Montgomery County planners say they are concerned by a trend of a low number of building permits for multifamily rental projects being issued by the county from October to June, indicating that the county is facing a worsening housing crisis.
The county awarded 38 permits for multifamily housing units from October to June, according to a July 31 Planning Board briefing on a quarterly economic indicators report by county planners and the Montgomery County Economic Development Corp. (MCEDC).
“We have had basically three straight quarters – that’s over nine straight months – of very low, basically zero, rental multifamily housing permitting, which is very concerning,” Ben Kraft, a planning research coordinator for Montgomery Planning, said during the briefing at the board’s Wheaton headquarters.
Planning Board Commissioner James Hedrick called the data concerning.
“What we’re looking at now is a recipe for localized stagflation and that’s really beginning to be incredibly, incredibly worrisome to me,” Hedrick said during the briefing.
Stagflation is an economic condition characterized by high inflation, slowing economic growth, and rising unemployment, according to Investopedia. In recent days, economists have been warning of a national stagflation trend in the U.S. economy following a disappointing July jobs report and rising inflation.
County Executive Marc Elrich (D), however, noted the drop in multifamily housing production mirrors a national decline in residential construction and could be attributed to national economic issues.
“Everything is slowing down. The headlines in the country right now are [there is] a slowdown in the market. There’s continued uncertainty about interest rates because they have not budged. There’s the continued worry about tariffs and driving up prices,” Elrich said Wednesday during his weekly virtual media briefing.
“If people are concerned, we need to think about what our housing policies are, what we’ve permitted,” he said, noting the county report did not include data from the cities of Rockville and Gaithersburg.
After the briefing, Kraft told Bethesda Today the data is indicative that it is a “time of a housing crisis” for the county.
“One quarter, not that concerning. … Two quarters, getting a little concerning, but you know, still not out of the question. Three quarters really is something that just looking at the data, at least for the last five or so years, it’s just not something that we’ve seen, and that really does suggest that there’s a real suppression of housing production in the county,” Kraft said.
According to the report, in the first quarter of 2024, the county’s Department of Permitting Services issued a total of 555 residential building permits for multifamily units. In the first quarter of 2025, just seven permits for multifamily units were issued by the county.
Matthew Cournoyer, a spokesperson for the county’s Department of Housing and Community Affairs, said in an email to Bethesda Today that it was important to consider all of the data concerning housing — not just the “narrow window of the end of 2024 and the beginning of 2025.”
“It’s also a bit challenging to look only at a single quarter or two quarters to compare numbers, either across time or across jurisdictions, because just a small handful of projects can significantly change the totals,” Cournoyer said. “[It] doesn’t make much sense to draw big conclusions from that narrow snapshot of data.”
Brian Anleu, vice president of government affairs at the Apartment and Office Building Association (AOBA) of Metropolitan Washington, said in an Aug. 1 statement to Bethesda Today that the trend identified in the MCEDC’s report aligns with what the organization has been hearing from its members locally and nationally.
AOBA, which represents local developers and landlords, opposes the county’s rental stabilization laws and recent calls for rent stabilization to be implemented in Rockville. The association says it is concerned that rent stabilization is stymying development in the county.
“The precipitous drop in housing development is the result of a regulatory environment in the County that is inhospitable to housing investment, as evidenced by the passage of rent stabilization and the County’s design and implementation of it,” Anleu said. “Housing providers and developers do not want to risk investing in over-regulated markets.”
Cournoyer, however, said county permitting data does not align with the narrative that the county’s rent stabilization law has had the biggest impact on multifamily housing production.
The Montgomery County Council voted to pass permanent rent stabilization legislation in July 2023, and the law went into effect in July 2024. Under the law, annual rent increases are capped at the region’s consumer price index (CPI) plus 3%, with a hard cap of 6% of the base rent. However, the county law does not include municipalities such as Rockville that have their own governments.
If rent stabilization “was going to affect development, you might expect it to start doing so in 2023 and 2024, since developers knew it was coming and new properties aren’t impacted immediately by the law anyway,” Cournoyer said. “But permitting data shows the number of [multifamily] permits essentially held steady or saw minor declines in 2023 and 2024. This doesn’t align with a narrative that the rent stabilization law has had the biggest impact here.”
According to data from the county Department of Permitting Services, 27 permits were issued for a total of 1,968 multifamily units in 2023, and 39 permits were issued for a total of 2,116 multifamily units in 2024.
What does the data show?
During the July 31 meeting, Kraft also presented quarterly residential building permit data from the beginning of 2023 up to the second quarter of this year (which ended June 30). According to the data, eight multifamily permits were issued in the fourth quarter of 2024, seven in the first quarter of 2025, and 23 permits in the second quarter of this year.
Kraft noted the 38 permits in the last nine months are primarily two-by-two apartments that are for sale and not rentals. Permitting for rental multifamily units in the first quarter of the year was “basically non-existent,” he said.
“Big picture, nothing is happening,” Harris said during the Planning Board briefing while reviewing the permitting data.
Kraft also pointed to data from neighboring jurisdictions, including Frederick, Prince George’s and Howard counties in Maryland, Arlington and Fairfax counties in Virginia, and Washington, D.C., noting some of those jurisdictions had substantially higher permitting numbers from the end of 2024 to mid-2025:
- Fairfax County permitted 1,642 multifamily units;
- Washington, D.C., 1,244;
- Arlington County, 618;
- Howard County, 542;
- Frederick County, 355; and
- Prince George’s County, 12.
Kraft noted the jurisdictional data came from the U.S. Census Bureau and included the caveats that past data has had discrepancies in multifamily permitting data for Montgomery County. In addition, the data shows there were zero multifamily units permitted in the county in that timeframe. He also noted the county’s permitting services includes two-over-two units in its multifamily permitting data, whereas the census data does not.
The jurisdictional data also shows the city of Rockville had 48 multifamily units permitted in the same time frame, but does not include numbers from Gaithersburg or Takoma Park. All three cities have their own planning commissions and are not under the county’s jurisdiction.
Analyzing the jurisdictional data, Planning Board Vice Chair Mitra Pedoeem concluded during the briefing that higher multifamily permitting in other jurisdictions signals that the county’s low rate may not only stem from national economic constraints such as high interest rates and increased construction costs.
Hedrick, her fellow commissioner, agreed.
“Comparable counties within the same economic region are not experiencing nearly the same level of lack of investment that we are,” he said.