In 2015, Washington, D.C. permitted 4,956 new housing units—the largest increase in housing since the census began recording this value in 1980.
Nearly every month, sales and development data arrives that confirms we are in a historic moment of real estate activity and development growth in our city’s history.
Clearly, this is a great time to be a member of our community.
What is less clear—if only because it has never been examined—is the economic impact all of this new development and real estate activity has produced for the city of Washington, D.C. itself.
In this article, we examine the economic growth of the city of Washington, D.C. over the previous decade, the role real estate activities and our development boom has played in this growth, and whether we really have contributed more than any other revenue stream to our city’s economic growth. 
The Impact of Our Development Boom on Washington, D.C. Tax Revenue
To determine the hardline impact of Washington, D.C.’s real estate community in general—and our last decade’s development boom specifically—we reviewed our city’s tax revenue data for the last ten years.
From 2006—2015, Washington, D.C.’s total tax revenue increased by 63.2%.
Total Tax Revenue
2006: $4,238,950,000
2015: $6,916,841,000
TOTAL INCREASE: +$2,677,891,000
While suggestive—the fact our city saw huge growth in revenue during a decade of huge development growth— this data on its own doesn’t speak to the exact role the development community contributed to the city’s increase in revenue.
To define that role, we looked at the primary tax categories that contribute to our city’s total tax revenue.
The first thing we noticed: three categories of taxes produce the majority of our city’s revenue.
Top Sources of 2015 Revenue for Washington, D.C.

  1. Real Property Tax: 27.73%
  2. Individual Income Tax: 23.60%
  3. Sales and Use Tax: 16.62%
    (No other single source contributed more than 7% to the city’s revenue in 2015.)

In total these three categories contributed 67.95% of our city’s total revenue (both tax and non-tax) and made up 77.75% of our city’s total tax revenue for 2015.
When we looked at this data, another point immediately stood out that’s germane to this exploration: Real Property Taxes added the single biggest source of revenue to Washington, D.C. in 2015.
However, while this data tells us Washington, D.C.’s real estate community contributes the single greatest source of revenue for the city, it doesn’t immediately tell us whether this is a byproduct of our recent development boom, or whether it is simply business-as-usual for our city.
To answer this question, we reviewed how Real Property Taxes have evolved as a contributor to our city’s revenue over the last decade.
Real Property Tax
2006: $1,152,143,000
2015: $2,194,500,000
Total Increase: $1,042,357,000
Percentage Increase: +90.47%
Over the last decade, Real Property Tax revenues have:

  • Grown more, in terms of absolute dollars, than any other revenue category. ($1.152b vs $634m for Individual Income Tax)
  • Grown faster, in terms of percentage increase, than any other revenue category. (90.47% vs 64% for Sales and Use Tax)
  • Grown faster, in terms of percentage increase, than our city as a whole. (90% vs 63.2%)

And—most telling—over the last decade, Real Property Tax has overtaken Individual Income Tax as the single largest contributor to our city’s revenue.
Individual Income Tax vs Real Property Tax (as percentage of total revenue)
2006 Individual Income Tax: 24.4%
2006 Real Property Tax: 22.8%
2015 Individual Income Tax: 23.6%
2015 Real Property Tax: 27.73%
In sum: Over the last decade, Real Property Tax has grown more, and faster, than any other revenue stream for the city of Washington, D.C., and has taken the lead as the top contributor to the city’s revenue.
This review of our city’s historical revenue data makes a strong case that our recent development boom has made our real estate community the most vital source of revenue for Washington, D.C.

Stress-Testing Our Conclusion
This data appears clear, and authoritative, but it is admittedly one set of data produced by a complex system—our city’s financials. While volume of real estate transactions and development directly contribute to Washington, D.C.’s incoming revenue, other factors can also impact our city’s tax revenue in general, and Real Property Tax revenue specifically— including changes in tax rates, population growth, and public-sector involvement in development.
To stress-test our initial findings, we looked at the data behind each of the above potential contributors to our last decade’s Real Property growth.
Population Growth: Larger populations generally equal larger tax revenue streams, and Washington, D.C.’s population has grown by 17% over the last decade. Despite this decade of population growth, Individual Income Tax actually shrunk as a percentage of total revenue coming into Washington, D.C. (24.40% to 23.60%) while Real Property Tax’ contribution increased from 22.80% to 27.73%. The biggest impact our growing population has produced on our city’s revenues appear to come from the efforts of our community to house our new residents.
Tax Rates: Over the last decade, tax rates have actually decreased on Real Property. Since 2006 time they shrunk from $.96 for every $100 of property value (in 2005), to $.85 for every $100 of property value (in 2016). During this time, Homestead Deductions have increased from $38,000 to $71,400.
Public Development: The majority (57%) of land in Washington, D.C. is occupied by public properties including government buildings, universities, hospitals, and museums. Despite their prominence these properties—nor any other public development project—did not contribute to our Real Property Tax revenue growth because these properties are exempt from the tax. Real Property Tax revenue, and its increased contribution to our city’s revenue, came exclusively from private real estate activity.
Your Turn: Help Contribute to Our City
Overall, the data makes it clear that our private real estate community’s activities have produced a huge financial boon to our city of Washington, D.C. Our recent development boom appears to have even transformed these activities into the single biggest source of increased tax revenue for the city over the previous ten years, to the point they now produce single biggest source of tax revenue for our city.
At Evergreen Private Finance, we are proud of being part of this real estate community—and development boom—that continues to drive our city to an even more prosperous future. If you would like to join us in making Washington, D.C. a better and better place to live, and contribute to the local economy, contact us today. Call us at (202) 713-9072 or email us at [email protected].
Written by: Evergreen Private Finance