"Abundance bros." on their book tour should make a stop in downtown Bethesda. Here, as in virtually all of the United States, the housing market is wholly detached from free market forces. YIMBYs and Abundance bros. alike continue to argue their warmed-over Reaganomics theory that simply by increasing the supply of housing, prices will come down. It hasn't happened in 99.9% of cases in America, and it certainly isn't happening in Bethesda, Montgomery County, or Maryland. In fact, two new pricing thresholds have been crossed by the new Hampden House apartment tower at 4700 Hampden Lane: studios in the $2000s, and 1-bedrooms in the $3000s.
How quaint the dare of the post-"Great Recession" builders to venture well north of $2000 for a 1-bedroom apartment in Bethesda last decade appears now. $2400 was shocking at the time. That now barely gets you into a studio at Hampden House, where those bedroom-less units range from $2,297 (530-square-foot studio) to $2,387 (576 SF studio). And aside from one 1-bedroom floor plan that starts at $2,946, all 1-bedroom units range from $3,016 to $3,653.
Hampden House stands between two other new apartment towers, The Elm (2021), and The Charles (which is expected to welcome its first residents this fall). Thousands of new apartments have come online over the last 11 years in downtown Bethesda, but rents continue to skyrocket. And rather than apply downward pressure on older rentals, the staggering increases simply provide justification for their rents to surge upward, as well.
This is the same result we see for house prices: the new townhome next to an industrial auto repair facility or parking garage is $1.x million. The duplex (now allowed by the County Council under the false pretense that it would provide "affordable housing," a farcical claim) with front and back yard areas will therefore be $2.x million. At that point, even older colonials in 20816 with large front and back yards and many more bedrooms can justify passing the $3 million mark. The trend line is clear: the more supply is delivered into the market, the higher the rents go.
16 comments:
I'd be in favor of many more apartment units if it indeed did lower prices overall. But, we see that is not the case.
The existing recent buildings are already increasing rents at alarming rates.
Two words, market demand.
10:06: There's actually very little market demand for this product at this price point. Many of the units in the new buildings are vacant, and are being filled with contract housing, students, and illegal Airbnb guests. Watch for the luggage on wheels at the lobby doors!
Must be that moribund economy that allows prices to keep going up. BTW, supply and demand are not Reaganomics- you have Adam Smith to blame for that.
Without a tax on vacant units, building owners have little incentive to actually compete in the market.
So true, Robert. Overpriced bloated and not in demand at all. Who can afford or would even want to pay more than $2000-a month for a 365-square foot efficiency (e.g., at the Auburn). Of course, the rates go up from there. What a scam!
Also, if anyone heard Kojo's show today on WAMU (8/1), Elrich was one of the guests. He pointed out that the ZTA debacle bill has ZERO allowance for affordable housing, which I'm sure you brought up in your post about that disaster. The planning board (and no doubt the county council) wants to expand the zoning areas even further. WTF?!?!
Hanpton House was always expected to be over 3K for a 1 Bedroom !!
We can’t act like we are very surprised !
It’s a Class A Luxury Apt Building right next to a NEW Elevator Entrance for the METRO (coming soon)
The idea that more housing drives up rents just doesn’t hold up not in Bethesda, or basically anywhere. Rents downtown have stayed flat or even dipped a bit, even with tons of new high-end units coming online. That’s supply doing its job.
Definitely some of these new buildings will have significant vacancies. That’s not failure, that’s how the market cools off. When units sit empty, landlords drop prices, offer deals, or fill them with temp housing. Better that than having high-income renters bidding up older units meant for everyone else.
Now, I’m not someone who thinks we should be chopping up every single-family lot in Montgomery County. But in dense downtown cores like Bethesda, we absolutely should be building more. That’s how you ease pressure without blowing up neighborhood character.
More supply won’t fix everything, but holding it up only makes things worse. Especially when the real bottlenecks are a broken permitting process, slow project approvals, and a lack of focus on attracting private sector jobs. If we want affordability and a thriving local economy, we need to fix those too.
11:52: Reaganomics is what the County Council is using on housing policy. Adam Smith is talking about the forces in a pure market economy - which is exactly what housing does NOT have in 2025. Otherwise, there wouldn't be so many vacant units in the new buildings.
12:48: You are correct.
3:43: Rents have not dropped in Bethesda. I'm not opposed to building in downtown Bethesda, but I'm opposed to allowing artificial rent inflation to continue without regulation. If this was a pure market, there wouldn't be vacant units in the new buildings years after they opened. The rent would be lowered to meet the true market price. That's not happening.
The buildings should be undercutting each other on price. Place a tax on vacant units, and watch those Bethesda rents plunge downward. That would be a true supply and demand scenario.
It's preposterous for developers to be demanding to bulldoze the SFH neighborhoods now, when they've shown that all this supply by itself does not lower housing prices or rents. They haven't even finished redeveloping downtown Bethesda and Silver Spring, Glenmont, and Wheaton, all within walking distance of Metro yet! The Council gave away the store on all those plans, but that still wasn't enough - they want the most-coveted SFH neighborhoods.
I live in one of the newer, but not brand new, luxury rental apartments in downtown Bethesda. I can report that the building is almost always between 93% and 97% fully leased. And yes, when the occupancy drops to the low 90’s, they lower the rent for vacant apartments or offer incentives like one month free rent for new tenants. Conversely, when the occupancy goes up, so do the rents on vacant units. And yes the rent usually does increase every time we re-lease. Sometimes only 0.6% or as much as 5%, depending on the rental market and availability at the time. Oddly, sometimes, identical units rent for less to new tenants, compared to rents for existing tenants. It really depends on timing. I my building at least, I have not seen any AirB&B short term rentals.
Robert Dyer @ 11:28 AM
“ Many of the units in the new buildings are vacant, and are being filled with contract housing, students, and illegal Airbnb guests.”
You’ve been making this claim repeatedly for several years now, but have never, ever provided any actual data to support it.
Soon most our tenants will only be able to afford living here if they're on the gubmint dole. We know where that leads.
Those are asking rents. BF Saul spent a fortune on that building, they aren’t afraid to push the envelope at the start, they can always lower the ask or increase the concessions.
A link to a very good YouTube Video on this subject, called “Left Wing NIMBYISM” This video dispels the theory that the creation of brand new market rate housing in dense, walkable, transit oriented communities harms the creation of affordable housing in any way. In fact it creates more housing for all by creating new premium market rate units that free up former market rate units to become more affordable. It suggests that inclusionary zoning (like the creation of MPDU’s) does not work because it drives up the cost for the majority of tenants. It also suggests that public housing in also not the answer. A very interesting video to review. It suggests that so called “left wing Nimby’s”want more affordable housing but do not support more market rate housing.
https://youtu.be/tvTa-GXKxak?si=1bsW9-8wCYNeiKfL
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