Mortgage: Will Sequestration Spoil the Party?
The state of the metropolitan area’s economy reminds me of a story my mechanic told me about many years ago when I drove an Audi. He said a nice lady came in for service. He asked her, “What is wrong with your car?” She replied, “Nothing.” The mechanic replied, “We can change that.” My old mechanic would have made an excellent 21st-century Member of Congress.
The overall economy in the D.C. metropolitan area is running well these days. This includes real estate. People are working and spending money. The job market has been building. Residents are buying homes, paying healthy rents and enabling others to do the same.
Well, there is one potential storm brewing over the Capitol that will affect the entire metropolitan area. The storm has already been named. It is called “sequestration.” Sequestration is set to hit on Friday, March 1, and the effects will be felt for a while.
The Washington, D.C., metropolitan area, which includes the District of Columbia, Maryland and Virginia, are most vulnerable due to how dependent the areas economy is on federal workers and contractors. The District’s economy is also heavily dependent on federal programs.
Presently, the area is enjoying a solid housing recovery. Good news is plentiful. In a re- cent Zillow survey, Washington, D.C., ranked as the sixth strongest housing market. The median price for metropolitan D.C. was $327,100 for January, up a healthy 6.5 percent over the same month last year. The top six are: San Jose, $639,600; San Francisco, $538,000; Los Angeles, $421,800; San Diego, $281,900; and New York, $346,100.
Washington, D.C. is growing to the tune of 1,100 new residents every month, making it one of the fastest growing cities. D.C. also posted a budget surplus of $415 million. Most recently the Washington Post featured an article on how Montgomery County, Md., is concerned about losing 25- to 35-year-old professionals to Northern Virginia and D.C.
The Washington metropolitan area is resilient to severe recessions because of the area’s dependency on the Federal Government, military and related work. These are the same fundamental reasons why our area is more vulnerable then other areas will be due to sequestration.
There is always the chance that sequestration will be averted. If not, it will be interesting to see how both the national and the local economies weather the impending storm. ★
Bill Starrels lives in Georgetown and is a mortgage loan officer. He can be reached at 703-625-7355 or firstname.lastname@example.org.