Anxiety increased among some shortly after President Trump was elected last November, but so far the national and regional economies are faring well, even if not soaring as high as Trump promised.
That was the conclusion of Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors, who spoke Sept. 18 at the Northern Virginia Association of Realtors’ annual economic summit.
Consumer confidence, employment opportunities, the stock market and home sales (except for July) have been up since the election, Yun said,
Trump’s election also spurred a brief jump in mortgage-interest rates from 3.5 to 4.5 percent. Yun said this could be attributed to the new president’s desire to stimulate the economy or to fears of a budget-deficit increase. Rates since have dropped back to about 3.8 percent, Yun added.
Home construction continues to lag behind the 50-year average need for units, as it has done for the past decade, and has been hampered somewhat by Trump’s decision to increase the tariff on Canadian lumber, Yun said.
The U.S. public continues to express avid interest in home ownership, but that rate is at a half-century low, spurred by changing consumer preferences and student debt that has tripled in the last decade, he said.
The nation has about 6.9 million fewer homeowners than ordinarily would be expected, and about 16 percent of people between the ages of 25 and 34 still live with their parents.
“I don’t think anyone would say this is the American Dream,” Yun said.
The economic summit, held at the Fairfview Park Marriott in the Falls Church area, also featured views from local economic and transportation experts.
The Washington region has added 83,000 net new jobs in the past year, but many of those have not been connected with the federal workforce, said Terry Clower, director of George Mason University’s Center for Regional Analysis.
Part of that was due to President Trump’s freezing of federal hiring, which amounted to more of a “cool-down” given the high number of exceptions made, he said.
The region’s economy continues to chug along well, but challenges are on the horizon, Clower said. Pressure to “drain the swamp” – clear out entrenched governmental interests – could change the area’s employment dynamics, he said.
Local leaders should focus on the region’s high cost of living and doing business, and understand the workforce’s changing nature, he said.
Regional governments are issuing about 10,000 building permits annually, but housing needs are significantly greater. Suburbs draw young people once they decide to settle down and form families, he said.
“Living upstairs from the bar is not as much fun when you have a 4-year-old in tow,” Clower said.
Gerald Gordon, president and CEO of the Fairfax County Economic Development Authority (EDA), made a push for increased recruitment of companies to the region. Businesses tend to pay more in taxes than they absorb in public services, unlike residential taxpayers, he noted.
About 18 million square feet of Fairfax County’s 120 million square feet of office space is vacant and the EDA is trying to remedy the situation. That task has become more difficult because companies decades ago needed about 265 square feet of space per employee, but now often need only 80 to 100 square feet, he said.
Normal economic laws of supply and demand apparently do not apply to Tysons office space. Rental rates there are staying high because companies are moving in a “flight to quality” from older office space to newly constructed buildings with modern amenities, Gordon said.
As a result, about 800,000 square feet of obsolete office space has been demolished and will be replaced with better offerings, he added.
Fairfax County’s demographics are shifting significantly, the EDA president said. While the county was only 4 percent non-white in 1960, it now has 48-percent minority population base and soon will become a majority-minority jurisdiction, he said.
“Residents come here because they want their children to grow up in a diverse community,” Gordon said.
Martin Nohe, a Prince William Board of County Supervisors member who also serves as president of the Northern Virginia Transportation Authority, briefed local Realtors about the region’s transportation challenges.
While the NVTA can allot $300 million per year worth of tax revenues toward vital transportation projects, officials have identified 358 projects costing $44.1 billion that need to be completed by 2040, he said.
Transportation projects used to be green-lighted based on who held the most political power, but nowadays such initiatives are approved following cost/benefit analyses, he said.
Some commuters now are taking a broader view as to which initiatives should move forward, Nohe added.
“People are starting to understand that their particular commuting route may not be the highest transportation priority in the region,” he said.