A U.S.-led war against Iraq may not have a major impact on the region's housing market but it will still significantly affect the Northern Virginia economy, said housing industry analysts and county economists.
Because the Fairfax County housing market exists in a sort of government bubble, it might be spared some of the difficulties other parts of the country might face, said Esther Pryor, president of the Northern Virginia Association of Realtors.
"We're still government and we're still the headquarters for the military and there are a lot of people who move in and out of here all the time," she said.
Regardless of what happens to the national economy, there will still be jobs with government agencies and government contractors available in the area, she added.
"That's the key, the job market," she said. "People always have to have a place to live."
The last time the U.S. went to war in the Middle East, in 1991, the local housing market remained strong, she recalled.
So far, at least, the state's hot housing market shows no signs of tapering off. According to the Virginia Association of Realtors, home sales were up 4.82 percent this January over the same time last year. Fairfax, Arlington and Alexandria saw a 6.35 percent increase in the number of homes sold and the area around Dulles Airport saw an 18.44 percent increase.
Despite these figures, the market for high-end homes seems to have slowed a little bit, said Pryor, but it is still strong.
"The high end's always there unless we get in a deep depression," she said.
But the housing market nationwide won't be affected by a war, provided it is short and successful, said Celia Chen, a senior economist at economy.com, an economic think tank in Pennsylvania.
"As long as mortgage rates remain low, then I think that the housing market should remain fairly buoyant," she said. "If the war is fairly short and successful then I don't think it's going to have much effect on the short term," she said.
In the second half of the year, she predicted, the economy will start performing better which will raise mortgage rates and cause the housing market to slow down somewhat, she said.
But if the U.S. gets bogged down in a long war in the Middle East, consumer confidence could suffer she said. Potential homebuyers might reconsider a significant housing investment, she added.
"Then you might start to see a more significant softening in the housing market," she said. "Home purchases would become lower."
IF THE HOUSING industry can escape a war unscathed, other sectors of the economy might suffer from a downturn in consumer confidence. At last week's county budget presentation, County Executive Anthony Griffin told the Board of Supervisors that uncertainty over a war made it difficult to predict whether his revenue projections would be accurate.
"We're waiting, quite frankly, to see what happens with a potential war with Iraq," he said. Already, he added, consumer spending is down and the number of jobs has not increased as much as in recent years.
"There's just a lot of uncertainty out there," said Griffin.
If consumers decide to spend less money, that would mean lower sales tax revenues for county services, said County Chief Financial Officer Ed Long. But a war would also affect expenditures he said. If the Middle East is plunged in a war and gas prices go up, it will cost more to fuel school buses, police cars and other county-owned vehicles, he said.
War would have an impact "potentially on both sides of the budget," he said.