More housing units don't guarantee lower rents
The District's 2.5 percent apartment vacancy rate is certainly an indicator of the city's economic strength. Vacancies remain low, even as rents steadily creep higher and new housing units are added at a furious pace.
The low vacancy rate and high rents are nevertheless concerning to many of the District's residents and would-be residents. Washington is already one of the most expensive cities in America. Even for many professionals, finding affordable housing can be a serious challenge.
All of the new housing units should theoretically offer relief for renters in the tight housing market; but so far there's no evidence that it's happening in practice.
In economics, shifts in supply and demand curves influence market prices. All else being equal, a boost in the supply curve for housing units would lead to lower prices. In this case, however, all else isn’t equal. As Washington's neighborhoods increase in density and add new amenities, they become gradually more desirable places to live. Demand curves are shifting, too, and in many cases, overwhelming the change in supply.
As neighborhoods like NoMa and Near Southeast continue to develop and grow, their appeal increases, as well. The problem of high rents in the District is not easy to solve, and recent events prove that building our way out might not have as much effect as many had hoped.
Rob Pitingolo blogs at Extraordinary Observations. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.
| October 14, 2010; 1:08 PM ET
Categories: D.C., HotTopic, Local blog network, economy
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