More people with good (and better) incomes want to live in the nation's capital, increasing the demand for housing and driving up house prices. When the size of gubmnt increases, not only are there more civil servants, but there are more political appointees and especially more well-paid lobbyists whose job it is to influence gubmnt. From WaPo:
The increased size of gubmnt is make at least some people better off... namely the people who owned property before the gubmnt-induced property boom/bubble. If I lived in DC now, I'd sell and either move out of DC or rent.
While much of the nation is still struggling to emerge from a historic housing-market meltdown, the District is reliving its boom days. High rents, low interest rates, low inventory, and a flood of new residents in their 20s and 30s are making parts of the city feel like it’s 2005 again.