Our conversation began with the recent article Dr. Fuller was featured in the Washington Business Journal article in which the headline read; “Sage or shill”. The article discussed his position on development throughout Northern Virginia over the years and how he is revered by many and unliked by some. It brought to light his perspective on bringing to the table the developer’s opinions and reasoning for bringing Metro to Loudoun. It took into account the long term economic effects on the county “with or without” the expansion of the Metro into Loudon. Essentially, it comes down to an estimated 40,000 job difference, the economic consequences over 30 years, and the difference as to the growth being that of office space or shopping centers. Office space brings higher paying jobs, more educated residents and the county tax base is better off as a result of the Metro. It also covered his conversation which may have swung a Board of Supervisor’s vote when he spoke with one of their assistants at a Fairfax Chamber of Commerce event. He recalled as he sat in among other Fairfax Chamber meeting attendees this fall, he happened to sit beside an assistant of an Administration Supervisors and had a very brief discussion with the fellow. When Dr. Fuller asked what his Supervisor thought -the response from the assistant was that he ‘was not for it’. Dr. Fuller simply asked -and you? The assistant considered it a ‘no brainer’. Some thought this was Dr. Fuller lobbying for the Metro, as the Supervisor would have a ‘vote’. Dr. Fuller said he often will discuss things he feels important like cookies, and thus the reason cookies were served at today’s meeting.
There was an Economic Summit last week at the National Conference Center which was mainly about Loudoun County and the developers were mixed on Class A office space – one optimistic, one not, one in the middle – in all of NOVA, where do you see the Class A office market heading? You can’t chance a county’s economic growth by just one type of use, like a strip mall. Class A is based on mobile access. As the economy shifts from a 40% federal dependency, NOVA is positioned to become a global business center, much like Tokyo or London. Western Fairfax and Loudon will be seen as a “regional labor shed”. When businesses ask themselves, “Where should I be?” the response will most likely be, tied to the Metro. The Metro expansion through Tyson’s, Reston and out to Loudoun will position this region for Class A space and job growth as a result.
In the past you have mentioned and actually may mention it today that we are expecting 1 million new jobs in our area. As a result, more housing will need to be built to accommodate the increase in employment – where do you see the new homes being built with Loudoun’s zoning issues as well as Fauquier’s view on no growth? We will see higher density in the areas where development is already approved for housing – especially near Metro stops and give a more urban feel to those areas.
I know you have slides that are going to tell us downside and upside of the fiscal cliff and sequestration but based upon what you hear, read and discuss with others, what do feel is really going to happen?
With regard to the economic ‘fiscal-cliff’, it is like NASCAR we are going around in circles under a yellow flag. When it all gets resolved – there will be give and take – the green flag will wave, there will be debris on the track but we will see growth in the economy.
It has been said and is in your slide later that Virginia will lose 207,000 jobs – what will the number be in NOVA? Where will our unemployment be at that time? NOVA is generating more jobs in spite of a slower federal growth. An estimated 24,000 Federal job loss in 2015 by 2020 this will equate to a stronger economy in the private sector and less government-based jobs so sequestration may not be a bad thing for our region from a long term perspective. If total sequestration occurs, which I don’t believe it will, there will be compromises made, Northern Virginia will see 75% of these jobs lost.
Real estate has always been a stable investment option (when compared to the stock market) and a lot of investors have entered the real estate market, what do you believe is the Outlook for 2013? Will people continue to invest? What is the window of opportunity for investors? Rental market will be strong. There will be a large influx of the 25-35 year olds and they are not in a hurry to buy. There will be a temporary backlash of the perception as to the 2005 market and it will be seen that purchasing a home is ‘not a good investment”. We will see a pent-up need in 2015/2016.
What is your opinion on mortgage interest rates – how long with they stay low? Interest rates will stay around 4% for 30 year fixed rates for 2013/2014; they will rise to 5% in 2015. Money will shift globally as the Asian market ramps up and Europe recovers. In the next six months: Republicans will give in; There will be revisions in Social Security and Medicare; Things will tighten up in the financing arena; Incentives will fade out over the next two years with regard to payroll tax and other taxes incentives. With regard to the economic ‘cliff’, it is like NASCAR and we are in a ‘yellow flag’ economy – eventually the green flag will wave and the economy will take off.
Do you have any ideas on what the future of the GSE’s will be? Who will be the next player in the mortgage market if GSE’s are phased out? When would phase out occur and how long will it take to accomplish? The GSE’s may merge into one entity. The market needs a government backstop with some type of guarantee so they will not entirely go away.
How about MID? What is the future? There will be a cap for mortgage interest deduction. There is currently a cap in place it will just be reduced and it will probably be to $250,000 in deductibility.
Mortgage debt relief, will it make the fiscal cut and why or why not? Distressed properties nationwide will continue to decrease and therefore some type of program will need to be in place. It won’t happen right away as Congress will have to re-evaluate. Something will be put in place and in all likelihood it will be retroactive to the beginning of the year?
How will these areas affect housing and our market in the future? There won’t be much of an impact because of job growth over the next 20 years, lack of inventory, no spec building by builders and low interest rates for the next few years.