You’ve seen all the hype over the sequester and just how bad it’s going to be. Our editorial today attempts to debunk some of this.
And there is one point in there that probably deserves a bit more room. We all know what Washington folk are saying about sequester. But are they really serious? There’s a way to know — look at what they’re doing with their money.
What does the Washington Metro region’s real estate market have to say about the sequester? After all, the people who work and live here are supposedly going to be hit hardest when the automatic spending cuts begin. If all the hype is sincere, we should expect homebuyers to get cold feet, inventory to grow, houses to languish on the market for longer periods, and prices to plummet. Instead, we have this:
- Home prices in the metro are up 10.7 percent year-over-year.
- Inventory is down about 50 percent year-over-year.
- Average days on market are down 27 percent.
In fact, the area’s real estate market has the feel of 2004 or 2005. One local realtor informs me that buyers have gone back to crazy tactics to avoid being outbid, such as waiving inspection clauses and even appraisal clauses, the same way they used to at the height of the housing boom.
Meanwhile, the stock market is sending a similar message. The probable reasons are (1) the cuts aren’t going to be as bad as advertised, and (2) to the extent that they are irrational and “meat-cleaver” like, the spending reductions will be made more rational at the end of March when Congress passes its next bill to keep funding the government.