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Roughly 36 percent of D.C.’s rental housing units are rent-stabilized

December 04, 2019
  • Yesim Sayin

Over 35 years after the enactment of the Rental Housing Act of 1985, the number of rent-stabilized units in D.C. has held up relatively well. According to D.C. Policy Center estimates based on publicly available tax data and proprietary data from CoStar, D.C. currently has close to 75,000 rent-stabilized housing units spread across almost 2,200 buildings (Table 1).[1] This is equivalent to 71 percent of all units in rental apartment buildings[2] and 36 percent of all units that are currently being rented.[3]

When the Rental Housing Act was enacted in 1985, we estimate that there were at most 85,000 rent-stabilized units in 3,158 buildings.[4] Some of these units have been lost when the buildings were converted to condos or co-ops, including conversations through TOPA.[5] This means that the total leakage out of the rent-stabilized stock has been less than 15 percent over nearly 35 years. This is a much lower leakage rate than other jurisdictions with stricter rent-control policies. For example, only ten years after San Francisco extended its rent control laws to buildings with fewer than 5 units, the number of rental units in such buildings declined by 15 percent, and the number of tenants in these buildings have declined by 25 percent—a much swifter decline than D.C. has seen in over three decades.[6]

D.C.’s stock of rent-stabilized units has remained so steady in part because the law prioritizes rent stabilization over strict price controls. The Rental Housing Act’s goal is not to create or preserve affordable housing, but to protect tenants from rapid, unreasonable increases in their rents. This might seem like a minor distinction, but it’s an important one to make as we consider the law’s future.

The Rental Housing Act allows landlords to increase rents to cover costs that grow faster than the cost of living, while providing assurances to tenants that year-to-year increases in their rents will be within reason. The District’s CPI + 2 percent rent increase allowance has been the primary reason why the city’s rent-stabilized stock has been resilient.

If the District’s goal is to maintain the size of the city’s rent-stabilized stock, the answer is to relax the rules that govern rent increases, not tighten them. This is especially important in an environment with rapidly increasing operating costs both because of market forces and because of regulatory impositions. The more rents are allowed to rise, the higher the landlords’ investment in these buildings, and the lower the temptation to take them out of the rental market entirely by converting them into condominiums.

Turning the District’s current rent stabilization program into a strict rent control regime will ultimately frustrate affordability goals. The city has firsthand experience with how expensive affordability can be: D.C. provides substantial subsidies for the creation and preservation of affordable housing units in addition to a combination of federal and local rent subsidies. These, when combined, account for more than $150 million in the District’s annual budget. If the District were to go beyond an extension of the current rent stabilization law and enact stricter rent control laws, absent any other supports, the city would simply push the cost of subsidizing affordability from the government’s balance sheet to landlords’ balance sheets—creating what is essentially an unfunded mandate. And the market will not passively internalize this, and the mostly likely outcome will be fewer, and not more, rent-restricted units.

About the data

Because D.C.’s rent stabilization ordinance operates through both buildings (based on the age of the building) and owners (through the number of rental units owned), it is difficult to know exactly how many units are actually subject to the law. The estimates for the number of rent-stabilized units in D.C. are based on a combination of data sources which include publicly available data from three separate Computer Assisted Mass Appraisal (CAMA) data sets for residential, condominium, and commercial buildings; Integrated Tax System Public Extracts; and private data from CoStar. The combined data was filtered by number of units and year-built information that met the criteria from the Rental Housing Act, in order to obtain the estimate for the District’s rent-stabilized housing stock. For buildings that did not have the number of units listed in the CAMA datafiles, we used the CoStar database. If the CoStar data did not have the information either, we used the number of different addresses in the same building as the unit count. The higher estimate for the number of units includes those for which the year-built information was not available, whereas the lower estimate does not.

This article is adapted from Dr. Sayin’s November 2019 testimony, with updated data.

Author

Yesim Sayin

Executive Director
D.C. Policy Center

Yesim Sayin is the founding Executive Director of the D.C. Policy Center.

With over twenty years of public policy experience in the District of Columbia, Dr. Sayin is recognized by policymakers, advocates and the media as a source of reliable, balanced analyses on the District’s economy and demography.  Yesim’s research interests include economic and fiscal policy, urban economic development, housing, and education. She is especially focused on how COVID-19 pandemic is changing regional and interregional economic interdependencies and what this means for urban policy. Her work is frequently covered in the media, including the Washington Post, the Washington Business Journal, the New York Times, the Wall Street Journal, WAMU, and the Washington City Paper, among others.

Before joining the D.C. Policy Center, Dr. Sayin worked at the District of Columbia Office of the Chief Financial Officer leading the team that scored the fiscal impact of all legislation the District considered. She frequently testified on high profile legislation and worked closely with the executive and Council staff to ensure that policymakers fully understand the fiscal implications of their proposed legislation. Yesim also has worked in the private sector, and consulted with international organization on a large portfolio of public finance topics.

Yesim holds a Ph.D. in economics from George Mason University in Fairfax, Virginia, and a bachelor’s degree in Political Science and International Relations from Bogazici University, located in Istanbul, Turkey. 

Endnotes

[1] Excluding public housing and other subsidized units, as shown in Table 1. Earlier testimony in November 2019 originally estimated the range to be approximately between 68,000 and 72,000; these estimates have been updated and revised upward with the addition of proprietary data from CoStar. See the “About the data” section at the end of this article for more information.

[2] Including those not subject to rent stabilization

[3] Including condominiums and single-family homes rented out by their owners, which are part of the city’s shadow rental market.

[4] Developed using information Lusk’s District of Columbia Apartment Directory for 1990.

[5] Through the 1990s, there was no deed recordation and transfer tax imposed on cooperatives (called economic interest), creating an additional incentive to convert.

[6] This happened through a referendum in 1994. The study also found some positive impacts on tenancy, but rent controlled buildings were 8 percent more likely to convert into condominiums or Tenancy in Common (equivalent of coop) buildings. Diamond, Rebecca, Tim McQuade, and Franklin Qian. 2019. The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco. (May 17, 2019).

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