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.
- 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%).
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.
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.
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.)
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.
Gross and net changes to inventory.
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.