Also note that since 2000 the average age of this area has come down nearly 2 years, showing that the population is trending younger and therefore more single than in prior decades. The current percentage of single person households or cohabitants is approximately 35%, so it can be assumed that conservatively 24,000 new prospective single renters move to this area each year. Since 2000 the area has grown on average 70,000 residents per year. With an average of 8,000 units per year being delivered is the market really being met? Which way the pendulum will end up really depends on the flexibility of developers to prove financial viability even with lower rental rates. However, these same dynamics may lead to fewer new projects being perceived as viable for financing and lead to a slow down in supply, which in turn will cause pricing to go higher. On one hand the cost of living in the DC metro region is astronomical, one of the highest in the country, and any slowing or decrease in housing price (the prime factor in cost of living) helps to provide new opportunities and attract new businesses. Whether this is good news or bad news is a bit of a trickier question. The average for all rental properties also slowed to only 1.3 percent growth, a historically minimal increase. This increase in supply, for those of you who don’t believe in the idea of addressing affordable housing by increasing viability of new projects by density, also caused a drop in rental rates for Class A apartments (typically associated with new construction) of 5%. The cause of this uptick was noted as being caused by significant new inventory coming on the market (over 16,000 since 2012). On the first front, based on a Marcus Millichap analysis performed at the end of 2013, the region saw vacancy rates in apartments tick up slightly to 5%.
This poses two questions in my mind: is there still a demand for more apartments in the Metro Region as a whole and is Tysons competitively priced given the current marketability of the area. After this meeting the Washington Post ran an article questioning whether the rental market could support the new inventory coming into Tysons, and if a lack of demand will slow development. Earlier this month a group of land developers proposing projects in Tysons met for the Biznow real estate conference to discuss the future of the growing region.
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