{"id":5659,"date":"2025-07-13T02:31:06","date_gmt":"2025-07-13T02:31:06","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/5659\/"},"modified":"2025-07-13T02:31:06","modified_gmt":"2025-07-13T02:31:06","slug":"mocos-multifamily-construction-market-disappears","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/5659\/","title":{"rendered":"MoCo\u2019s Multifamily Construction Market Disappears"},"content":{"rendered":"

By Adam Pagnucco.<\/p>\n

In the wake of Montgomery County\u2019s passage of a new rent control law, the county has seen its multifamily construction market disappear.\u00a0 Will it ever recover?<\/p>\n

On July 10, the county council received a briefing on economic indicators<\/a> from the Montgomery County Economic Development Corporation<\/a> (MCEDC), the county\u2019s economic development authority, and the Montgomery County Planning Department.\u00a0 The briefing showed a slowdown in the county\u2019s labor market in the first quarter, with the number of employed people falling, the number of unemployed people rising and the unemployment rate rising slightly (although still very low at 3.1% in March).\u00a0 That may reflect the federal cuts of the Trump administration, a problem on the minds of policy makers at the state and local levels.\u00a0 But the real news came on residential building permits, a measure of the county\u2019s construction market.<\/p>\n

The report<\/a> said this:<\/p>\n

*****<\/p>\n

Permits for townhouses and duplexes (210) in the first quarter of 2025 were close to their first quarter levels from 2024, but detached family homes (57) were permitted at about half of the typical first quarter volume of the last three years.<\/p>\n

Multifamily permitting can be volatile from quarter to quarter and year to year, but this quarter\u2019s seven units permitted is the lowest multifamily quarterly volume in the dataset we currently use, which goes back to 2019. The next lowest quarter was the previous quarter (fourth quarter of 2024, with eight permits), meaning that only 15 multifamily units were permitted in the six-month period from October 2024 to March 2025. The continuance of this slow pace for another quarter or two could indicate significant challenges in the multifamily market.<\/p>\n

*****<\/p>\n

That was followed by this bar chart.\u00a0 The light blue portion of the bars represents multifamily unit permits.\u00a0 In the first quarters of 2022, 2023 and 2024, the county saw hundreds of multifamily units permitted.\u00a0 Then the county\u2019s rent control law went into effect on July 23, 2024<\/a>.\u00a0 And POOF half a year later, the county\u2019s multifamily market has vaporized.<\/p>\n

\"\"<\/p>\n

Now let\u2019s bear in mind that this is not some cabal of \u201cevil developers\u201d making such a claim.\u00a0 This is coming from MCEDC, the county\u2019s economic development authority, and the county\u2019s planning department.\u00a0 MCEDC\u2019s board members are nominated by the county executive and confirmed by the county council.\u00a0 Both MCEDC and the planning department are financed by taxpayer money.\u00a0 The source they are citing is the county\u2019s permitting department.\u00a0 The county\u2019s own agencies are telling its leaders that its multifamily construction market has vanished.<\/p>\n

One more note: the county\u2019s planning department confirmed that the above data does not include the cities of Gaithersburg and Rockville.\u00a0 Those cities have their own permitting processes and do not have rent control laws.<\/p>\n

So what could have caused such an epic collapse?\u00a0 The construction market is burdened by several factors, including high interest rates, the impact of Trump\u2019s tariffs (which has only begun) and a slowing economy.\u00a0 Those are national factors that MoCo leaders can\u2019t control.<\/p>\n

Here\u2019s the problem.\u00a0 According to the U.S. Census Bureau<\/a>, multifamily residential units are rising nationwide.\u00a0 Its latest estimates show the seasonally adjusted annual rate of multifamily (buildings with 5 or more units) permits rising from 393,000 in May 2024 to 444,000 in May 2025, a 13% increase.\u00a0 Raw data for non-seasonally adjusted monthly multifamily units rose from 33,900 in May 2024 to 36,200 in May 2025, a 7% increase.<\/p>\n

MoCo\u2019s multifamily housing collapse is an extreme outlier from national trends.<\/p>\n

Here\u2019s another data point from the State of Maryland\u2019s planning department.\u00a0 In the five months of January through May 2024<\/a>, MoCo authorized 1,724 units in buildings with five or more units.\u00a0 The rest of the state authorized 1,404 of these units.\u00a0 That entire period occurred before MoCo\u2019s rent control law took effect.\u00a0 In the five months of January through May 2025<\/a>, after rent control had taken effect in MoCo, MoCo authorized zero units in buildings with five or more units while the rest of the state authorized 2,038 of these units.\u00a0 (In Prince George\u2019s County, where rent control took effect in April 2023<\/a>, zero multifamily units were authorized during both of these periods.)\u00a0 Again, while there is a slight difference between county and state data here, this is the state talking \u2013 not \u201cevil developers.\u201d<\/p>\n

Could this be due to anything other than rent control?<\/p>\n

Think about it.\u00a0 As county leaders were pondering rent control two years ago, developers began to preemptively cancel new housing projects<\/a>.\u00a0 Then the national real estate financing industry singled us out for redlining<\/a>, with one of the nation\u2019s biggest housing CEOs scolding us for a \u201cpoor\u201d political climate<\/a>.\u00a0 All of this comes on top of a towering<\/a>, decades-old body of economic research<\/a> showing the damaging effects of rent control on housing supply, including in Takoma Park<\/a> and MoCo itself back in the 1970s<\/a>.<\/p>\n

It was all so predictable.\u00a0 Only a nuclear bomb could have caused more annihilation of our multifamily market than rent control.<\/p>\n

Will MoCo leaders ever change course?\u00a0 Or will rent control irradiate our housing market forever?<\/p>\n","protected":false},"excerpt":{"rendered":"By Adam Pagnucco. In the wake of Montgomery County\u2019s passage of a new rent control law, the county…\n","protected":false},"author":2,"featured_media":5660,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[6076,28,2053,112,6077],"class_list":{"0":"post-5659","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-adam-pagnucco","9":"tag-business","10":"tag-housing","11":"tag-markets","12":"tag-rent-control"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/5659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=5659"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/5659\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/5660"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=5659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=5659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=5659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}