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Room for regional multifamily rent growth remains

  • ​Class A rents in the DC region have grown 3.2% annually, on average, over the past decade.
  • Rising rents have been driven by both rising demand and new deliveries priced at premiums to existing units. Rent growth has also been supported by an increase in the number of higher-income households; the share of households with incomes > $75,000 grew from 45.6% in 2006 to 53.6 percent in 2016. Despite income and rent levels increasing, the rate of rent growth appears to be outpacing that of income growth with the share of regional with incomes that can support the average effective rent dropping from 54.2 percent in 2006 to 50.9 percent in 2016.
  • In spite of declining rates of affordability, half of all households in the DC region can afford the region’s average effective rent, and a significant share of households have incomes that can support much higher rent levels: 28%, 29% and 39% of households in Washington DC, Suburban Maryland and Northern Virginia, respectively, earn more than $125,000 annually. Households with incomes of $125,000 can afford monthly rents of $3.50 p.s.f.
  • 22,000 additional units are expected to deliver over the next two years, which is a 10% increase to the region’s multifamily inventory. Much of the new growth is located in the Ballpark, NoMa, Southwest Waterfront and along the Silver Line in Northern Virginia. This new product located in increasingly desirable neighborhoods, combined with a large concentration of households in the region that can afford to pay above-market rents, will drive continued rent growth despite the uptick in supply levels.​​

Source: JLL Research, US Census Bureau, CoStar

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