October 15, 2012 Our Region’s Housing Market: What are price trends likely to be over the next 5 years? Lisa A. Sturtevant, PhD Center for Regional Analysis School of Public Policy George Mason University Adapting Inclusionary Zoning to a Changing Housing Market

The Washington Economy

Annual Job Change Washington MSA (000s) Annual Data Annual Month over Year Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by Sector Aug 2011 – Aug 2012 Washington MSA (000s) Total = 38,200 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

8.8 – DC 8.1 – U.S. 6.0 – SMD 5.5 – MSA NVA Unemployment Rate Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

The Washington Area Housing Market

Sources: ACS yr Estimate, HUD SOCDS, Census.

+74% Source: HUD SOCDS, Census, Bureau of Labor & Statistics

Sources: ACS yr Estimate, HUD SOCDS, Census

Aug = % Percent Change in Inventories of Existing Homes Month-Over-Year 2000 – 2012, MSA Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

Average Sales Price Percent Change Washington MSA All Housing Types % Annual Change Annual Change by Month Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

Home Prices as a Percent of Peak September 2012 Selected Jurisdictions Peak Price% of Peak District of Columbia$600,00090% Montgomery County602,00077 Prince George’s County350,00054 Arlington County630,00088 City of Alexandria555,00086 Fairfax County575,00085 Loudoun County620,00070 Prince William County460,00070 Source: GMU Center for Regional Analysis, RBIntel

Renters Paying 30% or More of Their Income on Rent Selected Jurisdictions % of Renters District of Columbia49% Montgomery County52 Prince George’s County51 Arlington County38 City of Alexandria41 Fairfax County45 Loudoun County47 Prince William County49 Source: GMU Center for Regional Analysis, US Census Bureau ACS Estimates

Washington MSA Building Permits 2000 – 2012, 3-Month Mvg Avg Source: Census Bureau, GMU Center for Regional Analysis

Housing Market Outlook

Employment-Drive Housing Demand Total Units Single- Family Multi- Family District of Columbia 70,4625,71564,747 Suburban Maryland 122,67849,67673,002 Northern Virginia 215,75596,374116,381 Washington Region407,944152,965254,979 Source: GMU Center for Regional Analysis Note: Assumes all workers are housed in the jurisdiction in which they work. The low estimates assume that new jobs have the same in-commuting rates as current jobs. Detailed study results available at cra.gmu.edu.

Comparing Prices of Current and Forecasted Units Owner-Occupied Units Washington Region Source: 2011 Sales, MRIS Note: assumes all workers housed in the jurisdiction in which they work

Comparing Rents of Current and Forecasted Units Renter-Occupied Units Washington Region Note: assumes all workers housed in the jurisdiction in which they work Source: 2009 ACS

Regional housing market has been recovering; sales activity and prices may soften in the near-term. Rents may not grow as fast and vacancy rates may increase in the near-term. Job growth over the next five years will put upward pressure on home prices, particularly in areas close to transportation/transit and employment centers. There is a need for more multi-family housing and smaller, more affordable owner and renter homes in the region. A lack of a sufficient supply of housing contributes to worsening traffic and quality of life and threatens our region’s economic vitality. Outlook for the Region’s Housing Market

GMU Center for Regional Analysis cra.gmu.edu