Real estate professionals, landlords, homeowners, and potential homeowners should all stay aware of what is going on in the real estate market. The D.C. area has been seeing a significant shift in multiple corners of the real estate market, which could potentially mean substantial changes for some. To see what this might mean for you, check out this list of five D.C. real estate trends you need to keep your eye on.
1: Home Ownership Is Making A Big Comeback
In 2016, American homeowner rates were sitting at 62.9%, which was the lowest since 1965. This happened as part of a slow downwards trend due to the recent economic crisis that – finally – has been broken. At the end of 2017, the market saw home ownership rates finally rise to a slightly better 64.2%. Over the next decade, this percentage is expected to increase rapidly as millennials reach their thirties and begin the transition from renting to owning.
2: No More Boutique Condos – The Real Deal Is Trending Again
Boutique condos are smaller buildings with a lower number of rental units. The recession saw limited funding to build large-scale condominium projects, and these boutique ones became the popular alternative. The average number of units per condo dropped from 150 down to only 75, but that number is once again on the rise. Experts expect this upwards trend to continue in coming years.
3: Class-A Office Space Will Have More Amenities
The vacancy of class-a office space is expected to continue a slow rise from the current 13.2% to reach 15.3% by the end of 2019. This rising vacancy has prompted landlords to begin what is being known as the “amenities war.” To prompt more purchase, landlords of these buildings have begun added lavish amenities. Examples of some of these include: rooftop decks with full-service kitchens and coffee shop baristas; high-end fitness centers; conference centers featuring pool and virtual golf.
4: Industrial Rents Are Skyrocketing
Competitive modern e-commerce has created a demand for faster delivery times. This, in a ripple effect, has drastically increased the demand for warehouse space near large population centers like New York, Philadelphia, Miami, and yes, D.C. This has sent the average cost of industrial properties skyrocketing to become 93% more expensive between 2013 and 2017 than it was in the previous four years. This increase in cost is expected to continue over the next two or so years before potentially leveling out.
5: High Apartment Rental Rates Not Falling Yet
Although high apartment rental rates are expected to drop slowly over the next decade, they haven’t seen any major change yet. They are expected to stay relatively steady at just over 10,000 units for the next few years. It isn’t until the large millennial population begins to reach their 30’s and begin buying houses that these numbers will decrease. The earliest forecast shows this to begin in 2021, although most agree a drastic shift will not occur until the mid to late 2020’s.