The Washington Area Economy and Outlook
Stephen S. Fuller, PhDDwight Schar Faculty Chair and University Professor
Director, Center for Regional AnalysisSchool of Public Policy, George Mason University
March 30, 2006
Dulles Area Transportation AssociationDulles Corridor Rail Association
The Washington Economy:Current Performance
Annual Job Change1991 – 2005
Washington Metro
-53
-8
36 3825
4461
7592
117
41
10
5671 65
-80-60-40-20
020406080
100120140
Source: BLS, CRA
Annual Job ChangeWashington MSA
-20
0
20
40
60
80
100
120
140THOUSANDS
Jan =+66,900
Annual Change of Employed ResidentsWashington MSA
-20
0
20
40
60
80
100
120
140THOUSANDS
Dec =+98,300
Source: BLS Household Survey
Metro Comparisons Job Change 1999-2005
15 Largest Metro Areas
-120
-70-68
-53
2258
58
70
73118
155
157187
221
253369
-200 -100 0 100 200 300 400
Detroit
Chicago
SF-Oakland
Boston
Seattle
Atlanta
Minneapolis
Dallas
Philadelphia
Houston
Los Angeles
New York
Phoenix
Miami
Thousands
WASHINGTON
Northern Virginia
15 Largest Job MarketsJob Change in 2005
-20
0
20
40
60
80
100
120
New York
Los AngelesChicago
PhiladelphiaDallasBostonM
iami
HoustonAtlantaDetroitSF-OaklandM
inneapolisPhoenixSeattle
Thousands
Washington +64,700
15 Largest Job MarketsRanked by Unemployment Rate
January 2006
0123456789
Washington
Miam
iM
inneapolis - SP
SF - OaklandPhoenixSeattleBostonPhiladelphiaLos AngelesAtlantaDallas - FWNew YorkHoustonChicagoDetroit
%
U.S.5.1%
3.1
Data not seasonally adjusted
2004 - 2005 Job Change By Sector
Washington MSA (000s)
-0.7
2.7-0.9
-6.1
3.6
1.19.5
8.3
5.8
7.66.6
0.3
26.9
-10 0 10 20 30 40
Transp & Util
Wlse Trade
Mfg
Information
Financial
Other Svc
Const
Leisure & Hosp
Retail Trade
St & Loc Gov
Educ & Hlth Svc
Federal
Prof & Bus Svc
Total = 64,700(Ranked by Size of Sector)
20%
25%
30%
35%
40%
45%
50%
1970 1975 1980 1985 1990 1995 2000 2005
Share of Washington Area Economy
1970-2005
No. Virginia
Sub MD
District
% o
f G
RP
Year
What is DifferentAbout The Washington
Area Economy?
0
20
40
60
80
100
120
19831985
19871989
19911993
19951997
19992001
20032005
Total Federal SpendingWashington Metro Area
$ Billions2005 =$117.2 B, + 8.3%
Federal Spending by Type1983 - 2004
0
10
20
30
40
50
60
Procu
rem
ent
Wages & Salaries
All Other
Billions Current $2005 = $59.2 B
0
1
2
3
4
5
6
7
8
9
19801982
19841986
19881990
19921994
19961998
20002002
2004
Annual Change in Federal Procurement Spending
Washington Metro Area$ Billions
2005 =+ $6.6 B
6.1
8.0
Federal Spending in 2004:U.S. and Washington MSA
($ in billions)
AmountAmount% Chg % Chg
03-0403-04AmountAmount
% Chg % Chg
03-0403-04
U.S.U.S. $2,162.2$2,162.2 4.9%4.9% $339.7$339.7 3.8%3.8%
Washington Washington MetroMetro 108.2108.2 11.4%11.4% 52.652.6 19.0%19.0%
% Of U.S. in 04% Of U.S. in 04 5.0%5.0% 15.5%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
The Washington AreaHousing Market
Housing Price IndexWashington PMSA
4th Quarter Each Year
0
50
100
150
200
250
300
19771980
19831986
19891992
19951998
20012004
Source: Federal Office of Housing Enterprise Oversight, GMU Center for Regional Analysis
1995 Q1=100
1990-1997 =+ 3.7 %
1997-2005 = +153 %
Housing Price IndexAnnual % Change
Washington PMSA4th Quarter Each Year
-5
0
5
10
15
20
25
19801985
19901995
20002005
Source: Federal Office of Housing Enterprise Oversight, GMU Center for Regional Analysis
1995 Q1=100
28-Yr Average (compound rate) = 7.0%
Metro Comparisons Annual Percent Change in House Prices
