- The Washington Times - Friday, January 19, 2001

With the ebb and flow of the stock market (specifically the high-tech Nasdaq stocks) there has been talk that the sky is falling and real estate is going to follow. Not quite.

Let's take a look at reality here. Yes, government sources and the media are reporting a slowdown in the national economy. I would encourage consumers to read beyond the headlines, however, as they look at how this slowdown will play out compared to corrections in the past.

First of all, the "bad news," if you want to call it that, is that companies aren't making as much money as they hoped. They still have earnings and profits, just not at the breakneck speed of years past. We have gotten so used to double-digit growth that anything less than 10 percent is considered a bad thing.

The way Stephen Fuller puts it is that we are looking at traveling down the road at 60 mph instead of 85. The George Mason University professor of public policy and regional development said last fall at the Northern Virginia Association of Realtors' Economic Summit that the region and the country would face a correction, a slowing down, at about this time. However, he also predicted that the annual economic growth for the Washington region will remain in the 2.5 percent range for the next five years.

That means more jobs, more people moving into town and more houses needed.

Growth should continue nationally as well. Associated Press has reported on a survey of economists that forecast the national economy growing by 2.6 percent this year.

Blue Chip Economic Indicators said last week that the economists in its monthly survey still say by an overwhelming majority that they believe a recession will be avoided. Yet they are lowering their expectations dramatically in light of the sharp deceleration in activity that occurred in the last two months of 2000.

Headlines about high-tech companies laying off people and shutting their doors to stave off bankruptcy seem to dull the silver lining. Yet, although it's a tough thing to lose your job, keep in mind that in the Washington area, we still have 30,000 unfilled high-tech jobs. For every employee laid off, there are plenty of jobs to be filled and companies more than able to absorb those needing a paycheck. In fact, both Virginia and Maryland are at their lowest unemployment rates in years, according to recent labor reports.

So what does this mean for the regional real estate market? Not much. Home shoppers still are facing a dearth of dwellings in the marketplace. At this time, the regional inventory is down roughly 35 percent, according to numbers from the Metropolitan Regional Information Services, operator of the regional multiple listing system. If you take a look at the numbers from two years ago, the inventory is down by more than 65 percent.

Consumer confidence in this area has no reason to wane. The benefit to Washington-are residents from a slowing national economy is lower interest rates. Have you seen them? They are down below 7 percent.

Applications last week for loans soared by 68.3 percent. That figure was up 52.5 percent compared to the same week a year earlier, according to the Mortgage Bankers Association of America. The interest rates are certainly going to help with this housing market.

Hmmm … continued low interest rates and a thriving economy in this region. From where I sit, this region isn't facing a recession; it is facing an opportunity.

M. Anthony Carr has written about real estate issues for 12 years. Comments and questions can be send via e-mail ([email protected])


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