Identifying Housing Challenges & Opportunities in D.C.

When it comes to housing markets, Washington D.C. is a bit of an anomaly. Thanks to the District’s remarkable diversity of income, age, and career trajectories, the city boasts a healthy housing market full of buyers and sellers. Nevertheless, the city still faces an affordability crisis for young and low-income residents.

You may have seen the Bureau of Labor Statistics study that came out a year ago, insisting that D.C. has a higher cost of living than New York. You may have also seen the string of replies critiquing that report and identifying why those measures failed D.C. Even if neither came across your newsfeed, the continual buzz about urban American economic survival has probably given you a few biases about what living in the District means for your budget.

I carried those exact same biases with me when I started digging into the data. I expected D.C. to have a formidable affordability problem, not quite so extreme as the ones in San Francisco or New York City. What I found is that by a whole bunch of measures (including the location affordability index), D.C. is the most affordable of the three. It even outranks Kansas City (at least in terms of percent of income spent on housing and transportation).

Here’s an in-depth look at housing affordability, inequality, and everything else I discovered using public data for Washington D.C.

A Very Resilient Market (That Works for Most Residents)

When the recession was cooling down housing markets across the country, D.C was doing okay. Today, the housing market is doing exceptionally well and home values are expected to rise. A few months ago, David Charron, a Washington Post real estate columnist, wrote this piece attributing the resilience of D.C.’s housing market to the District’s rich diversity. According to Charron, the revolving door of professionals that vary significantly by income and age coupled with the diversity of available housing leads to a high and beneficial turnover rate. He says that,

“The health of the District’s housing market corresponds nicely to every stock market analyst’s first piece of advice: Diversify your investments to protect your assets. We have the right combination of everything needed to keep a housing market afloat when times get rough.”

By this philosophy, the District thrives (as long as there is a balance of short-term leases and sustained homeownership in a city that has a good variety of townhouses, new and old apartments, single-family homes, and condos).

To put it simply, a good housing market has a diverse eco-system.

For most D.C. residents, 70 percent of whom are homeowners, this is excellent economic news.

In D.C. the average resident spends 28 percent of their income on housing. Today, 30 percent is the national standard for how much residents ought to spend on housing. The District’s numbers look great.

According to the data visualized in the map below, it would seem that D.C. is affordable and well-priced for most residents.

However, this average does not tell the whole story. A small proportion of tenants that pay a very low or very high proportion of their incomes skews the result, making it difficult to identify the presence of distressed renters.

Visualizing (Un)Affordability

Unfortunately, as the population grows, the D.C. market has trended away from that healthy diversity. Developers are building units costing upwards of $1,500 per month while the number of available apartments in the mid- and low- price ranges are dwindling. Between 2005 and 2008, the number of homes that cost under $800 per month decreased by 31,000.

While wages in high-paying industries (like medicine and law) grow, low- and medium- income workers are experiencing wage stagnation. Low-wage D.C. renters have very little to work with.

According to the 2010–2014 American Community Survey, nearly 15 percent of residents work full time in a year and still end up living below the poverty level. That is at a much higher rate than in New York City and San Francisco (9 and 12 percent respectively) and leaves the poorest residents to choose between horrible living conditions, homelessness, or a life outside of D.C.

In order to get a better sense of the economic makeup of these census tracts, look at the percentage of income spent on housing alongside the Gini Index (a measurement of income inequality).

Below, you’ll find two maps. The first one depicts percentage of income spent on housing and the Gini Index (income inequality) at a census tract level. The second map represents the same information, but only includes areas where 25 percent or more of a family’s income is spent on housing and where the income inequality score is higher than .45 (on a scale of 0 to 1).

With these maps, it’s easy to identify where the District’s affordability crisis plays out. Blue neighborhoods have a high proportion of income dedicated to housing costs and also high rates of income inequality. Residents in the neighborhoods surrounding Glover Park, Chevy Chase Heights, and Broad Branch are most likely to struggle with housing costs. When D.C. takes measures to address affordable housing, these neighborhoods warrant the most attention.

First Steps

D.C.’s recent changes to the zoning code allows accessory dwelling units (ADU’s), like carriage houses, to be rented out, adding more rental property to the District without altering the character of the neighborhoods. The city will also allow more corner stores, which should make sure that residents have ample access to healthy food.

While these efforts alone won’t solve the housing affordability crisis, they are an important step in making D.C. a better place to live.

Broad Outlook

Bringing data into the decision making process means a better distribution of subsidies and measurement of economic diversity. Data can help identify the areas of greatest need and predict neighborhoods that will become less affordable in the next decade, helping policymakers ensure a diverse and affordable city moving forward.

Although D.C.’s housing boom introduces some real challenges, the extra market activity should supply the city with more tax dollars, empowering D.C. to do more to protect the city’s 15 percent who are working, but scraping by.

With the right policies and data analysis in place, D.C. can maintain its economic success while focusing its efforts in areas that need it most.

To identify areas in need of more affordable housing in your own community, request a free interactive map here. Or, if you are more interested in predicting housing turnover, head here.

About the Author: Michelle Stockwell studies politics at Hendrix College.