Back in 2003, I moved to Washington DC to work in a federal agency for a few years. The first four months I lived in a basement in an old townhouse on P Street in Georgetown, but then had to decide whether to buy or rent. I found a real estate agent to show me a half-dozen small condominium units around Connecticut Ave in Woodley Park and Cleveland Park. The prices were crushing. A 400-square foot unit on New Hampshire Ave ran for $350,000. DC taxes and fees of various extractions piled on more cash up front, and I backed off and took a lease in the old Kennedy-Warren building.
It was a mistake. If I’d taken the plunge, I could have sold the unit two years later at a sizable profit.
Why? I asked the real estate agent in 2003 the reason for the high prices. He told me that just in the last year they had accelerated, and it looked like the trend would continue for a couple more years.
“What happened last year?” I asked him.
“Oh,” he replied. “Homeland Security.”
“What?”
“Yeah,” he went on. “When the Homeland Security Act passed, you got a lot of new federal workers hired, and they poured into DC this year and pushed up the prices.” He paused a moment. “But that wasn’t all. A bigger push came from the hundreds and hundreds of lobbyists that sprang up. I talked to a lot of them, and sold a few places. They said that a whole new source of cash was out there, and they represented firms that saw a whole new source of income.”
I wasn’t sure whether to believe him, but it sounded plausible. We were just a few blocks from K Street, and not that far from the Willard Hotel (source of the term “lobbyist”). And today the Wall Street Journal has further evidence of the trend.
It has moving data from last year showing where families relocated. It’s called the “Great DC Migration,” and here’s the summary:
“But first the biggest loser, which was Michigan for the fourth year in a row. More than two families left the state for every family that moved in. The fall of GM and Chrysler has obviously hurt. But two-term Governor Jennifer Granholm has also made her state the test case for the policy mix of raising taxes on higher incomes, increasing regulation, and steering taxpayer money at favored programs like job retraining and renewable energy. It hasn’t worked for Michigan, even with the auto bailouts.
“Ms. Granholm continues to be a regular economic policy adviser to the White House. Yikes.
“The next two biggest net losers were Illinois and New Jersey, while California and New York also continued to have far more departures than arrivals.
“Ten states gained net arrivals: Oregon, Arkansas, Nevada, Wyoming, Idaho, Colorado, Georgia, New Mexico, Texas and North Carolina. Of those, only Oregon sways decidedly to the political left and it has benefited from the economic refugees fleeing California.”
But one munipality beat them all:
“As for the biggest winner, well, our readers won’t be surprised to learn that it was Washington, DC, by a large margin. United Van Lines moved nearly seven families to the federal city last year for every three it moved out.”
So there’s the pattern. With the federal government growing every year, so does the DC population, as well as the Maryland and Virginia suburbs. The more the federal government pulls in revenue, the more the city pulls in people.
But at the state level, there is a different pattern. The more states tax their residents, the more the residents leave for states that don’t.
11 Responses to Movers Following the Money
slowlearner - January 21, 2010 at 2:27 am
That theory for explaining the DC housing bubble is cute, but I am afraid it doesn’t hold much water. In case you aren’t aware by now, 2003 was part of the run up of an unprecendented housing bubble in D.C. and most other major metropolitan areas in the U.S. Home prices in D.C. mirrored the larger trend in the U.S.:http://mysite.verizon.net/vzeqrguz/housingbubble/washington.htmlhttp://mysite.verizon.net/vzeqrguz/housingbubble/It was the same in New York City, San Francisco, Los Angeles, San Diego, Sacramento, Boston, Seattle, etc. It’s also unclear why you link the housing bubble to net migration statistics from last year – after the bubble already burst. I would also be willing to bet that those migration figures are more closely linked to employment conditions than tax burdens. People without jobs do not face much of a tax burden. You don’t think the fact that the U.S. auto industry was clobbered by the recession, and the resulting hemorrhaging of jobs, had anything to do with the migration of Michigan citizens? C’mon Mark, you can do better than basically reposting some right wing tripe from the Wall Street Journal.
