There was a lot of heady talk at the beginning of the year about sequestration putting a damper on the frenzied Washington, D.C.–area housing market, but so far the prices just keep getting higher, as measured by MRIS transactions. This kind of data isn’t ideal since it doesn’t necessarily compare apples to apples, and it’s always possible that there just happened to be a disproportionate number of sales involving very fancy houses. But the regionwide perspective seems a little hard to discount.
Even though there are a lot of construction cranes visible around downtown, the number of housing units being permitted remains well below its aughts level—a reminder that the bulk of housing and construction activity involves not particularly noteworthy developments in the suburbs, rather than high-profile projects near the center of the city.
There’s a lot of talk at the national level about a “housing recovery,” but that phrase could denote any number of things. What we see in the Washington area is that even in the markets where house prices have rebounded fairly strongly, we’re nowhere near a recovery in terms of construction activity or construction jobs. High prices might be good for individual homeowners, but they only do something useful for the economy insofar as they stimulate new investment and job growth.