In light of federal budget woes, staggering national debt, and continued economic uncertainty, most of the United States will take little solace in, and perhaps will be even a bit irritated by a recent S&P/Case-Schiller home-price report, a leading measure of current residential housing market trends, showing that the Washington, DC metro market to be the best performing residential real estate market in the entire country. It is, according to the report, a "Top 10" market to watch in 2011.
The Washingtion, DC metro area, which includes relatively large portions of suburban northern Virginia and Maryland, has clearly benefited from increased government spending, especially as the federal government is the region’s largest employer. It is also the driving force behind various ancillary industries for defense contractors, legal and lobbying firms, and numerous foreign companies, all desirous to be close to the powers of influence. Accordingly, the unemployment rate for the DC metro area remains under 6%, one of the lowest rates in the country, and this has allowed for relatively strong housing demand.
An interesting feature of the S&P/Case-Schiller home-price report is that Washington, DC is the only “Top 10” performing residential real estate market that would considered a ‘major’ metropolitan area. The other “Top 10” markets include small-to-medium sized cities such as Buffalo, NY, Des Moines, IA and Portland, ME. Notably missing as top performers are large cities such as Chicago, New York City, Los Angeles, Denver or Atlanta.
The issue of whether the comparatively strong performance of the Washington, DC housing market is a healthy sign for the country at large is an entirely separate matter. While there is no doubt federal government spending is a current boon to the Washington, DC metro region, I am personally concerned this may simply be a short-lived, short-sided benefit to the chimerical, yet seemingly prevalent philosophy and belief of many politicians that we as a country can spend our way to prosperity.