Capital beats the U.S. housing slump as Obama budget grows

Builders took out construction permits on 4,442 single-family homes in the Washington metropolitan area in the third quarter, up 11 percent from a year earlier, according to the Census Bureau. Nationwide, permits fell 17 percent.

The federal budget rose 18 percent this year to US$3.52 trillion and is projected to grow to US$5.3 trillion by 2019, according to the Treasury Department. NVR Inc., Toll Brothers Inc., Hovnanian Enterprises Inc., Pulte Homes Inc., KB Home and D.R. Horton Inc. are buying land and reporting sales growth in Virginia, Maryland and the District of Columbia, anticipating job and home price gains in the region.

“It's good to have a rich uncle and the federal government clearly isn't spending less,” said Stephen Fuller, professor of public policy and director of the Center for Regional Analysis at George Mason University in Fairfax, Virginia. “We're on a rebound much faster than other locations because of increased spending to manage the economy and to manage two wars.”

About 15 percent of all federal procurement goes to the Washington area, Fuller said. In the latest example of federal largess, the administration on Oct. 29 endorsed plans to extend an US$8,000 tax credit for first-time homebuyers, which is scheduled to expire Nov. 30.

Prices of existing homes in the Washington region climbed each month from March through August, gaining a total of 7.8 percent, as measured by the S&P/Case-Shiller home price index. The index for the nation's 20 largest cities rose 4.8 percent from its low in April.

In Fairfax County, Virginia, the most populous county abutting the District of Columbia, September prices surged 12 percent from a year earlier to a median of US$365,000, according to Metropolitan Regional Information Systems Inc. The number of total listings fell 28 percent.

Prices in the metro area are still 29 percent less than their peak in May 2006, the home price index shows.

“Do I see prices rebounding? Yes,” Dan Freire, a real estate broker in Ashburn, Virginia, with The Long & Foster Cos. “Will it be like earlier in the decade? No, and that's good. For now, prices are up because inventory is going down.”

Freire was the broker for Dean Cantrill, who transferred from Iowa to work for Cobham Plc, a British aerospace company with offices in Herndon, Virginia.

Cantrill sold his home in Iowa for US$413,000, about US$15,000 less than the listed price. He paid about US$660,000 for a four- bedroom, 5,500-square-foot (551 square meters) house built by Pulte about 20 miles (32 kilometers) from his office. He paid more than the US$639,000 listed price after ordering a finished basement, three-car garage and enlarged master bedroom.

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