East Side Rising
Pinpointing development patterns in a growing urban area is not an exact science. If it were, no one would ever go belly up after betting on a hip neighborhood for their new restaurant or investment property, and we wouldn't have to argue about what value a baseball stadium might or might not bring to the city. We can identify a couple of general rules, however. For instance, in a rapidly growing, quickly congesting city, a central location (geographically and economically) will command a pretty serious price premium, because those places minimize time to get to important places, and time is very valuable. In that central area, you might see some neighborhoods lagging others -- based on differences in crime, housing stock, amenities, or transportation options -- but major gaps between two centrally located areas can't persist for very long.
D.C. has seemingly violated the rules, though, splitting roughly down its middle, and separating by hundreds of thousands of dollars the values of homes that are a few miles, or less, apart. A report released today by the Urban Institute, and discussed in today's Post, confirms what many of us have noticed recently -- that the great west side price premium is coming to an end.
In most Northwest neighborhoods prices and sales are remaining high, but continued strong price growth is being seen almost exclusively in the city's eastern half, and especially east of the Anacostia River. While prices are leveling off in hot Ward 3 areas, Ivy City, Near Southeast, and Deanwood are posting scorching price gains of 30-40 percent annually, on average. The change is hardly surprising. Northeast and Southeast neighborhoods enjoy quick access to downtown and District hotspots, and they sit a few miles or a few blocks from homes that cost two or three times as much as the going east side rate.
And of course, questions of affordability are immediately raised by the report, especially so since contracts for about 5,000 subsidized apartments are due to expire this year, leaving building owners the option of selling their properties and pocketing a nice profit rather than renewing the contracts. District officials hope to help the situation by strengthening programs that help renters purchase their homes. Older rented housing will also be subject to the new District rent-control law, but given any significant price growth it's probable that new construction, which is exempt from rent control, will rush in to fill the new demand.
The Post article also hits on one of my pet peeves (see this, and this). Consider this exchange, which involves Urban Institute senior research associate Peter Tatian:
Nearly all the homes under construction this year and last have been condominiums or apartments, as opposed to single-family housing.In the last eight years, about 1,800 of the roughly 10,000 new housing units authorized in the city were single-family homes, so while new single-family homes are clearly outnumbered, they're also clearly in demand. Likewise, it's worth noting that outside the urban core of the District, residential areas consist mainly of single-family row houses and detached houses.If that trend continues, it could throw the city's housing supply off balance, Tatian said.
"We're heading in a direction that maybe we want to stop and think about," he said. Condominiums and apartments tend to attract singles or couples, while families with children seek houses.
"If we're not attracting families as well as singles and couples without children, we're creating a population base that is not going to be as stable in many neighborhoods," he said. "People will come here and spend a few years, and when they decide to get married or start a family, they leave."
But that, of course, is not my main problem with Tatian's assertion. Rather, I'd like to know exactly what it means to have a housing supply that's "off balance." Is Manhattan's housing supply off balance, for instance, or is Montgomery County's? Or perhaps, given space constraints, is it possible that central areas ought to experience growth in construction of dense housing, presence or absence of children be damned? I fail to see why attracting singles and couples, who generally work and spend and pay taxes without demanding much of the city, is a bad thing. Attracting those individuals might make it easier, in the end, to improve the school system, which would no doubt appeal to the many child-including families that somehow manage to reside in the city.
But do check out the report (and the website on which it appears, upon which we constantly rely). Further reports will follow, from the Urban Institute, released on a quarterly basis.
Picture taken by Terecico.