D.C. apartment construction hits a slump
Roughly 13,200 new apartment units are expected to be built across the D.C. metro this year, a slight slump compared to 2021 and 2022, according to a new report.
Why it matters: A housing shortage in the U.S. has contributed to the rising cost of both renting and buying.
- Nearly three-fourths of renters say they're renting in an area where they couldn't afford to buy, according to a new survey from RealPage, a real estate analytics and software company.
What's happening: New apartment construction is slightly down in the D.C. metro in part because financing is hard to get and construction costs are on the rise, developer Oliver Carr tells Axios.
- "Most projects no longer pencil out," he says.
The big picture: Washington is among the top 20 metros where roughly 41% of U.S. renters live, per the report by RentCafe, which analyzed data from real estate intelligence service Yardi Matrix.
- A historic surge in new apartment supply — 1.2 million units were completed during the pandemic — helped slow rent growth nationwide.
Yes, but: Around 89% of the U.S. units completed from 2020 through 2022 are high-end, per the report, and not the type of affordable apartments many renters want.
- Go deeper: D.C.'s apartment amenities arms race
What they're saying: "Based on the interest rates, we're priced out of where we would want to be or how much house we could afford," Alexandria renter Joel Daly tells Axios.
- For $4,400 a month, Daly and his wife can rent a million-dollar home. For that same monthly payment, they'd be able to buy a $530,000 house, he says.
Elizabeth Williams sold her Alexandria home in March, and reaped the benefits of a multi-offer, all-cash sale.
- She and her boyfriend have been renting an Alexandria apartment since then, but still desire the "autonomy" of a home even though the price might be "a gut-punch to our finances."
What's next: Across the U.S., 1 million rental units are slated for completion through 2025, but higher costs and other headwinds could slow developers' pace in future years.
- "Tightening of bank lending standards — combined with rising costs of construction materials, labor and land — has made new projects harder to pencil," senior analyst Doug Ressler at Yardi Matrix says in the report.
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