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Mayor Bloomberg Presents Preliminary Budget, Housing Projected To Decline 10%

Mayor Bloomberg Presented His FY 2007 $52.2 Billion Preliminary Budget [NYC] [1] yesterday.

The project projects continued economic growth but with less emphasis on the housing sector.

New York’s real estate market is expected to slow, however, with a 10% decline in home prices, a 14% decline in home sales over the next few years and a significant decline in real estate transaction taxes that have buoyed the City’s tax revenue in the last few fiscal years.

The language is not clear but it looks like the city is projecting a 10% decline in housing prices and a 14% decline in the number of sales over the next few years. Housing has been one of the primary reasons the city currently has a surplus.

This is 2007, not projection starts mid-2006. This budget used rising interest rates as the primary catalyst for weakening housing, Wall Street stock price advances and profits.

I find this logic interesting since some analysts disagree with the Fed’s stance that the economy is strong, using the 1.1% increase in GDP as evidence that the economy is weakening. If so, some predict the Fed may loosen rates in early 2007, which would influence mortgage rates to go lower. Of course, this could be completely incorrect and the economy is actually doing better than the statistics show.