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