How does the Real Estate Market Affect the Economy

When looking at real estate, one will notice that it truly affects the economy in a host of ways. Yes, whether one lives in California, New York, Florida or anywhere else, they are going to watch the economy go up and down, largely based on the housing market. In fact, if one doesn’t know this, they are going to make mistakes in their investing. With this in mind, here are four ways the real estate market affects the economy.

real estate market affects the economy

Jobs: Think about it for a minute, when working in real estate, most people make some serious cash. Construction workers, real estate agents, loan officers and many other people rely on the real estate market. When it’s booming, people will find work with tease. Not only that, when working in a booming market, people can command higher prices, which helps the entire economy as higher wages leads to more spending. To remember this fact, one must look to Florida. When the economy of Florida was doing poorly, it was largely caused by crashing house prices as many workers were out of a job once the market tanked.

Consumer sentiment: Now, without money in the bank or saved up, a lot of people don’t want to go out and spend any of their income. This is the sad reality that everyone faces in a bad economy. However, when the housing prices are skyrocketing, people don’t feel bad spending a little cash. In fact, the truth is, the last housing boom was largely caused by people then spending money in other areas. For example, when one could use their house as an ATM, they would take money out and spend it locally and nationally. Then, when doing so, people would put money into the economy and people were doing better.

Mobility: Without mobility, people have a hard time moving up in their life. Think about the average person who is upside down on their mortgage. It’s not easy to move for a new job if a person owes more than the house is worth. On the other hand, a person who owns an expensive house can take off for better, higher paying job opportunities. Think about a person who works at a large tech company who can, at a moment’s notice, unload the house and take off for the Bay Area or New York. This is a powerful advantage, and it’s helped people make more money and pay more in taxes.

Taxes for the state and federal government: Finally, while people hate to pay taxes, it’s a fact of life we all have to face. To get around this, some use tricky methods. However, in the long run, it’s not easy to avoid taxes, and most people suck it up and write the check. Luckily, when the real estate market is booming and people are upgrading and selling their old places, the government gets a lot of cash, which helps in the long run. In states like California, Florida and New York, one can look at the budget and see that a lot of cash comes in from real estate transactions. In the end, this helps schools and plenty of other government agencies.

When looking to the real estate market, one can see that it causes a ripple effect for the rest of the economy.

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