The Effects Of Housing On The Economy From Job Creation To Consumer Confidence Indexes
Most analysts have high hopes of a housing rebound and many are highlighting its effects on economic
improvement. The lengthy recession has left families in financial ruin and, for the first time in many
years, people are feeling hopeful. The effects of housing on the economy are positive and drastic. The
specific ways this happens are varied and not all impacts are easy to categorize in numbers.
Investment analysts and those in the property industry have released some positive numbers. Most
importantly, Standard and Poor's calculations reveal an 11% increase in buying of property in certain
states of the US. Other statistics by alternative analysts include foreclosures in their calculations but
Standard and Poor measure these separately. This makes their figures a more reliable measure.
Few are in doubt about the improvements being seen but there is no certainty of whether they will last.
People have slowly been buying more property since late in 2011 but it's only in August 2012 that
improvements were drastic enough. There simply isn't a way of predicting with certainty whether
consumers will feel confident enough to sustain a full rebound.
The economy's response to residential property rebound is very much dependent on consumer
confidence. When people feel more positive about their finances, they cause others to feel the same.
When many are buying new homes, expectations increase, which dominoes into a large improvement of
Financial confidence results in more spending, which increases job creation and leads to increased
business profit margins. This confidence is carefully analyzed by investment specialists and measured
statistically. The confidence index is currently as high as it was in 2006. Between then and now, it has
been in a state of crisis. The confidence index is expected to cause more property building, which will
sustain inventories to prevent the market from swinging too quickly back to a seller's dream.
When property building becomes a trend, jobs are generated, which increases spending. The number of
sectors employed to build a home are huge and include architecture, law, banking and consultancy.
Building also generates taxes. Hopefully, these taxes will be placed back into the economy to improve
People who own rather than rent property feel more responsible and proud. They purchase more
services and products to improve their houses. This money goes to businesses to improve employment
and tax payments. The effects of housing on the economy are occasionally dramatic enough to bring a
country out of a recession. The question of whether the current indication of a rebound will sustain
itself significantly enough to achieve this is yet to be seen.
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