slowlearner - January 21, 2010 at 2:47 am
I should also add that the migration statistics come courtesy of United Van Lines, making them close to worthless for tracking net inflows and outflows. Funny that Mark didn’t mention the source of data in his discussion.
goxewu - January 21, 2010 at 9:58 am
1. Not that The Wall Street Journal isn’t reputable, but it’s getting a little old–not to mention suspicious–that Prof. Bauerlein, a more than one-off contributor to the WSJ, so often on his “Brainstorm” posts, synopsizes WSJ material for his main points. Indeed, sometimes his posts are little more than restatements of Journal articles with an additional dollop of opinion. Is he under contract at the WSJ as a kind of online Mary Kay “distributor” for the paper?2. It’s also a little odd that such a dedicated opponent of “big government” took a job for a few years with the Federal government’s National Endowment for the Arts. If the Federal government were to contract to a size of Prof. Bauerlein’s liking, would it still contain an arts bureaucracy such as the NEA? Does arts policy have any place in the smaller government that Prof. Bauerlein advocates, other than the design of war memorials and scheduling orchestras to play at State dinners?
markbauerlein - January 21, 2010 at 11:23 am
No theory here, slowlearner, just a couple of observations, and you’re right about the general bubble trend in 2003. It sure seemed that DC was worse than the average of some major cities that I knew then in terms of rate of increase (NY and Atlanta). I do pick WSJ as my major source in recent posts, but I also have linked to Weekly Standard, NY Times, Chronicle of Higher Ed, and other periodicals I’ve written for in the near past. The NEA is a special case of government agency, and it goes back to what happened to the agency in the mid-90s (which you can read about here: http://www.amazon.com/exec/obidos/ASIN/0615232485/chainreadin04-20
goxewu - January 23, 2010 at 1:20 pm
I should probably let the second paragraph in #4 go (I can turn into a gila monster on these threads), but the way that the civil, reasonable Prof. Bauerlein can also get mighty slippery when challenged kept nagging at me. So:1. There’s a palpable quantitative difference–which adds up, in the end, to a qualitative one–between Prof. Bauerlein’s relationship with the NYT and the CHE and his with the WSJ, and between the way he sources material from the first two and the last one. “…also have linked to” is a pretty thin blanket under which to try to huddle the disparity.2. The NEA’s being “a special case of a government agency”* really doesn’t justify an putatively principled opponent of Big Government going to work for it. Many Federal agencies having to do with areas of endeavor not thought by opponents of Big Government to have anything to do with what ought to merit Federal monitoring/intervention/meddling could, and are, thought to be “special cases” by people nominally opposed to Big Government who have either an agenda or a vested interest (e.g., employment, line on a résumé) concerning that agency. There’s probably a catfish farmer out there who thinks that fish hatcheries in Louisiana are no business of the Feds, but who would take a job with a Federal agency that meddles in them because that agency is, well, “a special case.” It all depends on whose ox is being gored, or whose calf is being fattened, doesn’t it.* I’m familiar with the NEA, and served on a few panels (for small honoraria and per diems), going all the way back to the 1970s.
markbauerlein - January 23, 2010 at 2:37 pm
Remember that being against Big Government is not being against all forms of government. One thing that makes for good government is accountability, and few agencies are more scrutinized and reviewed than the NEA. (That includes journalists ever hovering to sniff out a controversial grant.) It was also streamlined in the mid-1990s when the staff was cut. Those are some reasons why the agency is a special case.
