D.C.-area apartment rents plummeted in the first year of the pandemic, with rental demand falling. But the rental market quickly recovered, with rents rising by double digits in 2021 and 2022 as demand returned.
In the last year, however, the pace of rent increases has slowed.
Nationwide, average rental rates are up 1.7% from a year ago. In the D.C. metro area, they鈥檙e up an average of 1.5% 鈥� one of the smallest year-over-year gains among big metros, .
Even so, the average apartment rent in the D.C. region is currently more than $2,600 a month 鈥� $700 a month more than the national average.
鈥淚t鈥檚 not as expensive as Silicon Valley or New York, but it does rank among the places like Boston and Seattle, those big expensive coastal cities,” said Redfin deputy chief economist Taylor Marr. “D.C. is still very expensive to find an affordable apartment to rent.”
Nationwide, February was the ninth straight month in which rent growth slowed on a year-over-year basis, and average rents were 0.3% lower than in January.
There are a couple of factors that have slowed rising rents in the D.C. metro and elsewhere. One is a sort of reverse-inflation effect for landlords.
鈥淚t is the rising cost of gas, food, everything else in the economy. It really just takes away how much money people are willing to spend, or can spend on rent,” Marr said. “That, overall, is decreasing demand for rentals and landlords have less power to raise rents.”
Another factor is the sheer number of new apartments being developed, increasing competition for renters.
鈥淭he number of apartments under construction nationwide is up 25% from a year ago to nearly a million apartments under construction, which is the highest in nearly five decades,鈥� Marr said.
In the D.C. metro, almost 21,000 new apartment units were permitted last year, . On a per-capita basis, that ranks the D.C. area No. 22 out of the nation鈥檚 50 largest metros. About a quarter of those newly-permitted apartments are being added to the supply in the District, with the balance in the suburbs.
Even with the recent slowdown in the pace of rising rents, median asking rent still remains 21.4% higher than it was in February 2020, the month before COVID-19 was declared a pandemic.
Median asking rents in some metros are lower than a year ago, led by Austin, Texas, where rents are down 6.5%. Median asking rents in Baltimore are down 2.2%, the sixth-largest decline.
