About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (October 2, 2019)

handle is hein.crs/govbbgk0001 and id is 1 raw text is: Congressional Research Service ~Info rming the legaslative debate since 1914 S October 2, 2019 Introduction to U.S. Economy: Housing Market The Housing Market Real estate and the housing market play an important role in the U.S. economy. At the individual level, roughly 65% of households are owner occupied, homes are often a substantial source of household wealth in the United States, and housing construction provides widespread employment. At the aggregate level, the housing market accounts for a significant portion of all economic activity, and changes in the housing market can have broader effects on the economy. Household Net Worth Purchasing a home is often one of the largest investments individuals make. Home ownership accounts for a significant portion of households' net worth in the United States. As of 2018, owner-occupied real estate accounted for about a quarter of households' net worth, according to Federal Reserve data. As shown in Figure 1, the share of households' net worth arising from their home has been relatively stable over the past several years, after declining significantly following the 2007-2009 recession. Figure I. Home Value as a Percentage of Net Worth 40% 35% 30% 25% 20% 15 0% 1987 1993 1999 2005 2011 2017 Source: Federal Reserve, Financial Accounts of the United States, Table B. 10 I.H Balance Sheet of Households. Notes: Total net worth of households measures assets less liabilities. Home value is measured as the market value of owner-occupied real estate, including vacant land and mobile homes. Employment Residential construction is a significant industry in the United States, and it employs a large number of people. At the peak of the housing market bubble, residential construction employed more than 1 million individuals. However, as a result of the housing bubble bursting and subsequent recession, employment fell to a low of about 560,000 employees in 2011. Since then, employment has picked up in this industry to about 832,000 in 2019, according Bureau of Labor Statistics data. Housing and the Broader Economy The housing market is incorporated into gross domestic product (GDP), the prominent measure of economic activity, in two ways. First, GDP includes all spending on the construction of new single- and multi-family structures, residential remodeling, and brokers' fees, which is referred to as residential fixed investment. As of 2018, spending on residential fixed investment was about $785 billion, accounting for about 3.3% of GDP. Second, GDP includes all spending on housing services, which includes renters' rents and utilities and homeowners' imputed rent and utility payments. As of 2018, spending on housing services was about $2.6 trillion, accounting for 11.6% of GDP. Taken together, spending within the housing market accounted for nearly 15% of GDP in 2018. Figure 2. Total Spending in Housing Market As a percentage of GDP 20% 6% a u Rsisdentia I nvestment 4% 2% 0% 1 94 957 196 1977 1987 1997 2007 201 Source: Bureau of Economic Analysis, National Income and Product Accounts, Table 1. 1.5, and Table 2.3.5. As shown in Figure 2, housing's share of economic output was generally on the rise between 1947 and 2005. Between 2000 and 2005, residential investment grew rapidly before declining even more rapidly as the housing bubble burst. Residential investment remained well below its peak, both in real terms and as a percentage of GDP. Spending on housing services continued to rise as a percentage of GDP through this period, however. Housing's Indirect Impact on the Economy The housing market plays an important role in the broader economy as well, as evinced by the housing bubble causing the deepest and longest recession since the Great Depression. Housing prices can impact residential investment and therefore affect economic growth. Rising home prices likely encourage additional construction spending to take advantage of higher prices, leading to more robust economic growth. A decline in housing prices ttps:i/crsreports cong ress.gov

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most