The housing market for families in the Washington region has gotten so dire that even developers are expressing angst over the crisis.
The Washington Business Journal (WBJ) hosted an Aug. 15 forum, “Real Estate Dealmakers: The Missing Middle,” that included Jair Lynch, president and CEO of Jair Lynch Real Estate Partners, and A.J. Jackson, executive vice president of social impact investing at JBG Smith.
Andy Medici, a reporter for WBJ who served as the forum’s moderator, told the audience of roughly 50 at the JBG Smith National Landing Marketing Center in Crystal City, Va., about the grave situation regarding housing in the future.
“In 2030, the Washington region could be short of 75,000 housing units,” Medici said, noting that workforce housing could be acutely affected by this shortage as the region grows in population.
In the District, the median price for a detached single-family home goes for $809,500 while a townhouse will sell for $752,300, according to data from the Greater Capital Area Association of Realtors. The average rent for a two-bedroom in the District comes out to $3,100 a month or $37,200 a year, according to , a financial planning web app.
SmartAsset reports the median household income in D.C. is $82,000.
District housing activists have long argued that more affordable housing can be built if developers focused on helping people instead of profit.
However, Jackson said building housing for low-income families comes with a high cost and the developer rarely breaks even or profits with low-income families.
“The median income east of the river is $32,000 while west of the river is $70,000,” he said. “The rent a family SmartAssetwould have to pay for an affordable housing unit east of the river would be too much for them and the developer would not profit because not enough money is coming in and the costs for the project, too. For a developer to build in low- and moderate-income neighborhoods, a District government subsidy would be needed.”
“Affordable housing for families doesn’t make the developer money so it doesn’t make business sense to do it,” he said. “There’s not a lot of capital in low income areas, therefore it isn’t profitable to build in those areas. Because it is not as profitable, few developers deal with affordable housing and there are a ton who develop market-rate housing.”
Lynch said there has to be a desire for more affordable housing and the politicians have to know that.
“The public will have to be there,” he said. “In the District, you have a $15.5 billion budget and only $100 million is dedicated to the Housing Production Trust that is supposed to help people get affordable housing. That is a drop in the bucket to what is needed to build more affordable housing.”
Lynch noted Hillcrest in Ward 7, with a median income of $65,000, has desirable traits for developers but because there are only 5,000 residents in a half-mile radius compared to 17,000 in Petworth in Ward 4, building there becomes challenging.
Lynch said residents east of the river need to understand the development and political processes better, starting with the proposed Comprehensive Plan that will guide development in the District for years.
“In September, the D.C. Council will vote on the comprehensive plan for the city,” he said. “The plan could affect neighborhood growth for years and trying to make change after it goes into effect could be like pulling teeth.”