Last month, Delta Associates, a D.C.-based real estate research firm, released a new report on the health of the District’s rental market. The report found that between September 2020 and September 2021, rents at high-end buildings in Washington had increased by 8.6 percent. The figures sync with a regional return to the status quo that has left analysts surprised.
“We have just seen large swings in the market,” said William Rich, president of Delta Associates. “We were not necessarily expecting to rebound as fast as it has. Rent did decrease pretty rapidly in the market but they have recovered almost as fast as they declined. We thought 2022 would be when we would see some meaningful recovery in rent. But it happened almost like a light switch went on.”
But these increases have also come during the District’s state of emergency, which began in May 2020 and will expire in January. In April 2020, not long after the coronavirus hit Washington and paralyzed the city’s commercial and social world, D.C.'s leadership passed sweeping legislation protecting the city’s tenants. The efforts included a provision freezing rent for buildings that are both rent-controlled and market-rate.
The District provisions — including one of the most stringent eviction bans in the country — were extended last fall. As part of that extension, the rent freeze was set to expire on Dec. 31.
Despite that policy, Delta Associates’ new numbers suggest some rents still went up.
Critics of the rent freeze say the city government’s actions were confusing in terms of what kinds of listings — empty or occupied apartments — fell under the policy, leaving owners unsure of what they could do.
“We can understand why some would raise the rent even with the rent freeze,” said Dean Hunter, chief executive of the Small Multifamily Owners Association. “The law was vague, confusing and done in a haphazard manner. ”
The mayor’s office did not return a request for comment on the analysis.
The figures track with numbers across the country. The Zumper National Rent Report in October reported that since March 2020, the median one-bedroom rent was up 11.8 percent and the two-bedroom rate was up 14.3 percent.
Tenants advocates say that this rise in demand has created pressure from landlords to raise the rent across the metro region, said Matthew Losak, executive director of the Montgomery County Renters Alliance.
“Based on the data and the high demand for housing, the landlord and developer community is pressing hard to raise the rent according to the market,” Losak said, adding that a rent stabilization order in Montgomery County was set to expire on Nov. 15 but the county council extended the protection.
Delta’s study was limited to Class A buildings, a real estate industry distinction pertaining to properties that are less than 15 years old with high-end amenities, hefty rents and low vacancies.
But the overall pattern is not limited to the District alone. Delta’s analysis found that for the entire D.C. region, rent increased 7.6 percent across all types of properties, and rent in Class A buildings across the region rose by 9.1 percent.
According to Rich, rents across the region are currently 101 percent of what they were in March 2020, while in the District, rents are around 96 percent of what they were at the pandemic’s start.
“Rents have recovered in other parts of the region faster than in D.C.,” he said.
The construction slowdown during the pandemic in 2020 will also likely mean less supply for the renter demand in D.C. for some time to come, Rich said.
“There was a bit of a slowdown and now we have seen a bit of increasing construction over the past few months,” he said. “There is a significant amount coming online in the next 12 months. Then you’ll start to see the lag” in new building openings.