Growth is still county’s mantra
- May 28, 2009
When the housing market started crashing in Loudoun County three years ago, it went down fast. The median sales price, which had soared to nearly $510,000 in 2005, sank to $310,000 by the end of 2008. And the only way to survive, says Realtor Tony Arko, was to invent a new way to do business.
Finding buyers and sellers wasn’t easy, because few of them recognized how bad things were. “The sellers thought the prices would continue up until they sold their house, and if it didn’t, it was the agent’s fault,” he says. “What was once a fight to get a client to use me to sell a home, instead of another agent, became a fight to get sellers to reduce their prices.”
Not everybody figured it out. By Arko’s count, nearly a third of the agents doing business in Loudoun three years ago are gone, and the ones still around are working harder than ever. Even though average housing prices have been rising this spring to around $345,000, the rest of the year will likely be sluggish. Foreclosed properties that have been kept off the market are now coming back, which will push the supply up and prices down. Arko predicts prices will average about $315,000 by the end of the year, “so we will have made no progress.”
That’s not really true, of course. The real estate market might be struggling, but one thing hasn’t changed. The Loudoun economy, despite its housing troubles, keeps growing, and even in the midst of a recession, Loudoun has plenty to be grateful for. It still has huge advantages of location and a density of some key business clusters. The latest proof is the announcement in April that Massachusetts-based Raytheon Co. signed a lease for 600,000 square feet of office space – formerly occupied by America Online — and will move 1,300 workers there from two locations in Fairfax County. That’s not going to sell a lot of houses, because most of those workers will commute, but the deal cut the county’s vacant office space by 30 percent.
Plus, the county is the beneficiary of a huge state and federal investment — a $5.2 billion extension of the Metrorail system, which won more than $900 million in federal funding late last year. When the second phase of the 23-mile extension is done in late 2016, it will have three stations in the county. So growth is still Loudoun’s mantra. In the first quarter, for example, the county issued 565 housing permits. That’s 24 percent below the same period a year ago, but still a sign of the county’s expansion. “Our growth has slowed, but we’re definitely still growing,” says Dorri Morin, a spokeswoman for the county’s economic development program.
School budget takes a hit
That’s hopeful news for business types, but the county budget — especially public education — still took a big hit this year because lower real estate values meant much lower tax revenues for the county. Its $733 million annual budget, which takes effect July 1, has a wide range of cuts, reflecting a 6.4 percent drop in local funding. The countywide budget of $1.4 billion includes a 10.5-cent increase in the tax rate to $1.24½ per $100 of assessed value, the highest in Northern Virginia.
“In the middle of all this, we’re still growing,” says Andrea McGimsey, a member of the county Board of Supervisors. They might not be selling a lot of houses here but Loudoun is full of young and growing families – next year the 57,000-student school system is expecting another 2,500 students. “That’s a lot of schools,” McGimsey says. “And of course we’ve had to build so many schools and libraries and fire stations and parks. It’s never easy in Loudoun.” Still, all three bond rating agencies gave the county top ratings in March. Moody’s analysis of the county’s economic future predicts it will dodge the worst of the current recession, in part because it has the largest cluster of Internet, satellite and defense-related companies in the nation. Moody’s predicts those firms will grow as the public and private sectors look for cyber-security solutions.
Projections for job growth look strong in this county of about 300,000 people, which has one of the highest median household incomes in the country. More than half of the county’s labor force now commutes out of the county for jobs, but that is expected to change. The April forecasts for employment growth from the Metropolitan Washington Council of Governments predict the number of jobs in Loudoun will rise 43 percent between 2010 and 2020, to 227,500 jobs. If you look way out to the horizon, the MWCOG data projects another 146,100 jobs by 2040. “We’re going to grow up to be one of the largest places in the country,” says Larry Rosenstrauch, the county’s director of economic development.
Development along Route 28
An important key is how development unfolds in the Route 28 corridor. A special tax district that overlaps Fairfax and Loudoun counties helped fund improvements to 10 interchanges along Route 28, which Rosenstrauch calls “one of the larger self-help projects in the state.” And, the county has a lot of mixed-use projects planned there – including the 554-acre Dulles Town Center project, and the proposed 424-acre Kincora mixed-use project, at the corner of routes 7 and 28, just a couple of miles from Washington Dulles International Airport. The county still is reviewing the Kincora project. McGimsey, who has backed a slow-growth policy since being elected to the board in 2007, says the county has to do development the right way in the corridor. “If we choke off Route 28 with traffic, we’re not going to be able to get to the airport,” she says.
Loudoun has had a rocky path to deciding how it would grow. In the past decade or so voters have swung from supporting pro-growth to slow-growth politicians, but Rosenstrauch says the issue seems to be settled. One Board of Supervisors a few years ago approved zoning that would have allowed 60,000 houses to be built in the western part of the county, but later boards abandoned that for a development plan that allows about 18,000 houses. “We’ve largely settled the land-use civil war we had about what will happen,” Rosenstrauch says.
If that land-use plan sticks, the county will continue largely with what it has today — a more densely developed eastern third and a less-developed western two-thirds. About 43 percent of the county’s 520 square miles is farmland. County leaders say that situation is fine with them because it will support the county’s rural economy. Loudoun actively promotes its wine industry — it has 23 vineyards and the biggest production in the state — and has one of the state’s biggest equine industries. “We still have a very strong backbone of traditional commodity agriculture,” says Melissa Nelson of the county’s Rural Economic Development Council.