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This Bloomberg article notes the impressive performance of the Washington area economy and housing market thanks to increased spending by the Federal Government. The preference for smaller, less expensive homes (typically condos in this region) is also highlighted by several large builders sales results. Is this permanent rebound for the area's housing market?
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Washington Beats U.S. Housing Slump on Obama Budget
By John Gittelsohn
Nov. 2 (Bloomberg) -- Demand for new homes is growing faster in the Washington area than in any other major U.S. city as existing inventory shrinks and a record $3.52 trillion federal budget fuels the local economy.
Builders took out construction permits on 4,442 single- family homes in the Washington metropolitan area in the third quarter, up 11 percent from a year earlier, according to the Census Bureau. Nationwide, permits fell 17 percent.
The federal budget rose 18 percent this year to $3.52 trillion and is projected to grow to $5.3 trillion by 2019, according to the Treasury Department. NVR Inc., [bn:WBTKR=TOL:US] Toll Brothers
Inc []., Hovnanian Enterprises Inc., Pulte Homes Inc., KB Home and D.R. Horton Inc. are buying land and reporting sales growth in Virginia, Maryland and the District of Columbia, anticipating job and home price gains in the region.
“It’s good to have a rich uncle and the federal government clearly isn’t spending less,” said Stephen Fuller, professor of public policy and director of the Center for
Regional Analysis at George Mason University in Fairfax, Virginia. “We’re on a rebound much faster than other locations because of increased spending to manage the economy and to manage two wars.”
About 15 percent of all federal procurement goes to the Washington area, Fuller said. In the latest example of federal largess, the administration on Oct. 29 endorsed plans to extend an $8,000 tax credit for first-time homebuyers, which is scheduled to expire Nov. 30.
Price Rally
Prices of existing homes in the Washington region climbed each month from March through August, gaining a total of 7.8 percent, as measured by the S&P/Case-Shiller home price index. The index for the nation’s 20 largest cities rose 4.8 percent from its low in April.
In Fairfax County, Virginia, the most populous county abutting the District of Columbia, September prices surged 12 percent from a year earlier to a median of $365,000, according to Metropolitan Regional Information Systems Inc. The number of total listings fell 28 percent.
Source: Bloomberg. View Article.
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