The Washington DC Housing Market: Trends and Outlook Housing Association of Non-Profit Developers...

The Washington DC Housing Market:Trends and Outlook

Housing Association of Non-Profit DevelopersDecember 11, 2014

Lisa A. Sturtevant, PhD

Vice President of Research, NHC

CURRENT HOUSING MARKET:5 CHARACTERISTICS OF THE REGION’S RECOVERY

Key Characteristics – Washington DC Housing Market

• Slower Job Growth

• Rising Prices and Rents

• Expanding For-Sale Inventory

• Convergence of Market Activity Across the Region

• Increase in New Construction

1991 1996 2001 2006 2011-100

-50

0

50

100

150

200

(000s)

1. Job Growth Has Slowed

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job Change – MOTYWashington MSA

Other Regions Gaining Jobs Faster

New York

Los Angeles

Chicago

Dallas

DC Houston

Philadelphia

Boston

Atlanta

Miam

i

SF-Oakland

Detroit

Phoenix

Seattle

Minneapolis

0

20

40

60

80

100

120

140

(000s)

Washington +17,600


Job Change Oct 2013 – Oct 201415 Largest Job Markets

(000s) Total = 17,600

Growth Uneven Across the Economy

Transp. & Util.Wlse Trade

ManufacturingInformation

FinancialOther Services

ConstructionLeisure & Hosp.

Retail TradeState & Local Govt

Educ & Health SvcsFederal Govt.

Prof. & Bus. Svcs

-20.0-15.0-10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0

11

-2-3

41

56

18

0-5

2


Job Change by Sector Oct 2013 – Oct 2014Washington MSA

Annual Change Annual Change by Month

2010 2011 2012 2013 2014

2000

2006

2009 Ma

rJun Se

pDecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

-20

-15

-10

-5

0

5

10

15

20

25

%

Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

2. Price Increases Have SlowedAverage Sales Price Percent Change

Washington MSAAll Housing Types


2010 2011 2012 2013 2014

2005

2008 Fe

bMay

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

-20

-15

-10

-5

0

5

10

15

20

25

%


Average Sales Price Percent ChangeWashington MSA

Single-Family Detached


2010 2011 2012 2013 2014

2005

2008 Fe

bMay

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

-30

-20

-10

0

10

20

30

%


Average Sales Price Percent ChangeWashington MSA

Single-Family Attached


2010 2011 2012 2013 2014

2005

2008 Fe

bMay

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

Nov

Feb

May

Aug

-15

-10

-5

0

5

10

15

20

25

30

%


Average Sales Price Percent ChangeWashington MSACondominiums

But Rents Continue to Rise

2000 2006 2007 2008 2009 2010 2011 2012 2013$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$744

$1,481

Source: U.S. Census Bureau, 2000 Census SF3; American Community Survey 1-year estimates

Median RentWashington MSA

20002001

20022003

20042005

20062007

20082009

20102011

20122013

2014

-60

-40

-20

0

20

40

60

80

100

120

140

Oct =+21.7%

Percent Change in Inventories of Existing HomesMonth-Over-YearWashington MSA

Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis. Total monthly inventory includes listings active at the end of the month plus sales during the month.

%

3. Inventories Have Been Growing

20012002

20032004

20052006

20072008

20092010

20112012

20132014

0

5

10

15

20

25

ArlDCFfxLdnPGMontPW


Total Listings Per SaleOct Each Year

Rental Vacancy Rates Have Edged Up

2006 2007 2008 2009 2010 2011 2012 20130%

1%

2%

3%

4%

5%

6%

7%

8%

4.9% 5.1%

Source: U.S. Census Bureau, SF3; American Community Survey 1-year estimates

Rental Vacancy RateWashington MSA

4. Recovery Has Become Widespread

Median Sales Price by JurisdictionWashington MSA


2010 2011 2012 2013 2014

2000

2006

2009 Ma

rJun Se

pDecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

-15

-10

-5

0

5

10

15

20

25

%


Average Sales Price Percent ChangeDistrict of Columbia


2010 2011 2012 2013 2014

2000

2006

2009 Ma

rJun Se

pDecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

-20

-15

-10

-5

0

5

10

15

20

25

%


Average Sales Price Percent ChangeSuburban Maryland


2010 2011 2012 2013 2014

2000

2006

2009 Ma

rJun Se

pDecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

DecMar

Jun Sep

-30

-20

-10

0

10

20

30

%


Average Sales Price Percent ChangeNorthern Virginia

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Building PermitsWashington MSA

