The partial government shutdown that started right around Christmas and extended through almost all of January undoubtedly put a squeeze on the metro DC real estate market.
We took a look at absorption rates – the pace at which the market is absorbing” the available inventory – in January and compared those to rate the previous January, and there is an inescapable conclusion: the market was slower.
In general, absorption rates were 3% – 5% less in January 2019 than January of 2018. There are always exceptions of course, as markets behave differently, but we even saw a slowing in those areas closest to Amazon’s new HQ2 location. In November and December of last year, we saw rates of 70% and 80% in Crystal City and the north end of Alexandria. In January, those rates dropped to around 50%. That’s still a very strong number, but three things combined to bring those rates down: a slight cooling from the initial reaction to Amazon’s news; the lack of available inventory since so much got snapped up in November and December, and the government shutdown.
We’re not worried about the long-term impact of the shutdown, but it’s going to take a while for the market to return to more normal levels of absorption rates. Of course, that assumes we won’t have another shutdown – and that remains to be seen as this writing!
—McEnearney Associates, “How the government shutdown impacted the real estate market”