Just read the recent report 'The US and Washington Area Economic Performance and Outlook' from Center for Regional Analysis, George Mason. This report is updated regularly. Here's my observation below.
We have two things that keep the housing market going: Federal spending and jobs (low unemployment rate).
Washington DC is a very unique market. Being the nation's capital, the structure of economy is largely supported by the Feds. So are the jobs creation. About 1/3 or 33.3% of our local economy is supported by the Feds, in which 15.2% of it probably contractors related and the other 18.1% is procurement related. The local business supports about 38.9% of our economy.
FEDs spending: the total federal spending for the DC metro area have tripled in a 22 years span (1985 to 2007). Just in the last 10 years, Fed spending for our area have gone up from under $80 billion to over $130 billion. Without this kind of "Federal" spending, our "local" economy would be in the tank! No kidding. There won't be housing market turnaround..at least for sometime. So, stop complaining about feds spending. This region benefits from it.
The job situation in our area, not as bad as other places in the US. The jobs growth, if any, is drop 2/3 from a little bit over 50,000 new jobs to just 17,000 new jobs. So long as we still have jobs added to our area, no matter how slow, our local market will still be insulated. Because our economy is government dependent, the government is the 'only' sector that has added new jobs from August of 2008 to 2009 by adding more than 12,000 new jobs while shedding jobs from other sectors (construction, retail, financial, information and more) that resulted with a net negative (or loss of) 42,100 jobs. Among the 15 largest job markets (metropolitan cities), DC region has the lowest net negative employment growth at -42,100 vs. Los Angeles, which stands at more than -200,000 jobs.
In the bigger scheme of things, US unemployment rate is at 9.6% vs. Washington DC at 6%. If we expand a little bit more, Virginia has the lowest unemployment rate at 6.7%. Maryland is at 7.2% and DC has the highest at 11.4% in September of 2009. Is that why homes in DC are not selling as fast as in Northern Virginia or Maryland? (Anyone knows why DC unemployment is high despite it is the nation's capital?)
HOUSING MARKET TREND
With regard to housing market, comparing the local sub-market conditions between Washington DC, Maryland and Virginia, we can see from the charts below while Maryland slowly recovering, District of Columbia (specifically) still struggling.
data & charts: CRA-GMU