Realtors Aiming for Full Rebound in 2009

Arlington Sun-Gazette, September 15, 2008
By BRIAN TROMPETER

The U.S. economy will continue struggling through the fourth quarter of this year, but rebound steadily next year, George Mason University economics professor Stephen Fuller predicted on Sept. 11 at the Northern Virginia Association of Realtors' 12th Annual Economic Summit.

The heavily government-supported Washington-area economy likely will not suffer as much as other parts of the country, he said.

“We won't get any whiplash,” said Fuller, who also is director of the university's Center for Regional Analysis.

The Washington region gradually is slimming down its excess housing inventory and will pass the peak of its foreclosure difficulties around Halloween, Fuller said.

The housing market downturn - especially in the reduced rate of new housing construction - has been a key factor in the nation's ongoing economic problems, he said.

Real estate in recent years was treated as a commodity, rather than a long-term investment, and this led to overbuilding and price inflation, Fuller said.

“We changed how we thought,” he said. “This is like going to a banquet and overeating. The next morning, or sometimes even the same night, I regret it. It takes a long while to work off the consequences.”

The Washington area added 35,400 new jobs between July 2007 and July 2008. This figure is lower than the average 45,000-job increase and is due to a loss of retail, construction and financial-services positions, Fuller said.

National unemployment numbers have not been encouraging. About 400,000 fewer people are employed at full-time jobs now than at this time last year, he said.

While consumer expectations have been lower ever since the last presidential election, those numbers have ticked slightly upward of late, he said.

“There is an increase in optimism among the pessimists,” Fuller said.

John Mason, executive director of the Northern Virginia Transportation Authority, also addressed the summit, which was held at George Mason University.

Mason told the Realtors that Virginia must finance new transportation projects if it is to avoid miserable gridlock in the future.

“You can't make all your sales on Sunday morning,” Mason said.

When analyzing the area's traffic congestion, authority members decided the A-through-F rating scale just didn't cut it. They then created a new low rating of G to categorize Northern Virginia's mess, he said.

The transportation authority, made up of officials from nine participating jurisdictions, last year received permission from the Virginia General Assembly to raise about $300 million per year for transportation projects.

But the Virginia Supreme Court in late February ruled the General Assembly, constitutionally, could not delegate taxing authority to an unelected body. The transportation authority has returned most of the taxes it collected and is now reducing the scope of its operations.

Mason showed a slide of projected traffic gridlock if the General Assembly does not resolve the transportation financing question.

“I am here to tell you that without that additional dedicated funding for Northern Virginia transportation, you are going to be severely challenged as you move around Northern Virginia in the process of selling homes,” he said.

Christine Todd, CEO of the Northern Virginia Association of Realtors, said the economic summit added a “great dose of optimism” about the real estate market, which is still in the midst of a recovery.

“We can now understand that there is light at the end of the tunnel - and it's not a train,” she said. “What was especially important to me was it was documented that our economy in Northern Virginia is in really good shape. No one is going to lose any money if they buy a house in this area and hold it for several years. The economy is just too strong.”

Luis Lama, the association's immediate past chairman, said Northern Virginia's economy remains strong and its real estate market will be helped by the recent federal takeover of Fannie Mae and Freddie Mac.

“We expect a very good year next year,” Lama said. “We need the news media to reflect that to the consumer.”