Why the Housing Industry is Important to the Economy - Building Moxie

New home building is absolutely vital in keeping the economy on the path towards recovery. How is the housing industry so closely tied to the economy? Is the economy moving in the right direction? If so, what threats can get in the way of recovery and cause an even worse recession?

Reports from the end of 2012 show sustained, high levels of builder optimism. Statistics from the National Association of Home Builders show that builder confidence has been on the rise for the last eight months and that it is higher now then it has been since 2006.

This optimism is excellent news for our country and for overseas investors who want a secure place to invest that will yield reasonable returns. While this optimism may be a great indicator of what could be, actual production is necessary in order to put money into the economy.

So where does the housing market currently stand?? At the end of 2012, the NAHB shows that the housing industry throughout the US had increased by 25%, as indicated by permits, sales and housing starts. The head economist for Freddie Mac estimates that the housing market may even improve by as much as 19% in 2013.

Lennar, the biggest home builder, cited a 42% revenue growth in the last quarter of 2012, which exceeded predictions by analysts. Toll Brothers, a luxury home builder, also made an optimistic move by acquiring two developments in Manhattan. Lastly, another home builder that is managed by Sherwood Capital announced their intention to issue an IPO of 200 million dollars, which may be one of many more to follow, says the Wall Street Journal.

Despite these good signs, the industry faced a great deal of uncertainty amidst the political turmoil surrounding the fiscal cliff debate. While it is well accepted that the new home industry deserves much of the credit for the economic recovery that has occurred, it will be a serious threat to the economy if builders are impeded in any way.

There will be continued debate as politicians make more decisions about tax cuts and budgets, but it is vital that law-makers understand just how connected the housing industry is to economic health.

The important tax breaks for the housing industry have been extended for a while longer, but lawmakers need to encourage investors and homeowners.? If they don?t then we risk losing all of the economic recovery and possibly even triggering another devastating global financial crisis.

This infographic shows just how important housing construction is to economic growth and the well being of our citizens.

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Construction of new homes adds jobs and increases tax revenue. So if lawmakers are serious about reducing unemployment rates and increasing tax revenue, then they have to make decisions that will boost, and not impede, the housing industry.

The National Association of Home Builders reports that ?building 100 average single family homes generates more than 300 jobs and nearly $9 million in tax revenue for state, local and federal governments that support schools and communities.?

Generally housing accounts for about 17% of the country?s GDP. So it is no surprise that the economy has struggled so much over the past 7 years, since there has not been much building at all. If the building industry could return to full force again, then it would have a powerful effect on economic growth.

When new houses are constructed, many industries get a boost, and revenue is generated for communities through local businesses and job creation.? Additionally, new homes increase the local tax revenue that can be dedicated to bettering communities.? Finally, new home construction raises property value, which will help to restore equity and thus bolster confidence and spending.? That right there is the key to full economic recovery.

Unfortunately, homeowners and investors have been deterred.? New homes bring in new residents, strengthen communities and invigorate cities.? Owning a home is also an important part of helping people move up.? Additionally, there is an important correlation between home ownership and reduced crime rates and improved academic performance.? These things are critical to a bright future.

The new housing industry is playing a key role in economic recovery, but it cannot carry the entire burden alone.? Home buyers and investors should not have to fight so hard when they are playing such a significant role in economic recovery.? Government, lenders and banks should be playing their part in the recovery rather than slowing things down.

Remember that when real estate markets are down, multi-family housing becomes more prevalent. ProtectHomeownership.com maintains that construction of the same quantity of multi-family units will result in only 33% of the job creation and revenue generation as single family homes would.

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New Homes Section is a leading resource of new home information. Search new homes, communities, home builders, and housing industry news by visiting New Homes Section online today @ www.NewHomesSection.com.

Source: http://www.buildingmoxie.com/2013/01/housing-industry-is-important-to-the-economy/

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