The Washington Area Economy and Outlook Stephen S. Fuller, PhD Dwight Schar Faculty Chair and University Professor Director, Center for Regional Analysis School of Public Policy, George Mason University March 30, 2006 Dulles Area Transportation Association Dulles Corridor Rail Association

The Washington Economy: Current Performance

Annual Job Change 1991 – 2005 Washington Metro Source: BLS, CRA

Annual Job Change Washington MSA THOUSANDS Jan = +66,900

Annual Change of Employed Residents Washington MSA THOUSANDS Dec = +98,300 Source: BLS Household Survey

Metro Comparisons Job Change Largest Metro Areas Thousands WASHINGTON Northern Virginia

15 Largest Job Markets Job Change in 2005 Thousands Washington +64,700

15 Largest Job Markets Ranked by Unemployment Rate January 2006 % U.S. 5.1% 3.1 Data not seasonally adjusted

Job Change By Sector Washington MSA (000s) Total = 64,700 (Ranked by Size of Sector)

Share of Washington Area Economy No. Virginia Sub MD District % of GRP Year

What is Different About The Washington Area Economy?

Total Federal Spending Washington Metro Area $ Billions 2005 = $117.2 B, + 8.3%

Federal Spending by Type Procurement Wages & Salaries All Other Billions Current $ 2005 = $59.2 B

Annual Change in Federal Procurement Spending Washington Metro Area $ Billions 2005 = + $6.6 B

Federal Spending in 2004: U.S. and Washington MSA ($ in billions) Amount % Chg 03-04Amount U.S.$2, %$ % Washington Metro % % % Of U.S. in 04 % Of U.S. in 045.0%15.5% TOTAL PROCUREMENT 68.6% of the increase in Federal Procurement nationally was in the Washington MSA Source: US Census, GMU Center for Regional Analysis

The Washington Area Housing Market

Housing Price Index Washington PMSA 4th Quarter Each Year Source: Federal Office of Housing Enterprise Oversight, GMU Center for Regional Analysis 1995 Q1= =+ 3.7 % = +153 %

Housing Price Index Annual % Change Washington PMSA 4 th Quarter Each Year Source: Federal Office of Housing Enterprise Oversight, GMU Center for Regional Analysis 1995 Q1= Yr Average (compound rate) = 7.0%

Metro Comparisons Annual Percent Change in House Prices 2004 –2005 (3rd Quarter) Percent WASHINGTON Source: Office of Federal Housing Enterprise Oversight, GMU Center for Regional Analysis Conforming Mortgages Only

Metro Comparisons Ratio of Median Value of New Housing to Median Family Income – Q WASHINGTON Source: NAHB/Wells Fargo, GMU Center for Regional Analysis In 2000 Washington was 2.8

Average Sales Price All Housing Types Washington Metro Source: MRIS, GMU Center for Regional Analysis $ + 119% Since % +10.5% +13.6% +13.8% +20.1% +21.7%

Average Sales Price Percent Change Month-over-the-year, All types Washington MSA %

Average Days on the Market Change Month-over-the-year, All Types Washington MSA

Total Unit Sales Change Month-over-the-year, All Types Washington MSA %

MSA Total Housing Unit Permits Average = 31,400/Year Year Projected Demand

Dulles Corridor - Fairfax Employment & Household Forecast Growth, THOUSANDS Source: COG Round 7, CRA

Dulles Corridor - Loudoun Employment & Household Forecast Growth, THOUSANDS Source: COG Round 7, CRA

Dulles Corridor - Fairfax & Loudoun Employment & Household Forecast Growth, THOUSANDS Source: COG Round 7, CRA

Looking Ahead

Economic Outlook (GRP) – 2010 Washington Area and Sub-state Portions (Annual % Change) % DC SM MSA NV

Employment Change by Sub-state Region (000s)10-YrAvg.(1) D.C S. MD No. VA REGION %2.3%2.2%2.0%1.8%1.5% (1)

Housing Outlook for 2006 and 2007 Market will continue to cool – returning to more Normal: 2006 Prices will increase in the range of 6% – 12% compared with 20+% in Prices will increase in the range of 6% – 12% compared with 20+% in 2005 Sales volume will drop back to levels (98-100,000 transactions)Sales volume will drop back to levels (98-100,000 transactions) Days on Market rising to averageDays on Market rising to average

Local Threats to the Forecast

Global / National ForcesGlobal / National Forces Labor Force Availability, Quality and CostLabor Force Availability, Quality and Cost Transportation Cost / CongestionTransportation Cost / Congestion Federal Spending and Procurement PolicyFederal Spending and Procurement Policy BRACBRAC Housing Affordability and SupplyHousing Affordability and Supply