The area’s escalating rent prices are not new news for Borderstan residents. Yet DC’s rising cost of living continues to make the headlines in publications such s The Huffington Post, The New York Times, Bloomberg Business Week and now, The Washington Post. (We even wrote a piece on the topic this summer – see “DC rent prices: How high is too high?“).
Erica Champion’s recent article in The Post, “DC’s hottest neighborhoods pull in region’s highest rent averages” discusses the District’s cost of living dilemma with regard to the city’s most popular living destinations.
“If ‘Beverly Hills 90210’ helped crystallize the notion that addresses do matter, stratifying the Washington area to analyze average apartment rent at the zip code level illuminates that fact,” wrote Champion in September.
DC’s Area’s Expensive Zip Codes
So where are the most expensive rental areas in DC?
On the list of the DC Metro area’s top 10 are zip codes 20008, 20009, 20001 and 20005, all of which encompass the entire Borderstan area (and its surrounding neighborhoods), from Dupont Circle to U Street and Shaw, and even Logan Circle, Columbia Heights and Adams Morgan. (See Census Frenzy: Ward 2 Population Up 16%, Ward 1 Up 4% and DC’s Population Boom.)
According to the article, most apartments located in these zip codes charge more than $2,000 in monthly rent, requiring a household income of at least $75,000 (43 percent more than the median renter household income in the region).
But despite high price tags, demand for apartment units in the region’s most sought after neighborhoods remains high, with an average occupancy rate of more than 96 percent, which is precisely why developers continue to build in these areas.
Champion attributes the demand in these areas to Metro access; a plethora of bars, restaurants and nightlife options; and retail establishments that cater to young affluent professionals.
Development along the 14th Street corridor continues, and a new residential building on 14th and W Streets NW may soon join the long list of ongoing projects. UrbanTurf first reported on the plans earlier this month.
At last month’s ANC 1B meeting, Valor Development introduced potential plans for the northwest corner of 14th and W Streets NW, a space currently occupied by a parking lot and an old two-story building. The concept includes 25 residential units (ranging from 500 to 1,100 square feet) and a fast-casual dining establishment.
The project is across the street from the much larger 14W Jefferson, 300,000-square foot project, where work is well underway. A Perseus Realty project, it will have 231 rental apartments, an all-new 44,000 square foot YMCA (on the 1300 block of W Street with a pool), and more than 10,000 square feet of ground-level retail space.
Valor Development has a number of projects (new and rehabs) in the area, including the Aston at 14th and R NW, 1617 Swann NW and 7th and P NW.
DC residents pay a heavy price for living in the nation’s capital. Land of the free? No sir, it is not… not even close. In fact, DC is quickly becoming the land of high rent — a cost that continues to increase with no sign of slowing down.
In 2011, “Bloomberg Business Week” ranked DC as having one of the highest rent hikes in the country. According to the article, renters in the DC metro area see an annual increase of 7.4%, with the area’s rent average rounding out at $1,473 per month.
And while rent prices in District are not as high as New York and San Francisco, our city is not too far behind. Just this past spring, “The Huffington Post” published an article, based on a report released by the National Low Income Housing Coalition, that listed DC as the 10th most expensive city to live in with a side-by-side comparison of wages earned versus the cost of rent.
In our October 2011 reader poll follow-up, “Readers’ Rent Pain,” one local real estate agent said that the average prices in the 20009 zip code are around $1,400 for a studio, $2,000 for a one-bedroom and $3,000-plus for a two bedroom. “The real shocker is what’s happening with two-bedroom apartments; they are getting very expensive very fast.” Of the readers who took the poll, 36% reported paying more than $1,500 per month (that’s individual rent paid, not total price of shared apartments).
But rent hikes aren’t just hitting residents. DC’s own Shakespeare Theatre Company recently made headlines in “The New York Times” over a legal battle with its landlord, the Lansburgh Theatre. Last year, the Lansburgh told its 20-year tenant that the annual rent would jump from $70,000 to $480,000.
What’s Driving Rent Hikes?
So what’s driving this increase? For starters, the economy. Home ownership rates are at an all time low; people lost homes during the economic collapse, and others are waiting to purchase homes. Thus, rental properties are in demand. Moreover, lenders have returned to more restrictive lending practices when writing mortgages.
A second reason: The “booming” DC job market. Despite DC’s high unemployment rate (down now to 9.1 percent from 9.3 percent), the metro area still ranks high in job prospects. Federal government opportunities, private contractor jobs and an array of political positions make DC a very attractive city for recent college graduates, hungry for a job.
And last, but not least, DC’s revitalization of historic and traditionally lower-income areas. The 14th and U Streets corridor is just one example of the number of revitalization projects sweeping our city. Shaw, Columbia Heights, the Southwest Waterfront, Stadium/Armory, Capitol Hill (and the list goes on) are all areas under renovation, restoration and revitalization.
And what’s going in to these hip new neighborhoods? Brand new, expensive luxury apartments. And while these projects are vital to the growth of the city, they are simultaneously detrimental, since the increased cost of living in these areas displaces residents who can no longer afford to stay.
So I guess my question is this: How can DC be the country’s most livable city if no one can afford to live here? How high is too high and when will rent prices stop climbing?