If you watch the news, most of the economic outlooks always mention the state of the housing market. Residential construction has a positive, direct impact on the United States economy. For each new single-family that is built, three jobs are created. Jobs are created in the lumber and concrete industry. Lighting and heating industries and other manufacturers of appliances profit from the building of a home. Real estate agents and brokers provide services to home builders and home buyers. And in this political climate where the outsourcing of jobs to other countries is argued and controversial -that cannot be said of the housing industry. Most of the products used in home construction and remodeling are manufactured in the United States.
Property values play a significant factor in the status of the housing market and the economy. During the housing boom that began in the early part of the 21st Century, the U.S. economy soared. As equities increased, so did consumer spending. As a result, more businesses opened up and more jobs became available. The stock markets also soared with interest rates at record lows. A strong housing industry not only means more jobs, but more money in our communities. Home building increases the property tax base which generates revenue that supports local schools and communities.
Housing can put America back to work. The gap between current production and potential housing construction is more than 1 million homes. That represents more than 3 million untapped American jobs. In normal times, housing accounts for more than 17 percent of Gross Domestic Product. Restoring the health of the housing industry is a crucial first step in putting America back to work. The broad-based indicators suggests that when the housing market improves, it provides an ever-growing measure of support for the rest of the economy, in terms of job creation, household wealth gains, and improved consumer confidence. There will be monthly ups and downs, of course, and continued geographic variation, but housing now holds the ability to foster a virtuous cycle for growth.
There are a couple of things that will need to change for us to enjoy a long-term, sustainable economic recovery. First, consumer confidence has to be restored, confidence in our financial systems, and confidence in the way management runs our companies. For many, this will mean a return to normalcy in our housing markets and with that a boost to the United States economy.
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