Real Estate Continues to Spur Economic Growth
It was at the beginning of December of 2012 when we reported that according to credible sources such as Reuters and the National Association of Realtors, the real estate industry will prove vital in the nations greater economic recovery. 2012 showed that roughly 11,000 jobs were added to the workforce each month. Such progression has had an immediate trickle-down effect to the rest of the economy where this increased propensity for consumers to spend has lifted the economy as well.
The rest of 2013 is set to be even more beneficial in terms of the job market for the United States. As if 11,000 positions added each month were not enough, this year upwards of 30,000 jobs will be born to the housing industry on a monthly basis. Out of all of the top economists surveyed by CNNMoney, more than half of them insisted that todays developing economy is primarily due to the housing industrys improvements and that this will be the central force propelling the economy forward in 2013 as well. Other notable reasons that less than half of the economists felt will be the main driver of the economy in 2013 were the aforementioned boost in consumer spending, as well as increased domestic energy production and stimulus from the Federal Reserve.
Keith Hembre, the Chief Economist of Nuveen Asset Management, mentioned that, "Homebuilding activity will likely remain the strongest growing component of the economy in 2013. After several years of excess supply, demand and supply conditions are now in much better balance." Housing starts, which we blogged about recently, are at their highest levels in 4 years. 2012 saw these increase by 28% over 2011 to 954,000 homes. Both this year and next year in 2014, however, a climb of 50% over 2012s numbers are anticipated to occur. Some one million jobs will also come from just careers relating to housing starts; a very strong prediction. This will help provide jobs not just in the construction industry, but also in manufacturing, furniture, and more.
Some of the greatest contributors which back real estate for spurring on the economy are from statistics such as that home sales have rebounded to their highest level in five years in 2012, home building activity has returned to respectable levels from before the heavy recession, there are drastically low mortgage rates, home prices have begun to ascend, and there is a decrease in foreclosure activity. Also within a past blog, the low inventory in the marketplace today has been one of the largest determinants of home prices which across many localities in the country have kept strong. Economists have pointed out that this relentless demand will cause a nationwide 3.7% increase in home values in 2013.
Celia Chen, the Housing Economist for Moodys Analytics, informs us that, "There's a lot of pent-up demand for housing, and very little supply. As demand continues to improve, home builders have nothing to sell. They'll have to build." Joseph LaVorgna, the Chief U.S. Economist of Deutsche Bank, thereafter stated, "One of the most significant indirect effects from the housing recovery is the 'wealth effect' on consumers due to the recovery in home prices. Even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets." It thus seems inevitable that both the real estate market will continue to build upon its recent successes now and into the future, and that this rebound will provide welcomed residual effects for the nations broader economy.
More Information: CNNMoney
