Mark Zandi of Economy.com, meanwhile, weighs nine variables. Among them: interest rates, availability of developable land, job growth, demographics, construction costs and return on housing compared with other investments. While negative scores on one or two measures could be "explained away," Zandi said, it may be a good indicator of a problem if the location is red-flagged on multiple fronts.
Washington, along with San Diego, Los Angeles, Honolulu, Miami, San Francisco and Boston, made [Dean Baker] and [David Rosnick]'s short list of places with the largest gaps between increases in rent and in home prices. Since 1997, Washington's home-price gain outpaced its rent increase by 50 percentage points, according to their report published late last year.
PMI, which ranked the region No. 18 on its risk index, tracked an area that includes the District, Arlington and Alexandria but excludes Bethesda. (The U.S. Census a few years ago broke out Bethesda and surrounding areas to reflect population growth.) Credit Suisse First Boston combines the two.
Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.