Housing Complex

The Apartment Iceberg Cometh

It's not news by now that developers and landlords are on edge about the wave of new housing stock that will hit next year, after a long drought (that graph at right pretty much sums up the situation). They're just getting even more strident about it.

"Whenever I have the opportunity of speaking nationally, I tell people how awful the Washington market is, and I encourage other people to do the same thing," said Tom Bozzuto, whose name you might recognize on a few developments around town, at a Bisnow panel yesterday. "I feel like the captain of the Titanic that just saw the iceberg coming."

For tenants, the iceberg is more like an oasis: Rents that are less astronomical than they might otherwise be, for a while at least.

"We have too many units coming to be absorbed all at once without extraordinary concessions in the marketplace," Bozzuto went on. "You better believe that it's going to be a challenge."

That's why you might see some developers taking their time getting started on projects they've got in the works. "For us, it's making sure we can wait out what's going to hit next year," said Jair Lynch, who's got something big going on H Street NE. "It's going to be a free-for-all in 2013."

  • thatshitcray

    Hooray for the Iceberg!

  • dud

    Right, it's all so awful that I'm being honest about how you should just rent this thing. right. now.

  • Cherrypicking

    I notice Lydia cherrypicked the guys talking doom and gloom, and didn't quote anyone that was optimistic. Yay journalism.

  • Hillman

    A good many current and planned apt complexes are actually being done / were done as condos, rented as apartments. For instance, Senate Square on H Street. Big complex. Currently rentals, but each one is actually legally a condo and can be sold individually.

    Quite easy for the owners to start selling them off as condos, as the DC condo market is pretty hot again.

  • mmmmmmark

    The problem with simply selling off individual condos in a building like that is buyer mortgage financing. Despite low rates and a good market, the majority of condo purchasers prefer FHA financing because of the low downpayment requirement. FHA financing is impossible for building like Senate Square because of presale requirements (30-50% of the building must be sold) and rental penetration requirements (the % of rented units must be under a certain threshold). This is easier for smaller buildings but at a 400 unit project like Senate Square, it is difficult to simply flip the switch and start selling.

  • RON

    I remember the days of DC being chocolate city...

  • DSS10

    I don't understand why there are all of these "Washington Housing crisis" stories being posted. I live in Washington and the rents have been stable for the last four years with in certain markets a little bit of a decline. Yes, some of the large corporate landlords (Archstone AKA "Crap Stone" and the smith holding group) try to bump their rates up 5-8% every year but that is negotiable and if you say that you are thinking about moving they suddenly become very flexible. What really funny is that the commercial rents downtown have really dropped from four years ago. So why are you posting this story?

  • J.R.

    That chart is interesting, but I'm not sure it's useful if we don't know where this flood of new units is going to be. If they're going to be in sketchier neighborhoods, will people continue to invest in them and move there as they did a few years? If most of these units are east of Rock Creek, will that affect the insanely high prices west of the park? Just because all of these new condos and apartments are "in D.C." doesn't necessarily mean they're all in the same market. I'll be curious to see how this pans out.