This morning at around 8:20 a.m., Stephen Fuller of the George Mason Center for Regional Analysis was interviewd by WTOP radio. The highlights:
- There are more jobs in the Northern VA region than employees.
- It will hurt the economy if not corrected, as employers will move elsewhere.
- Employers are already moving elsewhere.
- The reason for the labor shortage? Housing costs. Families with children can find an equal or better quality of life (a house with a yard) in other regions.
- Less than 25% of households have school-aged children (He didn't specify in which counties - I think he may have been talking about Fairfax County).
- We need more housing, but of the small kind for small households. Singles and couples without kids make for a good tax base.
My thoughts: (Please share yours, too).
- Housing prices hit a peak in the autumn of 2005 in Northern VA. By then, the exodus of working people who wanted a small yard for less than 600K had probably been well under way.
- Encouraging singles and couples with no children to live in "smaller spaces" is going to be difficult. We rent in a McMansion community and there are many households with merely 2 members (at 4000+ square feet).
- If done very well, however, a true "village" concept might be architecturally and aesthetically desirable for those with no children. Perhaps desirable enough to give up the McMansion.
- Do we need to build more housing? I do think that an adequate supply of new housing is a good thing.
- But this problem might be self-correcting, and that correction is already under way.
(This topic is also covered in more depth today in the Washington Post: "More Jobs Than People in Fairfax")
Monday, April 30, 2007
An Interview with Stephen Fuller this A.M.
Posted by Harriet at 8:45 AM
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7 comments:
IMO-
1) I know nothing about Businesses /Companies relocating due to housing costs for their employees. But it makes sense!
2) There are a number of Builders in the NOVA area building large townhouse (often called "Villas)that have 4000 or more square feet. The problem is that they are no cheaper than a SFH. Why pay that much to have neighbors crammed in right next door to you & no yard for the kids/dog?
You can find such places in Ashburn/Leesburg/Fairfax.
Just my 2 cents....
Horrible roadway congestion, no alternative transportation, and more workforce demand than supply. Would you move a company here?
My company is located in the heart of Fairfax. A co-worker just moved to Rhode Island because housing prices/income ratio does not make sense here. Despite claims by some that employess in the area are well paid, too many engineering companies I know do not pay that well.
So when Fuller and other 'housing prices can't come down here' crowd speak of 'job growth', they ought to ask how much these jobs are paying.
Indeed if these companies were to pay high enough salaries to match the housing prices, they wouldn't have enough of a profit.
"Less than 25% of households have school-aged children (He didn't specify in which counties - I think he may have been talking about Fairfax County)."
That's hard to believe....look at all the schools being built in Loudoun County....also look at the growth in the budget numbers for area schools....it's always more, more, more....and they usually get most of it.
I lived and worked in DC for three years right after college.....the main reason I moved out of the area (2003) was because of the cost of housing.
I can't believe it's taken people this long to "wake up" to the facts....as Chris pointed out, horrible roadway congestion, no alternative transportation, and I might add waaay overpriced housing.
As for, "There are more jobs in the Northern VA region than employees."
Yeah, but what kind of jobs....what do they pay?
22% and 28% of homes purchased in 2006 and 2005 were purchased by investors. the vacancy rate is at an all time high of one in 36 homes.
i don't think we have a lack of housing - there are plenty of vacant "investor" owned homes right now.
i think we have a lack of properly priced homes, which will be corrected as more and more of the "investors" who purchased properties in the last year realize that their dreams of getting rich for free aren't panning out and dump their properties or, more likely, are foreclosed on.
If employers won't locate here and/or actually move away....
will that result in less horrible congestion?
would that be "cheaper" than raising taxes.. higher and higher to pay for road improvements that would .. not ease congestion.. but merely keep it from moving closer to virtual gridlock?
So.... what is the appropriate "Republican" response to this issue?
More to the point - is it the job of the Fed or State government to save NoVa from itself or is it primarily NoVa's responsibility to figure out how to balance jobs/housing/roads/congestion?
You are thinking the the exodus of households hit by affordability problems is "well underway." But remember--this problem affects those in transition in the beginning, not everybody. Recent college grads moving into the area for a job, people getting married or remarried, indivuduuals or couples downsizing, people retiring--I've worked with all these types of households as as active full time realtor over the past period. I've also talked to a lot of people who are just staying out of the market--their jobs and household lives are stable. Lots of them--including myself--look around and realize that they could never afford to buy a house in the neighborhood they are in now--but that may not be true in a few years. Look at the great stats you provide on individual house prices as examples. So the bottom line is that the "crisis" is a crisis only for a minority of the area population.
And--the second point--there are self adjusting forces at work, of course and they are quite strong and universal in this area. I have a prospective seller client who believes that the City of Falls Church, because of its wonderful school system, will be the exception to the market adjustment. I told him the truth a couple of times--that a falling tide will lower all boats--but he simply got irritated. As housing prices decline--I would guess by a total of 30% under '05 peaks by the end of the adjustment--and incomes more gradually rise, these pressures will ease considerably. Potential buyers are patient--virtually all of them are telling me now, to my chagrin, to call them in six months!--and many are willing to live with the sandbox on the condo balcony for a while.
Finally, my observation is that people will adjust to living in smaller housing in denser neighborhoods. The current example is what people are now beginning to do to avoid the incredible commutes. I sell many Arlington properties. A consistent group of visitors to open houses is what I now call "in-movers"--families getting more and more willing every day to sacrifice the McMansion for a 1950s rambler with horribly small kitchens, baths, and closets. These adjustments take time, but they do occur.
Thanks for your excellent posts.
Kit
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