New construction is a key driver of growth in assessed property values and, in turn, property tax revenue. More construction leads to higher assessed values. Below we summarize our residential and commercial construction estimates used for our assessed value forecast.
Building Permit Estimates. Building permit activity has been declining since the summer of 2018, largely driven by a slowdown in residential building. We anticipate a continuation of this trend, with total permitted construction declining from $69 billion ($36 residential and $33 commercial) in 2018 to $65 billion ($33 billion residential and $32 billion commercial) in 2019 and further to $61 billion ($31 billion residential and $30 billion commercial) in 2020. We discussed our method of forecasting building permits in this prior post.
