In May 2007, Dr. Stephen Fuller, the oft-quoted director of the Center for Regional Analysis at George Mason University, told WTOP’s Adam Tuss that the Washington region’s housing market was “tipping in favor of the sellers.” If current trends continued, Fuller predicted, local home prices would double every 10 years. By 2057, the average rambler or colonial would be worth $14 million.
But even as Fuller spoke, housing prices had already begun a steep decline from their 2006 peak. The following year, Case-Shiller reported the largest home price drop in its history. By February 2012, home prices had climbed back to their 2002 levels, but most people who bought homes at inflated 2007 prices have still not recouped their losses. And few homeowners are counting on a $14 million future windfall to justify putting in a swimming pool today.
Economic forecasting is an inexact science, as Fuller himself discovered when he had to back away from his own job growth predictions. In 2008, he estimated the Washington region would add 1.5 million jobs by 2030. He recently downgraded that figure to 1 million, a 33 percent reduction in just four years.
Yet in a May 9 paper titled “The Impact of Metrorail on Loudoun County’s Economic Future,” Fuller confidently predicts Loudoun County will miss out on $72.2 billion in economic development between 2020 and 2030 if supervisors don’t approve Phase 2 of the Silver Line by July 4.
Not everyone shares Fuller’s rosy outlook on the project. One former Federal Transit Administration economist believes the Metrorail extension will “do little for economic development, either at the airport or in the county, since relatively few people will ride it.”
And in a white paper for the Reston Citizens Association, which favors the Metrorail extension, retired federal economist Terry Maynard warned that “skyrocketing tolls [on the Dulles Toll Road] will limit or possibly even reverse the projected economic growth along the Dulles Corridor stimulated by the Silver Line.”
Maynard maintains Fuller’s study is based on wild economic assumptions compared with those found in his own group’s 2011 workforce housing study. “All the benefits [in both build and no-build scenarios] are exaggerated upwards by about two-thirds,” he says.
In a phone interview with The Washington Examiner, Fuller said he “can’t be blamed for the forecast” because “I didn’t do the forecast.” Fuller says he relied in his study on work done by Global Insight, a private forecasting firm, for the Metropolitan Washington Council of Governments. But like all crystal ball readers, Global Insight does not have a perfect track record. “They didn’t call the recession right,” Fuller admitted.
Wall Street is apparently not relying on Global Insight’s economic insights either. Metropolitan Washington Airports Authority President Jack Potter has already admitted that bonds to finance the Silver Line would likely be given junk status, with correspondingly high interest rates, if — as Fairfax County Taxpayers Alliance director Thomas Cranmer points out — MWAA is able find investors willing to take the risk.
At a recent Loudoun County Board of Supervisors meeting, Metro officials informed supervisors the county would be charged $4 million annually for the airport station (which would be located on federal land) whether the final two stations are built in Loudoun or not. If the Silver Line is such a great deal, why the threat?
Examiner readers and Loudoun supervisors must decide for themselves whether they trust the analysis of a professional forecasting firm that missed the worst economic downturn since the Great Depression, and of an economist who predicted their homes will someday be worth $14 million.
Barbara F. Hollingsworth is The Examiner’s local opinion editor.
