growth in 2017 over 2016 was actually lower (by 520 persons).

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Components of population change last year compared to the 8 1/4 years since the April 1, 2010 Census. The 6,764 increase in DC’s population from 2017 to 2018 was just a little over half (55.4%) of the 12,205 annual average since the April 2010 decennial census count. Several features stand out:

  • Natural increase has become the major contributor to DC’s net population growth. This past year natural increase accounted for 60.6% of the increase; its average contribution since 2010 was 37.4%. Although births and deaths last year both exceeded their annual averages since the census, natural increase was less than the post-census average because deaths increased more than births.
  • Domestic migration is no longer a source of net growth for DC. Net domestic migration contributed 29.3% to growth since the census, but now more people are leaving DC for other parts of the US than are arriving from them.
  • International migration has become a more important source of growth for DC. It was the source of 32.0% of the net increase in DC’s population in the years since the census, and 53.1% of the growth last year.

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Comparison with the 50 states. In 2018 DC’s population was greater than that of Wyoming and Vermont. (The next closest states to DC are Alaska (737,438) and North Dakota (760,077)), Also, from 2017 to 2018:

  • DC’s population increase exceeded that in 16 states (9 of which lost population).
  • DC’s natural increase was greater than in 11 states (2 of which were negative).
  • DC’s net domestic migration was less negative than in 26 states.
  • DC’s net international migration was greater than in 18 states.

 

table 3

Details on comparisons with the states for 2018 and for changes from 2017 to 2018 are shown in the appendix.

About the data: This is the first of two blogs dealing with aspects of population growth in the District of Columbia.

The information reported here is from the tables released in December 2018 by the US Bureau of the Census in connection with population estimates for the 50 states and the District of Columbia as of July 1, 2018. Those tables include (1) total population; (2) population as of April 1, 2010 in the decennial census and as of July 1 of each year from 2010 through 2018; (3) components of population change from July 1, 2017, to July 1,2018; and (4) components of population change from April 1, 2010, to July 1, 2018. The components of change are natural increase (with births and deaths shown separately) and net migration (with international and domestic migration shown separately. The data include revisions to the years 2010 through 2017.

A version of this blog appeared in the December 2018 District of Columbia Economic and Revenue Trends, issued by the D.C. Office of Revenue Analysis.

Appendix

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