Even the White House Is Not Immune to Plunging Real Estate Market

Have you ever wondered how much the White House was worth? Of course, no one would ever dream of selling this icon of our nation, yet Zillow decided to try to put a price on it anyway. The online real estate database came up with an estimated value of $292,386,000 as of Jan. 18, 2010. That's down $15.6 million since President Barack Obama took office on Jan. 8, 2009, and down another $23.8 million since former President George W. Bush's last year in office.The house is apparently still on a downward trend. If you look at the current listing, the property's value fell another $1,084,000 to $291,386,000 in just the past week. The initial cost for building the White House back in the 19th century was $232,371.83. It was first occupied in 1800 by President John Adams and his wife Abigail, though it was not actually completed until several years later.

Of course, there's really nothing to compare to the White House when it comes to determining value. The 55,000 square-foot building sits on 18 acres, and its 132 rooms include 16 family-guest rooms, an underground bunker, three kitchens, three elevators, and 28 fireplaces. Just to give you the highlights of the living spaces.

In addition to the residence where the First Family lives, there's the West Wing (Oval Office and top executive offices) and the East Wing (First Lady and offices for her staff). The bunker is located under the East Wing.

In total the residence contains five levels: the sub-basement (storage, laundry); basement (Diplomatic Reception Room, Map Room, kitchen, curator's office, dentist's office, one-lane bowling alley); first floor (the "State Floor" contains the Red Room, Blue Room, Green Room, East Room, State Dining Room, and Family Dining Room); second floor (the "Family Residence" contains the master bedroom, Lincoln Bedroom, Queens' Bedroom, Yellow Oval Room, Truman Balcony); and third floor (recreation, music, and sun rooms).

The first cornerstone of the White House was laid in October of 1792. The building's construction was overseen by President George Washington, though he never actually lived there. Since that time each president has made changes and additions, compounding the cost of the property, so the total expense to the nation is not readily available. But it is the only private residence of a head of state that is open to the public, free of charge.

The White House has survived two fires. One at the hands of the British in 1814 (during the War of 1812) and another in the West Wing in 1929, when Herbert Hoover was president. Harry Truman spent a portion of his presidency living at the Blair House across the street while the interior of the White House, with the exception of the third floor, was completely gutted and renovated. The exterior stone walls, however, are still those first put in place when the White House was constructed two centuries ago.

With so little financial data available, how did Zillow arrive at its estimate? Here's how they describe the process:

  1. They looked at the most expensive home sales in Washington, D.C. in 2008, and built models relating the sales prices of these homes to their tax assessments and a variety of physical facts about the homes.
  2. They then applied these models to several large homes in D.C. with historical value that have been on the market in the past year. They did some additional computations that they did not reveal, but also looked at the increased value a historical home has over a comparable home with similar attributes.
  3. They then took the attributes of the White House and its property, predicting its value today based on these physical characteristics (using the models developed from Step 1 above).
  4. Finally, they did a lot of multiplying in order to apply the highest premiums seen in the historical homes to the basic valuation provided by the models in Step 3 above – assuming that the White House is the most historic home in America.

Basically, Zillow's estimate was reached with lots of smoke and mirrors. Do you think their valuation is fair?

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