2001 – 2014, 3-Month Mvg Avg

Source: Census Bureau, GMU Center for Regional Analysis

5. Construction Activity Up Steadily

Building Permits by TypeWashington MSA

20002001

20022003

20042005

20062007

20082009

20102011

20122013

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

0%

10%

20%

30%

40%

50%

60%

Un

its

Per

cen

t M

ult

i-F

amil

y

Source: Census Bureau

OUTLOOK FOR THE REGION’S HOUSING MARKET: 5 ECONOMIC & DEMOGRAPHIC TRENDS

Key Trends – Outlook for the Washington DC Housing Market

• Economic Restructuring

• Rising Affordability Challenges

• Aging of the Population

• Demand from Millennials

• Growth of Minority Population

1. Changing Structure of the Economy


Slower growth in Federal Government and Professional & Business Service jobs

Faster growth in Leisure & Hospitality, Retail and Construction jobs

Change in Federal Government JobsWashington MSA

20

02

20

05

20

08

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

-20

-15

-10

-5

0

5

10

15

20

25

30(000s) Annual Data Annual Month over Year

2009 2010 2011 2012 2013 2014


Change in Professional & Business Services JobsWashington MSA

20

02

20

05

20

08

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

-20

-15

-10

-5

0

5

10

15

20

25

30(000s) Annual Data Annual Month over Year

2009 2010 2011 2012 2013 2014


Washington Metropolitan Area Job Change

by Wage Category between 2008 to 2013

Lower Wage

Mid-Wage

Higher-Wage

-60,

000

-40,

000

-20,

000 0

20,0

00

40,0

00

60,0

00

80,0

00

2008-2009 2010-2013

Sources: EMSI 2013.3 & GMU Center for Regional Analysis

Principal Sources of JobGrowth in the Washington Area, 2012-2032

(000s)

Job % of Total Median

Change Job Change Wage*

Prof. & Sci. Svcs/Mgt 401.8 46.9% $81,500

Admin & Waste Svcs 139.0 16.2 29,500

Construction 95.0 11.1 36,700

Health Services 71.2 8.3 39,500

Leisure/Hospitality 45.9 5.4 18,300

Sub-Total 753.1 87.8%

Overall Total 857.3 100.0 $48,900

* in 2011$sSource: 2009-2011 ACS, IHS Global Insight, MWCOG, BLS, GMU Center for Regional Analysis.

2. Housing Affordability is a Challenge

19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

20132014

0

50

100

150

200

250

300

Source: Core Logic, HUD & Federal Housing Finance Agency

Housing Opportunity IndexWashington MSA

Thousands of Households Cost Burdened

2009 20120%

5%

10%

15%

20%

25%

% o

f H

ou

se

ho

lds

Se

ve

rely

Co

st

Bu

rde

ne

d

Source: NHC Center for Housing Policy, Housing Landscape 2014

190,000 working households

Households Spending More than Half of Their Income on Housing

Cost Burden Varies Around the Region

Arlington Alexandria District of Columbia

Fairfax Montgomery0%

5%

10%

15%

20%

25%

30%

19% 20%

26%

18%

25%

Renters Spending Half or More of Their Income on Housing, 2012

Source: U.S. Census Bureau, American Community Survey 1-Year file

Many Workers Can’t Afford to Buy a Typical Home

Source: NHC Center for Housing Policy, Paycheck to Paycheck

Or to Rent a Typical Apartment

Source: NHC Center for Housing Policy, Housing Landscape 2014

Foreclosure is a Growing Issue

3. More Seniors in the Population

2000 2010 2020 20300%

5%

10%

15%

20%Percent of Population Age 65+

DC Maryland Virginia

Source: Census Bureau, Population Projections

Many Households Have Lost Wealth

55-64

45-54

35-44

Younger than 35

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

$51,040

$49,793

$56,029

$5,270

Total Decline in Median Wealth by Age of Household Head, US, 2010-2010

-

-

Source: Pew Research Center, tabulations of Survey of Consumer Finances data

-

-

4. Millennials Drove Growth – In Some Places

Source: U.S. Census Bureau, 2000 Census SF3 and American Community Survey 1-year file

DC Arlington Alexandria Fairfax Montgomery Metro0%

10%

20%

30%

40%Percent Population Change, 2000-2012

Total 25-34 year olds

DC Arlington Alexandria Fairfax Montgomery0%

10%

20%

30%

40%

50%

60%

70%

80%

Homeownership Rate, 2012

25-to-34 year olds All Households2

Millennials Less Likely to be Homeowners

Source: Census Bureau, American Community Survey 1-Year file

Many Have Been Sidelined

Source: National Association of Realtors®

Share of Sales to First-Time Homebuyers - US

5. Younger Population More Racially Diverse

White Black Asian Hispanic0%

5%

10%

15%

20%

25%

30%

35%

Age Group by Race, 2013Washington MSA

Under 1818-2425-34

Source: U.S. Census Bureau, American Community Survey 1-Year File

Faster Growth of Minority Population in the Suburbs

DC

Arling

ton

Alexa

ndria

Fairfa

x

Mon

tgom

ery

Met

ro

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

WhiteNon-White

Percent Population Change, 2000 - 2012

Source: Census Bureau, American Community Survey 1-Year File

Minority Households Tend to Have Lower Incomes

Source: Census Bureau, American Community Survey 1-Year file

White Black Asian Hispanic$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Median Household Income, 2013

Key Takeaways from the Demographic and Economic Trends

• Demographic and economic trends point to growing needs for affordable housing Smaller homes, multi-family housing, rental housing Close to jobs, transit, amenities

• Different parts of the population competing for the same types of housing Millennials, seniors, families

• Needs vary around the region Local responses to affordable housing needs Needs vary considerably even within jurisdictions

ContactLisa Sturtevant

Center for Housing Policy and

National Housing Conference

[email protected]

202-466-2121 x234

www.nhc.org

www.housingpolicy.org

www.foreclosure-response.org

The Washington DC Housing Market: Trends and Outlook Housing Association of Non-Profit Developers...

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