The Washington area’s economy is approaching recovery, according to regional economists.
Based on the job and housing markets, Stephen Fuller, director of George Mason University’s Center for Regional Analysis, predicts that the local economy will grow at a faster rate this quarter than it has for the last two quarters, and ahead of national forecasts that predict a comeback toward the end of the year.
The gross regional product has been growing at a slower rate since 2004 but has not contracted, Fuller said.
“We’re not shrinking as fast as the other guys,” he said.
Fuller’s colleague, John McClain, the center’s deputy director, also predicted steady job growth in the coming years.
“At the local level, we are forecasting net growth in jobs for 2009 of 18,000, and by 2011 we expect the region to be growing in jobs near the long-term average of 45,000 jobs per year,” he says in an upcoming publication from the Northern Virginia Association of Realtors.
“That’s testimony to the fact that we have something positive in our economy — federal spending,” Fuller adds.
But the housing market remains a question, McClain said.
“The increases in sales and beginnings of economic recovery, along with the federal administration’s initiatives and the spring selling season, may well mean that 2009 will see the housing market starting its recovery,” he said.
Fuller added that home inventories are beginning to return to historically normal levels.
“Houses were way overpriced,” he said. “We’re about in a place where prices should be stabilizing.”
The region’s builders don’t have much left in the inventory of new homes, he said, adding that he receives reports from 20 builders in Northern Virginia. As the new-home inventory normalizes, it should stabilize the existing-homes market, he said.
“It isn’t something that’s going to happen in April, but it is going to happen,” Fuller said.
Indeed, home sales picked up in March throughout the area, according to data just released by the Metropolitan Regional Information Systems Inc.
“There is time yet to go to work through the economic and market mess of the past four years, but before long all indicators will be turning around,” McClain said.