February 14, 2006

W EXPECTS HOUSING CONSTRUCTION TO SLOW BY 2007, therefore probably is not overly concerned about the value of his mansion on 16th St. You see, Bush wont be moving until 20009 and by then the Council of Economic Advisors believes the building boon creating a housing glut will be over. This tidbit was gleanded from the 2006 Economic Report of the President, which states the following:

"On balance, residential investment is not projected to contribute to real GDP growth during the four quarters of 2006; in subsequent years, it is expected to subtract a bit from overall growth."
Our read on that is the Council of Economic Advisors expects the national oversupply of housing to begin to dry up begining in 2007. In 2006 supply should continue to come on line, but by 2007 housing construction nationally should slow. The administration mainly points to rising interest rates as the culprit behind the coming slowdown.

The prediction jives with whats happening in DC. Much construction in Columbia Heights and NOMA is expected to be ready to move in late in 2006 or sometime in 2007. With all the talk of a glut, its hard to believe that projects currently on the drawing board, but not approved or ready to break ground, will go forward as condos.

ZILCH FROM ZILLOW. If you live in DC, dont listen to all the hype about the new google mashup site Zillow, which shows house prices on a map. For DC it shows the tax assessment value, which of course has gone through the roof too, but not the fair market value as is shown for other cities. Only when Zillow shows real prices will we begin the nearly impossible task of figuring out how prices of mid-rise condos are shown.


Erika said...

Actually, residential investment refers to investment in new residential property, i.e. things like new builders and construction work. The sale of assets (such as homes or cars) that are not new does not get entered into GDP.

Therefore do not read the budget as saying 'the value of existing housing stock will go down' read it as saying, 'we expect the rate of growth in the building industry to be much dimished, or negative in upcoming years'. Given the slowing housing market, higher interest rates, and steep construction costs, that seems that a safe assessment.

dcbubble said...

revised....thanks for the comment