
The Washington, D.C., multifamily market has been the least volatile of the nation’s gateway cities post-pandemic and has maintained more rent growth momentum than its counterparts, says Carl Whitaker, chief economist at RealPage.
“Some of the recent stability in the market may be attributed to its steady employment base, which relies more on government jobs than other sectors, like tech and finance, that have seen more acute pressure due to interest rate hikes in the past year or two,” says Whitaker, noting that nearly 22% of the market’s employment base works in the government sector as defined by the Bureau of Labor Statistics.
Strong multifamily demand boosted Washington, D.C.’s occupancy rate in 2024, with Whitaker predicting it would end last year at nearly 96%, a full percentage point ahead of the national average. In addition, he notes the market boasts the nation’s 15th highest average renter incomes, with the average household earning roughly $125,000 a year as of the third quarter.
On the construction front, Washington, D.C., like other parts of the nation, is in the midst of a general supply wave.
“Nearly 16,000 units are scheduled to deliver in metro D.C. in 2025, which would mark the highest year for deliveries since the early 1990s (and most likely the highest total in about 50 years),” he notes. “But also, like other markets, the construction pipeline has been slowing. The 23,500 units under construction in metro Washington, D.C., as of December is a nominally large number, as this is actually the lowest number of units in construction since summer 2012.”
He adds that it’s likely that construction will slow further this year, with just 4,700 new apartment units being started in the past 12 months—the lowest figure in over 15 years.
“But perhaps most staggering is just how fast this adjustment has happened,” he says. “D.C. is now officially 75% below its peak new starts level, which was 17,800 new units started in the year-ending second quarter of 2022.”
In the geographically large market, according to Whitaker, submarket performance can vary greatly.
“Occupancy rates are tightest the farther out you get from the urban core,” he says.
He notes that Gaithersburg, Maryland, and Northern Virginia’s Fairfax County both boasted an occupancy rate above 96.5%, and, subsequently, many of those submarkets along with the likes of Virginia’s Fredericksburg, Manassas, and Woodbridge/Dale City were achieving rent growth north of 5% in 2024. However, suburbs with a higher share of Class C inventory, such as northeast Montgomery County, Frederick, and Landover, appeared to be the softest submarkets. Whitaker attributes that to a higher degree of distress in Class C product, which is both a nationwide and localized trend.
Another submarket he highlights is D.C. Navy Yard.
“Navy Yard often seems to be the topic du jour when talking about local D.C. trends, which is probably deserved considering just how much construction that part of the market has seen in the past decade or so,” he notes. “The existing stock of apartment units in the Navy Yard submarket has swelled to 24,200 units today. In 2014, the existing stock was just 8,100 units, which equals a 200% increase in unit count in just 10 years.”