Report Predicts What Virginia Economy, Housing Market Will Look Like In 2020
In a report that’s the first of its kind by the Virginia Realtors Association, Lead Economist Dr. Lisa Sturtevant analyzed past trends to see what the coming year has in store for the state’s economy and housing market.
The report predicts that, should there be a recession, the state likely would be shielded from national downturn, given its strong economy.
“Keep in mind that the last recession we had: 2007 and 2009 — that's not what we're talking about,” Sturtevant said. “We're talking more about your kind-of run-of-the-mill, vanilla recession that we tend to have every now and then.”
Sturtevant said Virginia isn’t as impacted as other states. That’s because the state is close to Washington D.C. — and when the Federal government ramps up spending during recessions to assistance programs, like food stamps and unemployment. Virginia companies are hired to provide billing and technical support services to assist the programs.
While Sturtevant said these forecasts are based on past patterns and assumptions about the future. There are a lot of uncertainties and some things just can’t be accounted for. Like, in this day in age, politics have a bigger effect on the stock market than ever before.
“I can't put a tweet in my spreadsheet. Like, when the president tweets something,” Sturtevant said. “There is an impact on the economy and it’s really hard to factor a tweet into a model. I don't mean to make light of it, but it's those kinds of things where we're in a different kind of political world.”
The report also expects a rise of about 48,000 jobs — particularly in the healthcare sector, which includes doctors, nurses and home health aides. Growth is also expected in “White Collar” or professional services jobs, like software developers, lawyers and accountants. About 2,500 jobs will come from Amazon’s plans to build its second corporate headquarters in Arlington. Sturtevant said wages will vary within these industries, but the report doesn’t track job growth in terms of income levels.
The outlook predicts an increase in home sales and new construction. But the question is, how affordable would they be? Sturtevant said that for millennials, first-time homebuyers or for growing families looking to upsize, options may be limited.
“The lack of supply at all price points except for the very high end I think is a real constraint. It's been going on for a long time now,” she said.
The median home price in Virginia is expected to be $308,819 in 2020 — this compares to the national median home price of $315,000 in 2019. She added, Virginia prices are forecasted to rise slightly faster than they are nationally, due to the high demand and tight supply.
Sturtevant said that the high cost of labor is another factor deterring localities from developing housing that’s under $300,000.
“Builders can't find enough workers to build housing,” Sturtevant said. “The construction trades really shrunk up during the recession and haven't bounced back. Young people aren't going into the trades as often.”
In recent years, politicians have started touting the idea of trade-schools as both a way to combat the student debt epidemic and to tackle the shortage in skilled workers.
Sturtevant said that cities and counties essentially determine the pace and type of new home construction. The big decisions determining housing supply, like land-use, zoning and permitting come from local government bodies like zoning boards, city and county councils.
“They set the rules, and in many places the rules are set to really limit the amount of new homes that are built out of concerns for traffic, schools, overcrowding, fiscal impacts,” she said.
But Sturtevant also said that existing residents of an area often have a hand in shaping how those decisions are made — by vocalizing opposition against changes that would allow localities to build more types of housing, sometimes “because they don’t want the character of their neighborhood to change.”