Wednesday, January 16, 2013

The Week in Review


How far does $250,000 go?

Speaking in favor of limiting property tax increases for DC households, Jack Evans told the City Paper,"$250,000 in Washington, that's a lot of money, but it doesn't get you very far here." Compared to what? That amount might buy you less here than in Tulsa, but it absolutely goes further than an annual household budget of less than $250k, which is what approximate 93% of District households earn.

Ten seconds of human interaction will reveal an enlightening secret: everyone thinks they are struggling. The more money you have, the more you spend. After mortgage and car payments, private school tuition, restaurant bills, travel expenses, and retirement savings contributions, even the rich feel stressed financially. But policy should be based on data and not anecdotes, and the data shows that nearly a quarter of District households earn no more than one-tenth of the amount Evans classifies as meager.



Is Brookland shabby?

Annie Lowrey's critique of Washington's economic success has the District chattering, in part because of how she characterizes Brookland. "Shabby" and "decidedly unhip" are too subjective to evaluate, but we can work with the claim that the neighborhood is mostly lower-middle-class. 

There are five census tracts that (arguably) are at least partially included in Brookland. The median household incomes of the tracts range from $50,500 to $72,587, according to the 2010 American Community Survey 5-year estimates. In 2010, the Area Median Income for the D.C. metro area was $103,500, and a household of four people earning between $51,750 and $82,800 was considered low income by the U.S. Department of Housing and Urban Development (HUD). Using this standard, it is probably safe to call Brookland predominantly low-middle-class. Whether HUD's standard is a good one is another question.



How common is it to pay $3,000 in rent?

Lowrey's article also suggests that Washington's yuppie newcomers are quick to shell out three grand for an amenity-rich crash pad. But data indicates that only 2.2% of District renters pay that amount or more. 

Since her article looks at the Washington region and not just D.C., let's include Fairfax, Arlington, Alexandria, Montgomery, and Prince George's Counties. The statistic only increases ever so slightly.


While the $3,000 rent seems to be mostly a myth, Washington-area homeowners do pay outrageous sums towards their mortgages, with close to 20% of mortgage-paying residents of the District and the region (including only those counties listed above) spending at least this much. So let's say Lowrey is half right on this one.


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Update: Comments on Greater Greater Washington suggest that $2700-$2900 might be a more realistic high end rental rate for apartments. Perhaps Lowrey rounded up to $3000? That does not seem unreasonable. 

If "$3000" actually means $2500+ (rounding to the nearest thousand), then more than twice as many area renters are in this category:

  • 5.07% of D.C. renters pay at least $2,500 in monthly rent.
  • 4.84% of regional renters pay that much.

Also, the ACS data used is adjusted to 2010 dollars. Survey responses from previous years are adjusted up to account for inflation,  but not for steeper boom-induced increases.

4 comments:

  1. Great data, Chris! I don't know anyone who pays $3K in rent so was surprised to read how common it apparently is.

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  2. There have been plenty of announcements of rents in the new Dupont/Logan buildings and they're all just under $3K. Condos are much more. And those census-tract income tables are notoriously way behind.

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  3. Are we measuring what total rent would be for a property or what each individual pays? Household data can be skewed by roommates who are otherwise unrelated reporting their own personal financial data rather than that for the household as a whole.

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  4. I say this because $3k+ rents are very common, at least in central DC. But the chances that ONE person is paying $3k+ is probably quite a bit smaller, considering that the properties commanding these rents normally would have yuppies scrambling for roommates, much as is the case in NYC.

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