Washington DC Metro Area Is Most Promising Real Estate Market in the World

I was invited by my Wells Fargo Loan Officer, Mike Pfeffer, to an economic workshop given by Roger Arnold.  Mr. Arnold is a macro economist who does consulting for government agencies such as HUD as well as think tanks, hedge funds and sovreign nation funds.  His workshop was extremely refreshing because he answered all questions directly and without prejudice.  He gave his analysis of current economic news and conditions and what their effect will be on the world, the nation and our region here in Washington DC.

Here are the main points and predictions he made that will directly effect us here in the Washington DC metro area

1. Washington has become the center of the world politically and now financially with the implosion of Wall Street, the size of the bailout and global recession.
2. The country is going through a deflationary period in the private sectors that will be offset by an increase in government.
3. The Washington DC area has a shortage of residential housing, office space and adequate transportation.

Inside the beltway, prices have alrealdy started to move up.  Office space in areas like Rosslyn and Crystal City are non-existant.  The question for the areas outside the beltway is how far out will the government move to search for space and housing and what areas they will expand toward. 

I think Loudoun County is poised to benefit from the increased size of government and buyers should factor this into the equation above all other media stories that predict continued doom and gloom.  The future looks bright for our area.

Comments

[Loudoun Citizen]

I tend to disagree with your statement: "I think Loudoun County is poised to benefit from the increased size of government and buyers should factor this into the equation above all other media stories that predict continued doom and gloom."

While I agree Loudoun could benefit from a possible increase in the size of the Government I do not think that buyers should factor that into the equation above all other "media stories" as you put it.

This kind of thinking/speculation is what led to a lot of pricing run-up during the recent housing price bubble. People bought over-priced homes they could barley afford (if afford at all) because people kept telling them that it did not matter because their house should be worth at least 20% more within a year. Telling people to primarily factor in the possible expansion of the Federal Government when buying a home in Loudoun just seems too speculative at the moment.

[Tony Arko]

LC, Thank you for the comment. What I was trying to say and obviously failed was that the impending growth in the federal government will offset the negative factors being reported such as foreclosures, short sales, record depreciation in real estate values. This will be unique to our area because this is the headquarters of government. No where else will this occur in our country. Buyers in other areas will not have the offset that we will have here. Hopefully that makes it clearer what I was trying to say.

And to be accurate regarding the housing bubble, the single biggest factor that caused the bubble was the complete elimination of all underwriting standards, which led to people who would never have qualified to buy a house being added to the buying equation. If the standards had been upheld by the lending institutions, these people would never have bought and price appreciation would have been tempered and the ridiculous speculation by complete amateurs would have never occured.

[Ben Martin, Va Assn of REALTORS]

Tony, did Arnold speculate about the Obama administration's effects on the DC economy? I've heard from a few observers that with Obama's planned orderly pullout from Iraq, we should expect less military spending, thus, fewer government contracts. And since NOVA has so many military contractors, they expect that the decline in military spending could negatively impact the NOVA economy.

[Tony Arko]

Ben, Someone asked about the reduction in military spending and he said that the increase in the other government departments and even the possible creation of brand new government agencies to handle the changing landscape of American business would far exceed any reduction in military contracts. He also said that a lot of the defense contractors are capable of switching gears and handling other department work and that a lot of them already do that. The contractors would just reduce defense staff and increase staff to work on new contracts.

[G.]

With all due respect, I think we're sliding headlong into Great Depression 2. We won't see much positive change in the economy -- locally or nationally -- for some time to come. I realize you'd like to put a good spin on things, but it's too late.

[Shawn]

Indeed it does sound promising. My suggestion is be prepared and take advantage of what's in front of you. People need to watch other markets to see what's going on so when when it starts happening where you are the you are better prepared.

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Thanks

[Estate Agents Finder]

I agree that Washington D.C. is the most promising Real Estate Market in the world. You have posted some good points in proving your claim.