Exploring the Economics of High Apartment Rent in Washington DC Area

This discussion post analyzes the factors contributing to high apartment rent rates in Washington DC, despite a slower rising trend compared to other US cities. The high demand for rental accommodations, driven by job opportunities and an urbanized lifestyle, is a primary reason. The analysis also considers the impact of good security (police presence and high-tech systems) and infrastructure on attracting residents and raising rental rates. The discussion references Glaeser & Gyourko's work on housing affordability, highlighting the role of government policies, zoning, and planning processes in mitigating high rents. The post emphasizes the need for a flexible approach to engage investors and create a master plan that ensures development in neighborhood areas, allowing for higher density and mixed-use transit infrastructure. It concludes by advocating for government policy review to foster investment and manage rental rates effectively.

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DISCUSSION QUESTION
High Rent Rates in Washington DC
Although apartment rents across the country are showing an upward rising trend at a
fast pace in the last two years, rents in Washington DC are showing a slower rising
trend. This is probably due to the reason that rents in Washington DC area are already
higher in comparison to other cities in the USA. Interestingly, the demand of rental
accommodation is also the highest in Washington DC in comparison to other cities and
experts give this as one of the reasons for high rent rates, (Baum & Baum, 2015). There
are numerous other factors contributing to these high rental rates of apartments in this
city. Occupancy in Washington DC is high and the city offers a variety of Apartments
which are suitable to individual requirements in America. This is attributed to the large
number of job opportunities in the City for the young population who are getting
accustomed to the fast developing urbanized lifestyle of the city, (Baum & Baum,
2015).
In their book Rethinking Federal Housing Policy: How to Make Housing Plentiful and
Affordable1, published in 2008 by AEI Press, Edward L. Glaeser2 and Joseph Gyourko3
have tried to explain why housing becomes so expensive in some areas and have also
outlined a plan for making it more affordable. According to Glaeser & Gyourko the two
probable reasons for the high rent rates in Washington DC are –
(a) Good Security
It has been observed that availability of large number of Police Stations and Hi-
tech security systems in the city has made it a preferred destination. The high
security level attracts young couples to the city and raises the rent al rates in
Washington DC.
(b) Good Infrastructure
1 Accessed from http://www.aei.org/publication/rethinking-federal-housing-policy/
2 Professor of Economics at Harvard University
3 Professor of Real Estate and Finance at the Wharton School of the University of Pennsylvania

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Washington DC has well laid roads and an efficient transport system. Working
youth prefer to live in areas which offer convenience of travel from home to their
place of work.
Two factors have lasting effect on rental rates. High rents, the first factor, has often
failed to raise rental charges. Under such circumstances, tenants leave the costly
premises to find an affordable premises, (Hinkel, 2010). The second factor is that weak
rules and regulations of governments hold back investment opportunities in the market.
Excessively high price of houses in cities such as Washington DC is forcing the
entrepreneur to look for different areas for their investment, (Megarry et al, 2012).
Although it is true that a strong and steady economic growth in a region can create high
demand for housing, it is also a fact that it mitigates the challenge if rentals are high.
Hence, the government must rethink about the zoning and planning process. It makes
essential for the authorities to create a master plan which can ensure of development in
the neighborhood areas and allow creation of a higher density, mixed use transit
infrastructure. There is need for the government to review policy and create a flexible
approach so as to engage investors from diverse economic background, (Baum & Baum,
2015).
REFERENCE LIST
Baum, A. and Baum, Prof A. 2015. Real Estate Investment: A Strategic Approach. (3rd
ed.) Oxon: Routledge.
Hinkel, Daniel F. 2010. Practical Real Estate Law. (6th ed.) Boca Raton, FL: Cengage
Learning.
Megarry, Robert, Wade, William, Harpum, Charles, Bridge, Stuart and Dixon, Martin J.
2012. The Law of Real Property. (8th ed.) New York: Sweet & Maxwell.