Will D.C.’s Housing Ever Be Affordable Again?

Is the title of an article in The Atlantic Magazine.  My short answer is no.

Here's why.

1. DC is a small place, about 61 square miles. But about 1/3 of the land is owned by the federal government or other institutions and therefore can not be built on for housing. (Unless the institution goes out of business, which does happen, but not that often.  One example is St. Paul's College in Brookland.  Earlier a section was sold off to EYA, which built no lot rowhouses on the land.)

 Most of the city that can be developed, especially single family housing districts, has already been developed. It is very difficult to make over single family districts into multiunit, denser housing.  Plus, the new housing would cost more than the old housing because it would be new.

Montreal's plex housing type fits 5-6 units in the same space as two rowhouses in DC.

2.  During the period when the bulk of DC's housing stock was constructed, the buildings constructed were relatively small, compared to other cities.  (Think of NYC tenements vs. single family rowhouses in DC.)

This continues to restrict how many people can be accommodated in rowhouses and rowhouse neighborhoods.

3. Height and therefore density controls significantly reduce the ability to add substantive amounts of new housing.

Besides most of the city has already been developed, so practically speaking, new housing can only be added to commercial districts, transit stations, and institutional properties.  Given the height limit, 16 stories is about the maximum allowable height of a building in DC.

But that's in the central business district, Downtown and adjacent areas.  Outside of the core, the zoning-based height limit is much less and six stories is a more typical height, four is common, although in some districts--Petworth, Columbia Heights, Waterfront--some buildings are closer to ten stories.


Most of DC's rowhouses are small, topping out at two or three stories.  Note the cheap infill rowhouse in this image, from the 400 block of M Street NE.

4. Demand has increased for a relatively fixed stock of housing. Therefore, prices go up. DC is now a strong real estate market.

 And as the prices further escalate in the in-demand areas, people seek out nearby housing in less-in-demand communities (in what Live Baltimore calls the "one-over neighborhood" phenomenon), reconnecting these neighborhoods to the in-demand portion of the city's housing market.

5. Plus the demand for new housing is still greater than the supply, even with the multiunit apartment and condominium buildings that have already been added to the market, so housing prices stay high except over multi decade timelines.

6. This is because by definition new construction is priced at the top of the market.

7. Inclusionary Zoning, or requiring that new housing being constructed set aside some units to be rented or sold to lower income households, has no impact on the existing building stock and it doesn't create a portfolio of "old" affordable housing.

8. Plus as pointed out in the article, the city hasn't focused on acquisition of existing housing to maintain affordability. In other words, there is no program to maintain affordability, other than the program which allows residents of multiunit buildings to join together to purchase the property in certain situations, which is a decent program. By contrast, cities like New York have pursued multiple actions and developed multiple programs that aim to preserve and expand the stock of affordable housing.

9. Neighborhood resident activism with regard to zoning and building approvals reduces the actual built density of new construction within the current zoning limits (see 1). This means that many multiunit buildings are constructed at a height and density less than allowable zoning. Note that by "allowing" built housing to be less than maximum legal density, it also costs the city property tax revenue as well as reduced income tax and sales tax revenues as an opportunity cost because of fewer residents.

The five story Allegro building in Columbia Heights is about two blocks from the Metro Station and one block from an eight story apartment building constructed in the early part of the 20th Century.

10. The city's zoning code doesn't provide an automatic density bonus for housing constructed within one or two blocks of Metrorail stations.

E.g., I can point to new buildings in my neighborhood, within two blocks of Metro that are easily 2-3 stories shorter "than they could be" given the existence of nearby transit infrastructure.

The three and one-half story Willow and Maple Apartments in Takoma DC are about two blocks from the Metrorail station.  Across the street is a taller four story building and across the border in Takoma is a one-off ten story office building.

Very Long Term Solutions

First, we must recognize that adding housing to an already strong market, because it is newly constructed, will only stabilize housing prices relatively in the short term, except that it may reduce demand on the single family housing market a bit, by providing a greater number of housing tenure options and more housing generally.  However, in the long term, on a 30 to 50 year time frame, prices will stabilize as these properties are paid off, and as the housing inventory expands signficantly.

2.  Legalize higher height and density.  (Mostly, I argue this because of DC's need to remain competitive vis a vis suburban jurisdictions and to increase the tax base to the point where increased revenues could finance intra-city heavy rail transit service.  See "DC Height Study Public Meetings This Week and the long term implications for transit expansion in DC.")
3. Baring that, add a density bonus in commercial districts and transit station catchment areas.  Currently, the limit in many areas is about 6-7 stories.  In many districts outside of the core, new multiunit buildings max out at about 4 stories.

4.  Make it city policy to not lop off a floor or two of new projects so that residents feel like they are part of the process out of a recognition that such practice reduces the amount of housing available and increases cost--that if they are concerned about housing access and housing prices, then they need to follow through with congruent practice designed to increase housing access and stabilize housing prices.

5.  Encourage the creation of accessory dwelling units in a systematic manner and make building regulations on the practice more nuanced -- in other words, allow more units on a larger properties, encourage units in transit station catchment areas,  rather than just one unit per lot, regardless of the size or location.  See "Granny flats' – a solution to housing crunch – come under fire," Christian Science Monitor.  From the article:

A resident of Portland, Ore., Mr. Peterson owns a company called Accessory Dwelling Strategies, which seeks to educate the public about the benefits of building a granny flat, or accessory dwelling unit.

He gives talks about designing and constructing ADUs and consults with realtors about the best ways to market secondary homes. He also runs a citywide ADU tour of Portland in an effort to prove that secondary homes can enhance neighborhoods rather than spoil them while allowing owners to make a profit.

“It’s a way for middle-income homeowners to create a passive income stream and flexibility for themselves,” Peterson says. “It’s a compelling form of development opportunity that is entirely market-driven … [but] not done by huge, large scale, well-heeled developers. It’s kind of a grass-roots form of housing movement.”

And it's growing, he says. In 2015, Portland saw three times the number of applications for ADU permits than in 2009, when it first waived system development fees and reduced the cost of permits by up to $15,000, OregonLive reports. Portland now approves slightly more than 100 ADUs annually, more than almost any other city in the US, Peterson says.

6.  Build denser public housing projects.  Complement the developments with great social and community programs to encourage mixed income and community stability.  But the policy over the last 20 years has been to reduce the size of the developments, thereby reducing the amount of housing available.

Bonus policy, semi-related

I was shocked to see an article in the Washington Business Journal, "D.C. doesn't want deeper levels of affordability in JBG's Eckington project" about how the city's Department of Housing and Community Development opposed a proposal by a developer to add more affordable housing to a project, but only if the housing was managed by the developer.

The Condo Shop is a condominium sales and marketing firm based in Philadelphia.

The city needs to develop the equivalent of a market-oriented affordable housing property sales and management agency that can be "nonprofit" but managed and marketed like how the private sector does it, with companies that specialize in selling condos, such as McWilliams-Ballard or Urban Pace.

Rather than separate marketing efforts for each separate development, combine it all into one program.  Focus on maximizing production and rental/sales of affordable housing units rather than bureaucracy.

Such an agency needs to be run with a private sector verve, which for the most part is not possible by typical government employees.  The way that Arlington County runs its transportation programs is an example of such a repositioning, based on social marketing practices ("Social Marketing the Arlington (and Tower Hamlets and Baltimore) way").