2004 –2005 (3rd Quarter)
3.0
4.14.5
5.4
7.27.4
8.7
11.4
13.313.5
14.9
18.018.3
20.6
25.334.4
0 10 20 30 40
Detroit
Dallas
Houston
Atlanta
Boston
Minneapolis
Chicago
San Diego
N Y
Philly
Seattle
L A
SF-Oakland
Miami
Phoenix
Percent
WASHINGTON
Source: Office of Federal Housing Enterprise Oversight, GMU Center for Regional Analysis
ConformingMortgages Only
Metro Comparisons Ratio of Median Value of New Housing to
Median Family Income – Q3 2005
2.0
2.52.7
2.7
3.13.3
3.4
4.2
4.34.6
4.7
5.06.7
7.6
7.88.8
0 2 4 6 8 10
Detroit
Atlanta
Houston
Dallas
Minneapolis
Philly
Chicago
Phoenix
Seattle
Miami
Boston
New York
SF-Oakland
San Diego
L A
WASHINGTON
Source: NAHB/Wells Fargo, GMU Center for Regional Analysis
In 2000 Washingtonwas 2.8
Average Sales PriceAll Housing TypesWashington Metro
207,000 219,000242,000
275,000313,000
373,000
454,000
0
100,000
200,000
300,000
400,000
500,000
1999 2000 2001 2002 2003 2004 2005Source: MRIS, GMU Center for Regional Analysis
$+ 119%Since 1999
+5.8% +10.5% +13.6% +13.8% +20.1% +21.7%
Average Sales Price Percent ChangeMonth-over-the-year, All types
2004-2005-2006Washington MSA
22.2
28.125.5 25.0
22.919.8
23.425.0 23.9
20.3
16.618.1
12.49.1
0
5
10
15
20
25
30%
Average Days on the Market ChangeMonth-over-the-year, All Types
2004-2005-2006Washington MSA
-4-7
-5-1
-3
0 0 13
6 7 7
15
26
-10
-5
0
5
10
15
20
25
30
37 21 59
Total Unit Sales ChangeMonth-over-the-year, All Types
2004-2005-2006Washington MSA
8.510.9
5.31.4
7.5
-1.1
-6.5
-1.6-5.6
-15.9
-22.6-20.5
-23.1
-18.3-25
-20
-15
-10
-5
0
5
10
15%
MSA Total Housing Unit Permits1980 - 2005
0
10
20
30
40
50
60Average =
31,400/Year
Year
ProjectedDemand2005-2007
Dulles Corridor - FairfaxEmployment & Household
Forecast Growth, 2005 - 2030
4558
155
0
20
40
60
80
100
120
140
160
180
Employment Households HH Elsewhere
THOUSANDS
Source: COG Round 7, CRA
Dulles Corridor - Loudoun Employment & Household
Forecast Growth, 2005 - 2030
41
24
98
0
20
40
60
80
100
120
Employment Households HH Elsewhere
THOUSANDS
Source: COG Round 7, CRA
Dulles Corridor - Fairfax& Loudoun
Employment & Household Forecast Growth, 2005 - 2030
86 82
253
0
50
100
150
200
250
300
Employment Households HH Elsewhere
THOUSANDS
Source: COG Round 7, CRA
Looking Ahead
Economic Outlook (GRP) – 2010Washington Area and Sub-state Portions
(Annual % Change)
-1
0
1
2
3
4
5
6
7%
DCSM
MSANV
Employment Change bySub-state Region (000s)
10-Yr10-Yr
Avg.(1)Avg.(1)2005 2006 2007 2008 2009
D.C.D.C. 3.93.9 7.57.5 8.08.0 7.57.5 6.06.0 4.04.0
S. MDS. MD 16.016.0 13.513.5 17.017.0 15.015.0 13.513.5 12.012.0
No. VANo. VA 34.9 43.3 41.5 38.5 35.0 31.5
REGION 54.854.8 64.364.3 65.565.5 59.559.5 53.553.5 47.547.5
2.1%2.1% 2.3%2.3% 2.2%2.2% 2.0%2.0% 1.8%1.8% 1.5%1.5%
(1) 1995-2005
Housing Outlook for 2006 and 2007
Market will continue to cool – Market will continue to cool – returning to “more Normal’: returning to “more Normal’:
• 2006 Prices will increase in the 2006 Prices will increase in the range of 6% – 12% compared with range of 6% – 12% compared with 20+% in 200520+% in 2005
• Sales volume will drop back to Sales volume will drop back to 2002-2003 levels (98-100,000 2002-2003 levels (98-100,000 transactions)transactions)
• Days on Market rising to 45-55 Days on Market rising to 45-55 average average
Local Threatsto the Forecast
Local Threats to the Forecast
• Global / National Forces Global / 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
www.cra-gmu.org