The Northern Virginia EconomyA d H i M k tAnd Housing Market

John C. McClain, AICPSenior Fellow and Deputy DirectorSenior Fellow and Deputy Director

Center for Regional AnalysisSchool of Public Policy, George Mason University

November 18, 2008

THE NORTHERN VIRGINIATHE NORTHERN VIRGINIA ECONOMY

15 Largest Job MarketsJob Change Sept 07 Sept 08Job Change Sept. 07– Sept. 08

100Thousands

W hi t 40 700

406080 Washington + 40,700

02040

-60-40-20

60

Ranked by Total Jobs

15 Largest Job MarketsRanked by Unemployment RateRanked by Unemployment Rate

September 200810%

6789

10

U.S.

23456

6.04.0

012

Data not seasonally adjustedSource: BLS, GMU Center for Regional Analysis

Annual Job ChangegNorthern Virginia

Annual Change Annual Month-over-the-Year000s

70

Annual Change Annual Month over the Year

2007 2008

53

45

31

50

13

31

2017 17

20 20 1913 12 14 14 14

8 8 11 13 11 10 9 12 13 1310

30

-8-10

10

2 3 4 5 6 n b r r y n ul g p t v c n b r r y n ul g p

2002

2003

2004

2005

2006 Jan

Feb

Ma

Ap

May Jun

Ju Aug Se

pO

cN

ov Dec Jan

Feb

Ma

Ap

May Jun

Ju Aug Se

p

Source: BLS, GMU Center for Regional Analysis

September 07 – September 08 Job Change By Sector Northern VAJob Change By Sector – Northern VA

(000s)Total = 12,800

(Ranked by Size of Sector)

1 84.0

1.29.0

Educ & Hlth Svc

Federal

Prof & Bus Svc

-4.70.6

-1.71.8

Construction

Leisure & Hosp

Retail Trade

St & Loc Gov

0 1-1.6

-0.94.6

Mfg

Information

Financial

Other Svc

0.60.0

-0.1

10 5 0 5 10 15

Transp & Util

Wlse Trade

Mfg

-10 -5 0 5 10 15

Federal Procurement – Northern VirginiaBillions $

g

+16%

+27%

+16%

+16%

Source: Consolidated Federal Funds Reports, Eagle Eye, Inc., GMU Center for Regional Analysis

THE NORTHERN VIRGINIATHE NORTHERN VIRGINIA HOUSING MARKET

Average Sales Price Percent ChangeNorthern Virginia

All Housing Types%Annual Change Annual Change by MonthAnnual Change Annual Change by Month

2007 2008

Source: MRIS, GMU Center for Regional Analysis

Sales and Total Active ListingsgWashington MSA, October Each Year

1000s1000s

Listings

Sales

Units Sold Percent ChangegBy Subregion

All Housing Types% g yp

NVA2007 2008

MSA

SMD

DC

SMD

Units Sold Percent ChangegNorthern Virginia

All Housing Types% g yp

PW

2007 2008

NVA

LDN

FFX

Total Active Listings Per SalegOctober Each Year

PW

LDN

FFX

ARL

New Housing Contract Kick-Out RategWashington MSA All Housing Types% g yp

66

6070

2006 2007 2008

35282932

44

4050

7 4 4 7 7 10 9 11 11181718181917

111614151417

28292525232421

17

102030

7 4 4

010

003

004

005

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lA

ug

Sep Oct

No

vD

ecJa

nF

ebM

arA

pr

May

Jun

Jul

Au

gS

ep Oct

No

vD

ecJa

nF

ebM

arA

pr

May

Jun

20 20 20 J F M A M J A S O N D J F M A M J A S O N D J F M A M J

Source: Hanley-Wood, GMU Center for Regional Analysis

New Housing SalesW hi t M t AWashington Metro AreaFirst Half of Each Year

Source: Hanley-Wood, GMU Center for Regional Analysis

Mortgage Foreclosure Ratesby County – April 30 & August 11by County – April 30 & August 11

Foreclosures /10,000 units

Source: RealtyTrac, GMU Center for Regional Analysis

Foreclosure ActivityVirginia Metropolitan Areasg pJuly 15 and Oct 15, 2008

Source: RealtyTrac, GMU Center for Regional Analysis

Virginia Housing Market – Existing Units3rd Q t 2008 3rd Q t 2007

MLS A P i S l P di S l

3rd Quarter 2008 vs. 3rd Quarter 2007

MLS Area Prices Sales Pending Sales

Dulles -23% + 27% + 58%

NVAR -19% + 15% + 27%NVAR 19% + 15% + 27%

Prince William - 42% + 145% + 194%

Richmond - 2% - 2% - 7%

Roanoke Valley - 4% - 26% - 18%

Tidewater - 3% - 18% - 3%

Virginia + 1% - 5% + 10%

Source: VAR Multiple Listing Services, GMU Center for Regional Analysis

Prince William Housing MarketO t b E h Y

Median Sales Price Sales

October Each Year

Median Sales Price Sales

389389

177

NVAR Housing Market

Median Sales Price Sales

October Each Year

Median Sales Price Sales

490

359

THE OUTLOOK FOR

• Foreclosures Will Take Time to Work Through

NORTHERN VIRGINIA’s HOUSING MARKET

– Many Sub-primes Will Have Reset by Early 2009– Alt-As will take much longer– Some Areas Face Danger of Prime Mortgages Going intoSome Areas Face Danger of Prime Mortgages Going into

Foreclosure Because of Falling Prices

• Fiscal Impacts of Declines in Residential Property Values Will Invoke Large Toll on Government Tax RevenuesWill Invoke Large Toll on Government Tax Revenues

• Federal Policy Effects – How Long For Current Actions to Turn the Current Situation?

• Increases in Sales A Sign the Tide is Turning?• Prices and Market Recovery Will be a Mix by Geography –

Areas with Good Transportation and Access to Jobs Recovering Soon, Most Areas Will Take Longer

THE OUTLOOK FOR

• Underlying Economic Fundamentals are Still OK

NORTHERN VIRGINIA’s ECONOMYUnderlying Economic Fundamentals are Still OK– Federal Procurement Moderating Trend to Continue & Will Grow But

Will Not be the Economic Driver as in the Past Sectors Related to Housing Market Will Take Some Time to– Sectors Related to Housing Market Will Take Some Time to Recover – Will Depend on Housing Market Recovery

– Long-term Prosperity/Recovery Will Require Adequate Workforce, Workforce Housing Improved Mobility / Traffic Congestion ReliefWorkforce Housing, Improved Mobility / Traffic Congestion Relief

– Need Long-Term Economic Strategy To Build on Region’s Strengths & Adjust to Any Shifts in Procurement Policy

• Federal Policy Effects – How Long For Current Actions to Turn the Current Situation?

• Recovering Slowly Late 2009 At National Level ?? –• Recovering Slowly Late 2009 At National Level ?? –Northern Virginia Jobs Will Continue Slow Growth

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