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Question for all the economists out there: How do you feel about DC real estate? I sat next to a real estate economist from CoStar Group on a plane recently who was quite excited about potential for appreciation in residential real estate in Washington, DC, particularly along the Red Line (cuts diagonally across DC going Northwest). Anyone agree? Disagree? Also, to the extent you have opinions on segments within the residential real estate market, those would also be much appreciated (e.g., high end single family homes vs. smaller single family homes vs. small condos, suburbs vs. northwest vs. downtown and other less established areas).
P.S. - And when I say "economists," I mean all of you out there who are passionate about the quantitative side of real estate, not those who have econ degrees, although those opinions would be much appreciated as well.
DC has been strong during times when federal government spending ramped to offset the economy contracting. I would say that means it has plateaued at best given budget pressures now.
Thanks crescent22. Your take is consistent with my preexisting sense. This gentleman went into all sorts of demographics and office space vacancy statistics that went over my head, but he was so excited about it that I wanted a reality check.
agree, there's a lot of high paying government jobs in DC that do nothing but earn all
besides, tons of shameless rich lobbyists companies flock there
I agree with me
DC also has fairly strict height restrictions, unlike any other large US city, making ultra-dense housing scarcer.
...and if he worked for CoStar, he probably knew more than all of us combined on the topic.
Caonima (your screen name rocks btw), Brooks2 and jason1006 - interesting and thank you for weighing in. One of the factors the CoStar economist cited was the height restrictions. Re CoStar in general, I had never heard of them other than through one of the big ticket RE purchases in DC in 2010: CoStar CEO bought one of the great houses in the middle of Cleveland Park in 2010 and some of the locals noted the oddity of the purchase - the neighborhood is populated with quintessential DC types (lawyers, political appointees and lobbyists); it was unusual to see a self-made business person buy there. I wish DC had a Streeteasy equivalent.
Maybe you could license the name and start a DC version. Or work with SE on an expansion plan. There is enough development in the DC/NoVa area to support one. DC however, unlike NYC, has an MLS service so its fairly easy to see most of the available properties in ones desired location/price point/ type of dwelling in one place. Also, this may be stereotype but I wonder if you would get the type of impassioned dialog (not counting the over the top or should I say beneath consideration stuff) on a real estate board in DC when politics is the real passion of much of the population.
Still its worth considering and discussing. Maybe looking at a business plan.
NativeRestless - Interesting idea. Unfortunately, I have no head for that game, but if anyone out there does, I would love to see it happen.
Suggestion to Streeteasy: Have one of your busdev people reach out to Andrew Florance (CoStar CEO) and give it a whirl. CoStar is bullish in DC, has cash, and may want to branch out. Also, there is quite a tech community in Northern Virgina; I imagine the software engineers down there are less expensive than they are in Manhattan.
being bullish now on dc, is like being bullish on china/brazil..
what up laos?
our government has been for sale of recent, and sales have been quite good. scummy lobbyists and "lawyers" who broker all this shit have to live somewhere. no shock the dc metro area has held up quite well.
Allow me to introduce myself. I'm an economist who lives in DC (in the aforementioned Cleveland Park, in fact). My two cents:
The better areas of DC and the close-in suburbs have held up fairly well in the general downturn. DC had one additional thing going for it beyond what you found in other cities: the end of the Marion Barry era. This accounted for some of the run-up in RE values and I think it continues to have a positive effect as people come to realize that he and his kind aren't likely to run the district any time soon (our current Mayor is a bit of a throwback, but not much).
The height restrictions have certainly had an effect on RE values, but that's cooked in and the restrictions are probably not changing, although there has been discussion. It's more likely that the CoStar guy's bullishness is connected to a large-scale zoning reform initiative that is underway in DC. I imagine that sophisticated and connected players would be attracted by the profit potentials they might see there.
@Eric_14: Yes - Zoning reform initiative was a factor that appeared to be heavily weighted in his analysis. His prediction was that the Connecticut Avenue corridor would become as dense as Georgetown in the not-too-distant future. Given how quickly the area around the Verizon Center was transformed, not to mention the U Street Corridor, I suppose it is not implausible if zoning changes.