How the elections will affect the D.C.-area real estate market

By David Howell

 

Thirty-two thousand jobs. Theoretically, that is how many positions are up for grabs in the Washington region as the nation will soon elect a new commander in chief. That much potential turnover has to have an effect on the DMV’s real estate market, right?

Let’s take a look at the executive branch. Regardless of the presidential election’s outcome, there will be a change in the occupant of the White House, and there are about 3,000 presidentially appointed jobs. Let’s assume that every one of those positions changes and a considerable number of lower-level staff positions change along with them. That could be as many as 8,000 jobs total.

The reality of Washington’s political job market is that many who will fill those seats already live here. People cycle in and out of public-sector jobs with considerable frequency, but let’s be generous and estimate that half of those 8,000 jobs will be filled by people who relocate to the metro area.

Let’s also assume that half of those will buy homes sometime in their first year here. If this calculation is accurate — although history tells us that this is a significant overestimation — that would be 2,000 home sales.

There are 24,000 jobs on Capitol Hill, but close to 9,000 are considered nonpartisan and generally do not change with election cycles. So the “political” staff on the Hill numbers about 15,000. But even with 435 House and 33 or 34 Senate seats on the line every two years, there is usually not an enormous amount of turnover.

In 2014, 95 percent of the members of the House running for reelection won. Forty-one members retired — and their party kept the seat in each and every case. There was a significant change in the Senate with a net change of nine seats. In 2010, we saw the biggest party change in recent memory with a 15 percent change in the House and a 16 percent change in the Senate.

So if we take an extreme example and assume we have another major shakeup of seats with a 15 percent turnover in Congress and assume that there is a 100 percent replacement in the staffs of those newly elected members, that would translate to 2,250 jobs changing hands.

Most staff jobs on Capitol Hill pay less than $50,000 per year — no one is buying a home on that salary — and even many newly elected officials look for rental housing or even live in their offices.

As is true with the executive branch positions, some of the people who will fill the new congressional staff positions already live in the D.C. area. But let’s assume that half of the new hires come from out of town and half of those buy a home sometime in their first year in the DMV. That would add up to about 560 home sales.

(McEnearney Associates)

 

So how much impact would 2,560 additional home sales have on our market? There were slightly more than 50,000 home sales in the immediate D.C. metro area last year, so that would be a 5 percent increase. But as the table shows, there is no historical correlation between home sales and election results. On the heels of the major changes in the makeup of Congress in 2010, the number of sales in the immediate D.C. area fell almost 5 percent the following year.

The election of 2008 brought a change in the White House and a change of 29 seats in Congress. There was an increase of almost 20 percent in the number of sales in 2009 compared with 2008 — so on the surface one might be tempted to say these elections had a major effect on the region’s real estate market. However, in February 2009, Congress passed and President Obama signed into law the first round of the Homebuyer’s Tax Credit, and the number of sales jumped nationally as well.
There are other significant factors at play. Individuals do not make a decision to purchase a home in a vacuum. Just moving to the area to take a new job — even a new job on the Hill or in the executive branch — does not cause a person to ignore overall market conditions or their personal circumstances.

Also, although there may be new occupants of these jobs, these are not “new” positions like we see created when a company moves to the D.C. area. The elections may make a big difference when it comes to policy, but when looking at residential real estate, we should not expect much impact.