If you were hoping that 2012 is the year that real estate prices jump back up towards those numbers we saw in 2005-2007, I hate to ruin the party.
According to the economic forecast that George Mason University’s Center for Regional Analysis put together on Friday, 2012 is looking like a year where we run in place, with our eyes on the horizon at 2013, hoping that things might get noticably better a year from now. The title of this year’s forecast conference was aptly called, “Is this a recovery, or what?”
There was a packed crowd of business men and women at the Ritz-Carlton Tyson’s Corner, sipping coffee and taking careful note of what regional economicst Stephen Fuller had to say about the impact of the coming (likely) reductions in federal spending and nervous laughter when he told the crowd that the Washington region now “is at the bottom of the heap” among cities actually adding jobs. “Detroit is adding more jobs” than we are, he said, and that is because about halfway through 2011, the federal spending slowed dramatically.
Really? Detroit? Just two years ago, the Washington area was leading the country among metro areas in terms of adding jobs. As goes Uncle Sam, so goes Washington.
So what does this all mean for real estate and that large investment called your home and whether you should buy or sell?
The one positive sign is that the region is seeing a pickup in new constructio nof homes, although much of that is new apartment buildings going up to meet the rising demand for rental units. One result of the recession: three-quarters of all local residents ages 25-34 now rent their homes; compared to 63 percent of folks in that age group in 2005 through 2007.
On average, the DC area added 3,600 new housing units a year during the boom years and from 2008 to 2010 we added less than half of that, about 1,500 units.
In recent months, George Mason’s Lisa A. Sturtevant said the region has 2,300 units now under construction or being marketed, the first positive sign of growth that we’ve seen in two years. “We’re not there yet but we’re doing much better,” she said.
Her forecast for 2012: “Modest improvement” in home sales and some increase in sales activity.