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.
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.
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).
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.