District of Columbia Housing Monitor: Fall 2006

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The quarterly District of Columbia Housing Monitor uses the most recent available data to illuminate housing market and affordable housing trends in the city. In addition, each report includes a special focus section that analyzes, in greater depth, developments that are shaping the Washington, D.C., housing landscape. In this issue, the special section examines trends in home purchase mortgage loans through 2004.

The information presented in this report is supplemented by data provided on the NeighborhoodInfo DC Web site (www.NeighborhoodInfoDC.org/housing). Key findings from this report:

• Evidence mounts that the District of Columbia home sales market is slowing. In the first quarter of 2006, sales of single-family homes dropped to 826, down from 1,212 sales in the fourth quarter of 2005 and from 1,270 in the first quarter of 2005. Condominium sales experienced a similar decline. Data on real estate listings confirm a slowing market. Furthermore, while prices of single-family homes and condominiums are still higher than one year earlier, the rate of price growth has slowed.
• Except for Wards 1 and 7, all Wards experienced price declines at the start of 2006, but several Wards still recorded strong year-over-year price increases. The largest price decreases occurred in Ward 2, where real prices of single-family homes dropped 11.6 percent between the fourth quarter 2005 and the first quarter 2006; in Ward 8, where prices dropped 4.8 percent; and Ward 3, where prices dropped 4.4 percent. Despite the recent price declines, Ward 8 still recorded the highest price growth, 26.0 percent, between the first quarters of 2005 and 2006.
• Home building continues on a record-breaking pace, particularly for multifamily housing. In the first six months of 2006, permits for 1,539 new housing units have been issued, up 4.3 percent over the first half of 2005. Almost all of these 2006 permits are for multifamily housing (1,494 units).
• Thousands of federally assisted housing units remain at risk. The District of Columbia currently has 10,959 units subsidized under project-based Section 8 and other federal multifamily programs. Contracts for 4,505 units are set to expire between April 2006 and March 2007.
• The number of new home purchase loans has increased steadily over the past 10 years, while denial rates for loan applications are once again rising. Between 1995 and 2004, the number of new home purchase mortgage loans increased from 3.6 to 11.0 loans per 100 existing housing units, reflecting the increased market activity. In 2004, the denial rate for conventional home purchase loans increased to 13.4 percent of all applications, up from 10.3 percent in 2003.
• Levels of subprime mortgage lending, which increased slightly between 2003 and 2004, were much higher in Wards 5, 7, and 8 than in the rest of the city. In 2003, loans from subprime lenders accounted for 5.3 percent of all conventional home purchase loans, up from 3.6 percent in 2003. Rates of subprime lending are more than 10 times higher in Ward 7 (13.9 percent of home purchase loans) than in Ward 3. Wards 5 (11.2 percent) and 8 (10.8 percent) also recorded disproportionate shares of subprime loans.
• The median income of mortgage borrowers has increased 38 percent in real terms since the mid- to late-1990 and reached $100,000 for the first time in Wards 1 and 6. The median income of borrowers in 2004 was $92,800 (in 2006 dollars), up 7.7 percent from 2003. Median borrower income increased to $105,100 in Ward 1 and to $100,900 in Ward 6.
• The share of home purchase loans to African-American borrowers rebounded slightly from past declines, while those to Hispanic and Asian borrowers continued to increase. The percentage of black borrowers declined from 34.5 percent between 1995 and 1998 to 27.0 percent in 2004. This low total nonetheless represented a bounce back from 2003's level of 24.3 percent. Over the same period, the share of loans to Hispanic borrowers increased from 4.1 to 5.6 percent, and the share to Asian borrowers increased from 1.7 to 4.4 percent.
• About one-third of all home purchase loans were to lone female borrowers; such borrowers accounted for roughly half of all loans in Wards 7 and 8.

Note: This report is available in its entirety in the Portable Document Format (PDF).

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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