Panelists Terry Clower, Stockton Williams and Lynn Fisher discuss the regional economy, housing and recent election during the Northern Virginia Association of Realtors’ 2016 Economic Summit on Nov. 10 at the Fairview Park Marriott in Falls Church. (Photo by Brian Trompeter)
Political commentators and activists may be wringing their hands and rending clothing at the prospect of President-elect Donald Trump’s new administration, but local experts said they don’t expect the new administration’s policies will drastically affect the region’s economy.
“It’s going to be fun to watch when the reality of government hits the political rhetoric of the campaign,” said Terry Clower, director of George Mason University’s Center for Regional Analysis, who was among panelists Nov. 10 at the Northern Virginia Association of Realtors’ 2016 Economic Summit at the Fairview Park Marriott in Falls Church.
Ken Harney, a nationally syndicated columnist for the Washington Post Writers Group who served as the forum’s moderator, told of the surprise he felt while watching the Nov. 8 election returns.
“It hits you, the new reality,” he said, but added, “It’s really to early to assess.”
As with any new administration coming into the Washington, D.C., area, there will be about 4,000 top-level appointees, plus hundreds of people from the outgoing administration who need to decide what to do with the rest of their lives, Harney said.
“I think there will be a fair amount of movement in the [real estate] marketplace,” he said. Expensive, close-in communities such as McLean could see an influx of Trump staffers because “Republican officials tend to favor Northern Virginia,” he said. “The Trump people coming in are not poor.”
Harney made several predictions of actions the new administration likely will take. He was not optimistic about the fate of the Consumer Financial Protection Bureau, which he said had issued rules that angered Realtors.
The president also may pursue a revised tax code with only three brackets and new deduction caps. Action on taxation will take place more quickly because Republicans will control the presidency and U.S. House and Senate, he said.
Lynn Fisher, vice president of research and economics for the Mortgage Bankers Association, said the U.S. domestic economy is strong as the new administration prepares to take over.
She predicted modest economic growth of about 2 percent annually over the next few years, but said interest rates might rise from the current 3.6 percent to 5.4 percent by 2019. Of the latter prediction, she added, “We’ve been wrong continuously for the last couple of years.”
Sales of new homes likely will rise 10 to 11 percent next year and those of existing homes will go up by about 6 percent, Fisher predicted. “Our story is really about steady growth,” she said.
Job growth has been solid in 2016, with employers adding about 188,000 jobs per month, Fisher said.
“The labor market is quite tight,” she said. “We’re almost at full employment, which will put upward pressure on wages.”
Inflation has been fairly steady at about 2 percent per year and has been held in check by low oil prices, Fisher said. If Trump implements an economic-stimulus package, inflation may rise, she said.
Housing-loan delinquencies are down significantly, thanks to tighter lending regulations imposed after the recession – “this is the safest mortgage market we’ve probably ever had,” Fisher said – but some panelists said the new rules’ stringency might be keeping some buyers out of the market.
Heavy student-loan debts and the “gig economy,” where people perform temporary assignments rather than holding steady, reliable jobs, also are making loan underwriting difficult, panelists said.
Stockton Williams, executive director of the Urban Land Institute’s Terwilliger Center for Housing, discussed the economic impact of suburban areas. Though often derided as static, dull bedroom communities, suburbs continuously evolve and drive metropolitan growth, he said.
Two-thirds of Americans work in suburbs, where 91 percent of population growth occurred between 2000 and 2015, Williams said. About 75 percent of people ages 25 to 34 live in the suburbs in the nation’s top 50 metro areas, as do 76 percent of minorities. Suburbs are “hardly homogenous from racial and ethnic perspective,” Williams said.
The suburbs of Northern Virginia continue to propel the state’s economy, gaining more jobs despite reduced federal spending in recent years, Clower said. Northern Virginia’s 3.4-percent unemployment rate is quite low, but the region’s cost of living denies many families the ability to survive on just one income, he noted. The region’s housing costs also have killed some potential economic-development deals, Clower said.
The Washington area in the last year has seen 2.4-percent job growth, placing it about in the middle of U.S. metro areas. This is far better than the previous year’s performance, but the economy is overdue for a recession, he said.
The local economy might see some short-term growth if Republicans in Congress cooperate with Trump’s agenda, Clower said. Also, the president-elect has vowed to increase military spending, and the D.C. area always gets a piece of that action, even if the funding is destined for other locales, he said.
Clower also cautioned Trump’s spending plan would enlarge the national debt and said an immigration crackdown might deprive the region of a sizable share of its construction workers, many of whom are Hispanic.
“Who’s going to build the housing we need?” he asked. “We need immigrants in this population.”