Two Year Forecast of Indicators Affecting the Housing
Industry
Many American consumers and producers use
various economic forecasting tools to evaluate where the housing industry is
heading. The real gross domestic product rate (GDP), unemployment rate, inflation
rate, the CPI (consumer price
index), PPI (producer price index), and housing starts are all areas of the
economy and housing industry that economist try to forecast. Forecasted economic conditions, if correct,
give those in the housing industry a realistic idea of future conditions
allowing for enhanced planning and management.
Economic Indicators
Real GDP
According to the
bureau of economic analysis, at the end of 1985 the Real GDP was 4,321.8 billion dollars. In addition, 21
years later the Real GDP rose to
13,392.3 billion dollars (Bureau of Economic Analysis, 2008). According to
a report released by NASDAQ.com, Real GDP
in 2006 increased 3.4% in the fourth quarter, as apposed to 2.0% in the third.
Real GDP is an important economic
tool that many investors use to depict were investments should be made and by
how much. GDP helps translate what
the economy is doing and a residential investment is one of the key components
to the market (2007 U.S. Economic Events & Analysis, 2007). The bureau
of economic analysis is a more reliable source because they have nothing to
lose or gain by publishing truthful information while the NASDAQ could have a
hidden agenda. The dramatic differences in the Real GDP
over the last 22 years directly correlate with the constant rise of housing
prices. A raise in 66% of the real GDP
is going to demand an increase in housing prices at some point.
