The population growth in Washington DC has been remarkable over the past two decades, and it has had a significant effect on the real estate market.
House prices
have risen faster than incomes, making it difficult for many households to afford housing. This has led to an overall decline in housing production in the region relative to the 1990s. The Consumer Price Index (CPI) measures the prices of a basket of household goods and services, and assigns a weighting to each item in the basket based on its average share of total expenditures.Housing represents almost a third of the CPI inflation basket and 40% of the basic CPI basket, which excludes volatile food and energy components. As a result, even small increases in rental and housing prices can have a significant impact on overall inflation. The District has seen an increase in investments in some neighborhoods, as well as greater flexibility under zoning laws to increase development in others. This has made a difference in the availability of housing for low- and middle-income families.
The housing market in Washington DC is comprised of a variety of property types, including single-family homes, townhouses, and condominiums. Exurban counties, such as Loudoun and Prince William Counties in Virginia, have experienced explosive growth in the past, followed by a sharp decline, and are now reaching levels similar to those of the early 1990s. Changes in regulations or policies could affect housing supply and demand, particularly in the affordable housing sector. An important factor in reconciling the desire for affordability with market forces is to consider what the city will look like in the future with current policies (given the projections for population growth and economic conditions) and whether that future is desirable. There is a risk that components of the CPI related to housing will continue to accelerate in the coming months due to recent appreciation of housing prices.The continuing rapid growth of single-family homes in exurban communities means that most of the region's additional households are located in places that rely on cars, far from work centers, and live in carbon-intensive homes.
This has direct effects on household wealth and neighborhood affordability. It is essential to consider what policies can be implemented to ensure that housing remains affordable for all residents while still allowing for population growth.
