It is too soon to tell if downsizing in the federal workforce will impact the apartment rental market in the District of Columbia. Federal workers make up a significant proportion of the nation's capitol workforce.
“The District is always in transition, especially when a new administration takes office, with people moving in and out of the city for both government and private-sector work opportunities,” said Redfin senior economist Sheharyar Bokhari. “Rents will be impacted if laid-off workers move away in droves, but also by workers who want to live closer to where they work, now that they are required to be in the office.”
While all eyes remain on the market, median rent in D.C. rose 2.7% year-over-year in February to $2,325, following three months of decline, according to a Redfin report. Asking rents have fallen during nine of the past 12 months in the city, while the broader Washington, D.C., metro area saw some of the biggest rent increases in the country. But booming apartment construction tempered rents that peaked at $2,463 in July in the District and have now fallen between $2,265 and $2,350.
Bokhari noted that apartment construction is now slowing, which will lead to less new supply in coming years. The city approved only two permits for apartment units per 1,000 people last year, down from four per 1,000 in 2023 and 11 per 1,000 in 2022, according to the report.
Among the most populous cities surrounding the D.C, Arlington, Virginia, saw the biggest year-over-year increase in asking rents, with February prices rising 12.1% to $2,591. Bethesda, Maryland, had an 11.1% increase in rents while Alexandria, Virginia, saw an increase of 6.4%.
Construction has slowed considerably in Arlington County during the past two years, with only one apartment unit per 1,000 people being permitted in 2024 down from 13 units permitted per 1,000 people in 2021. Meanwhile, Montgomery County, home of Bethesda, has had minimal apartment construction activity in recent years but saw a big jump in permits last year.
In Silver Spring, Maryland, year-over-year rents fell 7.3% to $1,695. Centreville, Virginia, and Rockville, Maryland, saw declines of 5.3% and 4.3% respectively.
Median rent in the greater Washington, D.C., metro, including D.C and neighboring counties in Maryland and Virginia, rose 9.2% year-over-year in February to $2,045, said Redfin.