Contrasting Views on the Future of the Northern Virginia Housing Market

The Washington/Northern Virginia Real Estate Market has continued to outperform the rest of the country, but can this continue? What forces will shape the real estate market in the immediate future and in the years ahead?

As they gaze into their crystal balls trying to see where the market is headed, pundits – on the upside and downside - highlight outside forces and trends that may be transformational … or not.

On the downside Bryant Ruiz Switzky writing in the Washington Business Journal on 11/21/11, projects the negative effects on the region of automatic federal spending cuts that should go into effect in 2013. These cuts triggered by the congressional supercommitttee’s failure to reach a deficit reduction deal would hit the region hard, according to George Mason economist Stephen Fuller.  Specifically what does this mean for Northern Virginia?  Fuller estimates that cuts in military equipment spending would cost Virginia job losses reaching 122, 770 and $7.2 billion in lost earnings.  Sounds terrible for the real estate market, as well. But most pundits, Fuller included, feel that politicians will find a way around these cuts in an election year.

On the upside a recent analysis predicts that the D.C./Northern Virginia area will add more than a million new jobs by 2030, far outweighing the effects of federal spending cuts. According to Brady Dennis writing in the Washington Post (D.C. area is behind the curve on housing and jobs forecasts, 11/21/11), the study found that based on those projections the region will need as many as 731,457 additional units to house workers in the area where they work.  That means producing about 38,000 new housing units per year. 

Of course, the doomsayers worry that local communities won’t be able to meet the demand for new housing thus causing businesses to relocate to other areas and reversing the employment boom. But that doesn’t have to happen.

It will take planning and innovative new approaches to create communities where people want to live, raise families and work.  But when you think about it, that’s not a bad problem to have to solve. And the benefits to the real estate market will be tremendous.