As the District continues to grapple with housing affordability, economic competitiveness, and fiscal pressures, it is worth interrogating the multifamily sales slowdown through the lens of policy design and market behavior. One frequently cited culprit is the Tenant Opportunity to Purchase Act (TOPA). Critics argue that the uncertainties created by TOPA reduce investor interest and depress property sales—and therefore tax revenue. Is there evidence to support this claim?
What the data say
Drawing on CoStar data in TOPA’s Promise and Pitfalls: Balancing tenant rights, affordability, and housing investment in Washington, D.C., D.C. Policy Center researchers examined multifamily market trends in submarkets across the D.C. region with at least 6,000 units. Since 2000, inventory has grown by over 50 percent across D.C., Maryland, and Virginia. Valuations largely kept pace, except during major downturns—first during the Great Recession, and more recently starting in 2022, as investor appetite began tilting toward other metropolitan areas.
However, something different has been happening in the District: since 2015, sales volume has been falling steadily—even as valuations remain relatively strong. This divergence merits attention.
What might be happening
Why is D.C., which once led the region in attracting capital and development, seeing a drop in transaction volume?
Three likely explanations emerge:
- Capital is rational. Suburban markets increasingly offer higher returns on a per-unit basis.
- Commute times don’t matter as much. Telework has flattened the value premium on centrality.
- Policy friction matters. Transaction complexity—especially from TOPA—adds time, uncertainty, and risk. Housing providers, investors, brokers, and title agents consistently cited this complexity in interviews about TOPA.
Any and all of these factors would result in investors redirecting capital to places where deals are cleaner, faster, and easier to close. In short, the market is responding to incentives.
Sales volume vs. market value: A growing mismatch
From 2010 to 2018, as D.C. added inventory, sales volume rose to about 3 percent of total asset value—on par with Maryland and Northern Virginia. But since 2018, D.C.’s ratio has fallen sharply and now sits at about half the suburban level.
This doesn’t mean D.C.’s assets are losing value. But it does mean they’re being traded less frequently, and that is a concern—for both liquidity and fiscal health.
What’s at stake: Revenue and competitiveness
Multifamily asset values remain strong. But a healthy market is not just about what properties are worth—it’s about how easily they move. If regulatory complexity is dampening sales, the costs are broader than they appear: slower capital flows, reduced tax revenue, and potential erosion of investor confidence in the city’s housing market.
Between 2019 and 2023, D.C.’s multifamily sales averaged $1.06 billion annually, generating roughly $30.8 million in deed transfer and recordation taxes. If D.C.’s sales-to-value ratio matched that of Virginia, deed tax collections would have been higher by $27 million each year. Had it matched Maryland, deed tax revenue would have been $46 million higher.
Even if the friction created by TOPA explains only a fraction of the lower sales volume in the District, it would still amount to significant revenue during a time when the city is navigating post-pandemic recovery and facing budget pressures.
Why does this matter now?
Mayor Bowser is presenting her Fiscal Year 2026 budget to the D.C. Council on May 27 and plans to include in the Budget Support Act (BSA) key TOPA reforms first introduced as a part of the RENTAL Act. Typically, DC Council will limit budget bills only to provisions that directly impact the budget—meaning they either cost something or bring some revenue. And the arbiter of that decision is generally the Chief Financial Officer (CFO).
Even if the CFO cannot assign a definitive fiscal impact to the TOPA reform provisions due to uncertainty, DC Council should still keep them in the BSA. The reforms send a clear signal that the District is serious about improving its business climate and addressing inefficiencies in the housing market. These changes may not yield immediate or easily quantifiable revenue, but they can unlock long-term economic value by reducing friction in property transactions, attracting investment, and stabilizing the city’s rental housing stock. The positive market response is already evidence of this potential. The Council should act on that signal.