While realtors struggle to find homes to sell, landlords are faced with a glut of apartments.
In fact, Washington is one of the nation’s few major urban areas with falling apartment prices.
“New product that is delivering is heavy on apartments more than condos and houses in D.C. as a result of the recession and financing the way it’s been over the past several years,” said Jonathan E. Kardon, senior project manager for Level 2 Development, a downtown Washington real estate development firm.
Georgetown is different from some other parts of the District only because housing prices tend to be higher than most areas.
He blamed the shift toward apartments on “a younger demographic and people coming out of the recession are not as willing to commit to a purchase of a home.”
Nevertheless, they still want the amenities of living downtown.
Median home prices in the District of Columbia rose to a record $460,000 in March, which was up 13.6 percent, or $55,000, from one year earlier, according to a survey by RealEstate Business Intelligence, a real estate data firm.
However, rents throughout the Washington metropolitan area are expected to drop as much as 2 percent this year, according to Delta Associates, another real estate data firm.
Demand for apartments is “very strong in Northwest,” which includes Georgetown, said Tom Schneck, marketing director for Douglas Development Co., a real estate development firm.
One of the apartment complexes owned by Douglas Development is at 2715 M Street NW in Georgetown.
“My understanding is that that property is very, very full all the time,” Schneck said about the 16-unit, upscale apartment building.
The firm has three other apartment buildings under construction, one in Northwest, another in Tenleytown and a third in the Shaw neighborhood.
Realtors say the falling rents result from a pace of apartment construction that was faster than job growth. Washington leads the nation in new apartments under construction.
As the housing market fell apart during the recession that began in 2008, homebuilders focused more on apartment construction.
Young adults, homeowners who lost their homes through foreclosure and stricter lending standards leave apartments as the only viable alternative for some residents.
In addition, government budget cutbacks mean more federal employees are expected to seek other employment – and other housing – soon.