goxewu - January 23, 2010 at 4:05 pm
I probably learn more slowly than slowlearner, but I do learn. Here’s what I’m learning from #6, above:1. Being against “Big Government” isn’t being against government that’s big. It’s being against government that isn’t “accountable.” (Why opponents of “Big Government” don’t call themselves opponents of “Unaccountable Government” instead is still something I haven’t learned.)2. If an agency of Big Government is “scrutinized and reviewed,” then it doesn’t matter that the agency adds to a government’s size–even if it’s an agency whose function (e.g., meddling in the arts) is obviously well outside of the basic functions of a Small Government.3. “Journalists hovering to sniff out a controversial grant” is peculiar to the NEA, because opponents of Big Government have never cited journalists sniffing out controversial government grants for decades anywhere else, and they never heard of Sen. Proxmire’s “Golden Fleece” awards.4. It’s O.K. for an opponent of Big Government to work for an agency whose function (e.g., meddling in the arts) is obviously well outside of the basic functions of a Small Government, as long as it was recently streamlined and the staff had been cut. (Memo to proponents of big Government: To get critics such as Prof. Bauerlein off your backs, simply cut one position from any agency in the interest of “streamlining,” and its existence will then be justified to those critics.)5. Do as I say and not as I do.6. I want Prof. Bauerlein as my defense attorney. No matter the crime I’m accused of, I’ll walk on a technicality.
markbauerlein - January 23, 2010 at 8:10 pm
One of the things the Federal government is needed for and does well is population and survey research, in part because of rules set by OMB. That was my main job at NEA, including working with the Census Bureau.
rchill - January 24, 2010 at 8:07 am
I lived in the DC area from 2002-2008. I too, saw the rise in house prices and I guess I could have jumped on as well…glad I didn’t, as the “bubble” burst. If you looked at the houses/townhomes/condos, they were not worth the price. And if you just looked around, you could see it was a bubble and that it would burst. It did, about a year prior to our leaving. Townhomes that were going for $500,000 could not be sold for $250,000. Part of the reason was the glut on the market. Many of the townhomes are cookie cutters – one pretty much like the other. In the Alexandria VA area more than 2000 townhomes were on the market. It wasn’t just DC – it was the Northern Virginia and some area of Maryland that also went price nuts for a while. Not Big goverment…big human greed.
goxewu - January 24, 2010 at 9:04 am
OK, I’ll bite:What, pray tell, was that “population and survey research” that had to be done in/with the NEA instead of just with/in the Census Bureau itself? Since the census (or The Census) is mandated by the Constitution, it’s a fuction of Government justifiable to opponents of Big Government. But the NEA, by its very nature, is an agency operating in an area–the arts–in which, almost every genuine opponent of Big Government agrees, the Federal Government has no business at all. (Possible exceptions: sculpture for war memorials and orchestras to play at State dinners, etc.) It’s difficult if not impossible to reconcile Prof. Bauerlein’s’ opposition to Big Government with his accepting employment at an agency that’s the very embodiment of Big Government.The “Do as I say not as I do” corner into which Prof. Bauerlein has painted himself has gotten smaller and smaller and smaller. First the NEA was “a special case”an “exception” because of “what had happened to the agency in the mid-90s.” (Conservative culture warriors gutted it?) Then it was an exception because it had been streamlined and the staff had been cut. (Any agency peripheral to providing for the common defense, etc., is OK with opponents of Big Government as long as it’s been downsized?)Then it was an exception because an exception because “few agencies are more scrutinized and reviewed than the NEA.” (See “Golden Fleece Awards” in #7, above.)Then it was an exception because journalist were always sniffing around it to expose a controversial grant. (As if journalists don’t look for exposés anywhere else.)Now it’s because it was engaged in “population and survey research,” which is “one of the things the Federal government is needed for and does well” and because this work coattailed onto the Census Bureau, which is (finally! gasp! wheeze!) a Constitutionally mandated government agency. (Proponents of Big Government, such as I, by the way, justify a lot of that BG because we think its involves “the things the Federal government is needed for and does well.” Or at least reasonably well, or at least without the gouging you’d get from private enterprise if it did the same thing–witness HMOs.)What it comes down to, at the pointy point of the corner into which Prof. Bauerlein has painted himself, is that the NEA is exempted from being part of Big Government because Prof. Bauerlein, an opponent of Big Government, worked for it.Nice work if you can get it.
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