1. 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

2. The Washington Economy: Current Performance

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

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

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

6. Metro Comparisons Job Change 1999-2005 15 Largest Metro Areas Thousands WASHINGTON Northern Virginia

7. 15 Largest Job Markets Job Change in 2005 Thousands Washington +64,700

8. 15 Largest Job Markets Ranked by Unemployment Rate January 2006 % U.S. 5.1% 3.1 Data not seasonally adjusted

9. 2004 - 2005 Job Change By Sector Washington MSA (000s) Total = 64,700 (Ranked by Size of Sector)

10. Share of Washington Area Economy 1970-2005 No. Virginia Sub MD District % of GRP Year

11. What is Different About The Washington Area Economy?

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

13. Federal Spending by Type 1983 - 2004 Procurement Wages & Salaries All Other Billions Current $ 2005 = $59.2 B

14. Annual Change in Federal Procurement Spending Washington Metro Area $ Billions 2005 = + $6.6 B 6.1 8.0

15. Federal Spending in 2004: U.S. and Washington MSA ($ in billions) Amount % Chg 03-04Amount 03-04 U.S.$2,162.24.9%$339.73.8% Washington Metro 108.211.4%52.619.0% % Of U.S. in 04 % Of U.S. in 045.0%15.5% TOTAL PROCUREMENT 68.6% of the 2003-2004 increase in Federal Procurement nationally was in the Washington MSA Source: US Census, GMU Center for Regional Analysis

16. The Washington Area Housing Market

17. Housing Price Index Washington PMSA 4th Quarter Each Year Source: Federal Office of Housing Enterprise Oversight, GMU Center for Regional Analysis 1995 Q1=100 1990-1997 =+ 3.7 % 1997-2005 = +153 %

18. 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=100 28-Yr Average (compound rate) = 7.0%

19. 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

20. Metro Comparisons Ratio of Median Value of New Housing to Median Family Income – Q3 2005 WASHINGTON Source: NAHB/Wells Fargo, GMU Center for Regional Analysis In 2000 Washington was 2.8

21. Average Sales Price All Housing Types Washington Metro Source: MRIS, GMU Center for Regional Analysis $ + 119% Since 1999 +5.8% +10.5% +13.6% +13.8% +20.1% +21.7%

22. Average Sales Price Percent Change Month-over-the-year, All types 2004-2005-2006 Washington MSA %

23. Average Days on the Market Change Month-over-the-year, All Types 2004-2005-2006 Washington MSA 37 21 59

24. Total Unit Sales Change Month-over-the-year, All Types 2004-2005-2006 Washington MSA %

25. MSA Total Housing Unit Permits 1980 - 2005 Average = 31,400/Year Year Projected Demand 2005-2007

26. Dulles Corridor - Fairfax Employment & Household Forecast Growth, 2005 - 2030 THOUSANDS Source: COG Round 7, CRA

27. Dulles Corridor - Loudoun Employment & Household Forecast Growth, 2005 - 2030 THOUSANDS Source: COG Round 7, CRA

28. Dulles Corridor - Fairfax & Loudoun Employment & Household Forecast Growth, 2005 - 2030 THOUSANDS Source: COG Round 7, CRA

29. Looking Ahead

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

31. Employment Change by Sub-state Region (000s)10-YrAvg.(1) 20052006200720082009 D.C. 3.9 3.97.5 8.0 8.0 7.5 7.56.0 4.0 4.0 S. MD 16.013.517.015.013.512.0 No. VA 34.943.341.538.535.031.5 REGION54.864.365.559.553.547.5 2.1%2.3%2.2%2.0%1.8%1.5% (1) 1995-2005

32. 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 20052006 Prices will increase in the range of 6% – 12% compared with 20+% in 2005 Sales volume will drop back to 2002-2003 levels (98-100,000 transactions)Sales volume will drop back to 2002-2003 levels (98-100,000 transactions) Days on Market rising to 45-55 averageDays on Market rising to 45-55 average

33. Local Threats to the Forecast

34. 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

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