- Real Estate
Washington, D.C. Home Prices Become Nation's Highest
Gentrification Revamps the City
Washington, D.C.'s home market is now the most expensive in the United States, according to a new government study.
Nationwide, Americans spend about 33 percent of their income on housing, averaging $16,887 a year. In the Washington area, the average is $17,603.
The nationwide average includes $3,087 for mortgage interest and charges, $1,836 for property taxes and $1,153 for maintenance and repairs.
Washington beat out San Francisco, which ranked second, and New York City, which ranked third in the Bureau of Labor Statistics study based on 2012 data.
The median price for a Washington area home rose by $3,000 from a year ago to $390,000 in September. It was the highest median home price since before the most recent recession.
The Urban Institute, a public policy group, reports that escalating home and rent prices in Washington reflect the fast pace of gentrification.
"It takes more than a thriving restaurant scene to sustain D.C.'s recent population boom," the Urban Institute reported. "New residents also need somewhere to live."
The rise in home prices appears to be driven primarily by young, single professionals who move to the nation's capital to advance their careers. At the same time, they are pushing out low-income families that cannot afford the high prices.
"While the city is now prospering, these changes have made D.C. unaffordable for many residents, both current and new," a new Urban Institute report said.
The changes are most obvious by tracking apartment rents. In 2005, there were more apartments in Washington renting for $500 a month or less than for more than $1,500, according to the Urban Institute. Now, the most expensive apartments with prices over $1,500 a month outnumber the least expensive by three-to-one.
"Even at higher income levels, many renters are paying more than 30 percent of their income on housing and some find homeownership out of reach," the Urban Institute reported. "Lower income residents, meanwhile, are getting further priced out of the market."
Data from NeighborhoodInfo DC shows every sector of the city has increased its supply of housing. Some of the most notable gains are in NoMa (North of Massachusetts Avenue) and the part of Southwest D.C. close to the Nationals' ballpark. In Anacostia, many vacant lots have been filled in the past few years with new houses.