Wednesday, July 05, 2006

Pop!

Pop! That sound you just heard was the sound of the housing bubble bursting, cooling, deflating... I know the exactly when the needle made contact with that bubble too. It was the day after we put our house on the market in early May. That day, mortgage rates took a sharp increase, and houses in my neighborhood that were moving in 1-3 weeks up until then, are now not moving at all. We settle on our new house tomorrow and have yet to sell ours. Ugh!!!

For the past few years, the housing market in the DC area has been one of the hottest in the nation. Like many other housing markets, houses were moving in a matter of days, if not hours. Housing prices in this region shot through the roof as a result. The value of my current house has increased 150% in the 8 years since I bought it. There have been plenty of other single-family homes that have doubled or tripled in value as well.

All of this together has made the DC area one of the costliest (scroll to bottom) housing markets in the country, close behind markets in California and the NYC area. All of this has been great until now for those who were able to take advantage of it. But for those middle-income workers who have wanted to move to the DC area because of the hot job market here, that transition has been very difficult, if not for some, prohibitive.

In recent years, many people have sucked it up and made the move here, but i've also seen candidates from lower cost-of-living areas back out of the process because they could not afford housing similar to what they had before, and they were not willing to live out in the boonies with a horrific commute so that they could afford similar housing. Now that the market is starting to 'correct' itself, we are starting to see something that could be of even greater concern. Prices are still sky-high, and are unlikely to drop drastically, which will continue to make housing affordability in this area a problem.

So what are the implications for Recruiting? This slowdown is national in scale, so my concern is that for those who might of been considering relocating here, that they might be more cautious now out of concern for selling their own home in a reasonable period. Much of the hiring I do currently is local, but it certainly doesn't help if relocating candidates gets even harder than it is already.

It could be worse though I know. Interest rates are still half of what they were 20-25 years ago. My parents told me a couple weeks back that when we moved in 1980, that the house we moved from sat on the market for 6 months. Could be worse indeed. So, if you know of anyone in the market for a beautiful 3 bedroom, 2 1/2 bath townhome located just minutes from great dining, shopping, entertainment and I-270, please send them my way!

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