Wednesday, April 30, 2003

Your government at work We just returned from a quick trip to Washington, DC. It was immediately easy to see why most people living there have no clue what's going on in the rest of the country. I grew up, and spent a large portion of my early working years, in the DC area. It was always a cliche but nevertheless true that we considered the area to be essentially recession proof. Certainly there were down years and boom times but the lows were never as bad as the rest of the country and the highs never matched hot markets like Silicon Valley during the tech explosion. Until now. The entire DC metropolitan area is not only still growing, it's growing exponentially. There is no recession in DC. Zilch, nada, zippo. And it's nowhere more apparent than in real estate. DC has always been one of the hottest and most expensive housing markets in the country. Now, it has reached a crisis level. There is not enough housing to go around. Or, more accurately, there is not enough "inventory" (to use the real estate term) on the market. As in the heyday of Silicon Valley, a house or condo put on the market will often receive multiple purchase offers the same day. Buyers compete against each other and include automatic escalation clauses in their contracts so they won't be outbid. Houses in undesirable locations that sat on the market for years are selling within days of being listed. It's insane. A long-time friend of mine gave up her medical practice and recently became... a real estate agent. So what's driving all this growth? People moving into the area, obviously. And they're moving to DC, for the most part, to work for the Federal government. My Realtor friend claims that the Transportation Security Agency and Department of Homeland Security are creating an influx of Gold Rush proportions for the housing market. The Washington area has always been in love with growth, building on every available inch of vacant space. Were it not for Federal regulations, you can bet there would be an upscale Yuppie condo complex on the Mall, right next to the Smithsonian. Now, builders are finally running out of space. Formerly distant bedroom communities are described in real esate brochures as being "conveniently located." And the new outlying bedroom communities are encroaching on Richmond, VA and even border towns in West Virginia. 2-3 hour commutes (one way) are becoming commonplace. And that's on a good day with no unusual traffic snarls. After our brief visit it's easy to see why the entire Washington DC area exists within a version of Steve Jobs' infamous "reality distortion field". It's a bubble of prosperity owing its existence to bureaucracy. Whatever happened to the concept of reducing the size of government? 9:33:52 AM    Oh yeah? []