The contemporary real estate industry is considered more a business or investment whereas it has a specific role to play in growing the infrastructure of a country eventually contributing to the growth of GDP and overall development of the nation. The residential real estate provides homes for millions of families around the world and is an authentic and reliable source of income and wealth for many families globally. Similarly, the commercial real estate including the apartments creates numerous jobs as well as infrastructures like offices, retails, education centres and hospitals etc. which provides earning for the public as well as jobs for the job seekers. Contact Baudinet.ca if you are interested to invest in real estate business.
The real estate construction contributed a substantial amount of 1.15 trillion USD to the country’s economic output which came about 6.2% of the total GDP of the US in 2018. The real estate has been contributing enormously and regularly every year to the world economy and in 2017 the contribution was 1.13 trillion USD in the US. But the maximum contribution of the real estate to the US GDP was in 2006 with 1.19 trillion USD which was about 8.9% of the US GDP.
The construction of residential, commercial, and industrial infrastructure is only considered as contributing factors and measured by GDP. On the other hand, real estate contributes numerously to the wellbeing of mankind. For instance, the reduction in sales in the real estate business results in a decline of prices of real estate which eventually reduces the value of homes irrespective of homeowners selling their homes or not. Ultimately, this reduces the incidents of home equity loans meant for the homeowners which they would cut from the consumer spending.
As much as 70% of the US economy is based on personal consumption. A reduction in consumer spending eventually creates a downward growth of the economyfurther leading to declining of income, employment etc. At this juncture, if the federal government does not come out and intervene by reducing the taxes it would certainly lead to recession. In fact, gradual declining in home prices was responsible for the financial crisis in 2008. The median price of single-family residential homes was down with 4% from the pick time in 2005. Many intellectuals compared the situation with the great depression of 1929 as well as with the 1980s decline in oil-producing areas.