Many experts agree, The Housing Industry led us into the great recession, and it will lead us out of it. That is exactly what’s happening. As the real estate and housing industries have recently begun to recover, so is the economy. There are a number of reasons for this belief:
- The Housing Industry employs millions of construction workers. When housing crashed over 2.5 million construction workers lost their job. Now, with construction picking up, hundreds of thousands of unemployed workers are now finding jobs. The more people employed in construction, the more money they spend on goods and services.
- New home construction creates hundreds of thousands, if not millions of manufacturing jobs. Consider that every new home built, requires purchasing home furnishings, appliances, lumber, concrete, flooring, paint, roofs, draperies, furniture and a myriad of other new products that must be manufactured and sold through retail outlets. That’s why every new home constructed, leads to several new jobs.
- The money disbursed during construction and sales of both new and existing homes also stimulates local economies. With more workers employed, there is more money circulated in the economy, leading to more jobs and more stimulus. This creates a circular effect and perpetuates continued growth.
- As housing prices have recovered, homeowners feel richer. In fact, they are. Home prices have added over $1 trillion to the market value of homes. As a result of this “Wealth Effect,” real consumer spending rose at a rate of 3.4% in the first quarter of 2013. When people feel richer, they spend more and that in turn leads to additional growth. Once again, there is a circular effect where initial growth, generates continued growth.
- With more people working, more people can afford to buy homes. Guess what? as more homes are built, more people are employed and the more prices continue to rise.
The million dollar question still remains? Is the Great Housing Recovery a result of the historical, cyclical nature of booms and busts? Or, is the present feeling of utopia in housing, temporary and primarily due to the Federal Reserve Stimulus program, that has led to historically low interest rates. Either way, the present conditions are ideal for both sellers and the buyers who are looking to purchase at some of the most affordable housing prices in history.