Real Estate Markets: Why We Love Washington, DC
It is well known that in the real estate investment world, location is everything and can impact just about every aspect of a project. Choose to invest in a location that is trending downward, and you may not hit your targeted returns. However, choose to invest in a location that has a proven track record of continuous growth, not only in terms of population, but with factors such as increasing per capita incomes, rents meeting or exceeding the economic growth in the area, reduced or declining occupancy rates, and residents are not afraid to pursue the “American Dream” of home ownership, and you could really be in for great success. At JID Investments (JIDI), we are confident that Washington DC is one market that is full of opportunities for real estate investors. Here’s why:
A Strong Economy and Access to Everything
As our nation’s capital, Washington DC sits at the epicenter of our government. With a population of approximately 5.4 million in the greater metropolitan area, the district hosts scores of state and federal agencies employing hundreds of thousands of people. There are three major airports (BWI, Reagan National, and Dulles) within 45 minutes of downtown. Due to the city’s long and storied history, rich social and cultural heritage, and a wide array of museums, monuments, and public sites, DC hosts millions of domestic and international tourists annually. In short, Washington DC offers tremendous upside and shows no sign of slowing down anytime soon. So, let’s look at how this translates into real estate investment opportunities.
Apartment Rents and Occupancy Rates
In Washington DC, the average apartment rent for a one-bedroom is $2,223 and a two-bedroom is $3,329. Although the COVID-19 pandemic took a toll on the city’s rental market, prior to the pandemic, the one year rise in rent was just shy of 4% while the three-year increase was a little more than 11%. Additionally, the average occupancy rate in the district was 95%, meaning only 5% of available apartments were vacant. This makes Washington DC a very strong market for multi-family residential apartment complex development.
Condominium Pricings and Availability
For some people, apartment life is good. There’s little-to-no maintenance with which to concern yourself and depending on the terms of the lease, you may not want to be tied to a long-term living situation. But what about those who want the pride of home ownership? There are plenty of those people in Washington DC. So, let’s take a look at the Washington DC condo market through the lens of a residential real estate investor. First, the average price for a condo in the district is approximately $345,000 and based on condo sales from the past two years, consumers are purchasing them as quickly as they are built. Some estimates put the average increase in condo sales across the district from September 2019 – September 2020 at more than 170%. Simply put, people in Washington DC are not afraid to purchase, even in the difficult social and economic times of the COVID-19 pandemic. And once again, this bodes very well for multi-family residential construction and development.
So, what does all of this mean for JIDI and our family of investors? It means we trust Washington DC from a multifamily residential investment standpoint. The city is a vibrant one with a generally well-paid workforce, stable economy, rich social and cultural diversity, and a living history that tells the story of our great nation. And for these (and many other) reasons, JID Investments will continue to look for opportunities in the Washington DC area for many years to come!
David A. Rutherford
Director of Investor Relations
JID Investments, LLC