I have heard so many people say "who cares about the real estate market"? I felt I needed to give the other side a viewing. We all need a vibrant market for many reasons. Let me list some: employment in many industries; wealth building for all of the classes; return to normalcy in the credit markets; increase in the Gross Domestic Product and additional revenue for the Government. The last one is a big one for those of you who aren't fans of paying additional income tax and realize that a large deficit in the budget doesn't really help either.
The most mentioned reason for a vibrant real estate market is employment. Real estate employs in some manner construction workers, maintenance workers, architects, landscapers and gardeners, painters, plumbers, security companies, electricians, roofers, real estate agents, title company employees, escrow officers, mortgage employees, bankers, government workers including building inspectors, plan checkers, recorders and we should also mention attorneys and accountants. I could go on but I think you get the point. Others who benefit from real estate are furniture manufacturers, glass companies, tile manufacturers and retailers, steel fabricators etc. How about the utility companies that employ the water, gas and electrical service people? Directly and indirectly real estate employs a very significant amount of the working people in this country.
The wealth in this country for the average person is generally tied to the equity he or she has in their real estate. This could be a condominium, a single family residence, rental units or the ownership of commercial property. We have seen the phrase "millionaire" become common place with those who own houses and I would stake the claim that the majority of wealth in this country is in real estate. My only caveat is that "billionaire" has replace the aforementioned title as one who is at the top of the heap. Most billionaire's have made their money in the stock market valuation of their companies so I am not sure that my previous claim is still true. Nevertheless for the middle class real estate is still the one!
Having the equity in their houses has helped the middle class carry the burden of this country because 70% of the spending comes from this group, who up to now has been able to reap the reward of home ownership and use the money from their house(s) to continue to buy the goods and services of our nation. A vibrant real estate market has kept us going, a falling market is reflected in the recession or recession like atmosphere which is currently gripping our Country.
I feel the biggest reason for a need to return to at least a calm, but not falling real estate market, is to right the ship of the financial companies in our land. If you have not been paying attention the losses being announced by this industry are staggering to say the least. A recovering real estate market could at least limit the future losses and eventually reverse the financial drain as real property seeks a better price level. Do we need a runaway market? Absolutely not! We need a return to normalcy with moderate growth in most areas with commensurate price improvement. Let the industry be quiet and uninteresting for a few years and the country can go on with its business. If we don't work for this it could turn out to be our undoing even though you personally may not be affected by the collapse. Something to think about.
The final points of increasing the Gross Domestic Product and gaining additional revenues for the treasury are paramount to the survival of our country as we know it. With a weak dollar comes a torrent of foreign buyers who have a huge discount on the real property in this country. They have much less to lose because of the discount they receive by having a stronger currency. Their buying is not just limited to our real estate but our companies as well. Many of the well known companies on Wall Street have majority ownership by citizens of foreign countries. When foreign ownership of our assets becomes more than prevalent our way of life is threatened. Again something to think about!
We need the employment, the buying an selling of real estate and the building aspects of the industry to create wealth that is taxed and keeps our government functioning. If you take the time to read the budget each year you find that a great deal of it is essential, obviously not all of it, and it needs to be paid for. The real estate industry has carried a big portion of this and needs to continue so we may enjoy our way of life.
Without a vibrant real estate industry where are you going to live? I leave you with your own conclusion and hope you find some of my points valuable to your beliefs.