Renting in DC is getting more and more expensive. These seven charts take a by-the-numbers look at what’s causing DC’s affordable housing crisis and its consequences for renters.
1. DC’s population growth is driving demand for more housing
The District’s population is growing. That’s good for our economy, but it also means demand for housing is going up.
Since 2005, we’ve added almost 77,000 residents. That’s much different from what happened in the 1990s, when DC lost 35,000 residents. In fact, the District hasn’t been this populous since 1979.
2. New housing supply stalled during the recession and is recovering now
During the recession, housing construction stalled while DC’s population increased. When there’s not enough housing supply to meet the demand, prices can go up.
Housing supply increased steadily in the 10 years leading up to the recession, by an average rate of 1,300 units per year. But between 2008 and 2010, DC gained only 700 new units.
In 2011, the pace of new construction rebounded and exceeded pre-recession levels. Last year, 4,200 new units received permits. But for people renting in DC, the cost of new units is just as important as how many there are.
3. Unfortunately, new housing isn’t translating to more affordability
While there are about 12,500 more rental units now than there were in 2005, units with rent higher than $1,500 per month were a big part of the increase.
In 2005, there were 20,900 rental units over $1,500. That number more than doubled by 2012, to 54,800. Meanwhile, the District went from having 65,200 units priced under $800 in 2005 to only 35,000 in 2012, a decrease of over 31,000 units.
4. DC’s stock of affordable rentals is declining, and the supply of mid-range units isn’t growing
Between 2002 and 2013, affordable units (those priced under $800) went from making up 40% of the rental stock to barely 20%.
Meanwhile, the share of middle-range units (between $800 and $1,400 per month) didn’t grow. But the share of high-priced units (over $1,600) ballooned from under 15% of all rental units to 35%.
5. Rents have increased, but a lot of renters’ ability to pay has not
While the cost of renting has increased, wages of working-class and lower-income workers (see below for full definitions of these terms) in DC has remained stagnant, leaving many of these households unable to keep up with rising rents. Over the past 16 years, wages at the 50th percentile have increased by only $6, and wages at the 20th percentile have only gone up by $2.
6. Rent in DC is rising faster than income, especially for lower-income and working-class renters
Rent is rising for DC households in the middle to lower end of the income distribution, and their incomes aren’t keeping pace.
Incomes at those levels are either not growing at all or are growing far too slowly. Rent is going up for top earners as well, but so are their wages.
7. For the District’s lower-income and working-class renters, the rent is “too damn high”
Rising rents, fewer low-cost units, stagnant incomes, and more expensive new rental units all amount to more burdensome housing costs for DC renters. In 2013, 41,000 District renters were severely burdened by housing costs, which is defined as spending more than half their income on housing. This is up from 27,000 renters in 2002.
Those at the middle and lower end of the income distribution are feeling the squeeze of the current situation. Over 60 percent of extremely low income, and over 30 percent of very low income renters, spend more than half their income on housing. The share of low income renters who are severely cost-burdened is up from 1% to 10%.
Such heavy housing cost burdens have serious implications. As working-class and lower-income households spend more of their income on rent, those households have less money to go toward healthcare, education, childcare, transportation, retirement savings, and other necessities.
According to the DC Fiscal Policy Institute, “low-cost private rental housing has virtually disappeared.” To bridge the gap between rental housing cost and renters’ ability to pay, DC needs to invest in programs that create and preserve rental housing that’s affordable to working-class and lower-income households.
What’s “lower income”? What’s “working class”?
Throughout this post, “low-income” refers to households that made no more than 50% of Area Median Income. In 2013, that meant below $42,950 for family of two and below $53,650 for family of four.
“Working-class” refers to low income households, with incomes between 50% and 80% of Area Median Income. In 2013, that was between $42,950 and $53,400 for a family of two, and between $53,650 and $66,750 for a family of four.
These numbers come from the HUD income limits. Some local housing programs define income categories differently.