An interesting look at the historic impact of residential investment on GDP has been posted on Calculated Risk Blog. The post includes this graph with comments on the analysis. What the graph shows is the disturbingly serious decline in total residential investment during the current recession. And if when one projects through the end of the current year and into the future, it seems obvious that housing will not be the engine that lifts us out of this recession.
Graph courtesy of Calculated Risk Blog.
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John,
The graph is pretty clear on the weakness of the residential real estate right now. Either another sector helps out here or then the recession will last longer than anyone would like.
Esko - Residential is going to be weak for a long time. We'll have to find/create another stimulus for GDP.
Good Day John, interesting chart, with unemployment hight and still a low consumer confidence it will take a while until we are recovering. Un the plus side. I have seen a great demand on the rental market. Just had 2 of mine rented with the quickest turnaround I ever had in the last 5 years.
Barbara - Sounds as if you're adjusting to market conditions, a prerequisite for success in this market.
John - I knew real estate was very down, but I didn't realize that more money was being generated in home improvements than in actual single-family home sales. That's really astounding to me.
I also have a rental home that was recently vacated. I actually raised the rent on the home, and within the first week received 12 applications to rent. Investors would be smart to absorb some of these homes for rental income right now.
Lina - There are opportunities for those who can afford to hold a home.
John, I don't know what sector will lift us up & out. I follow lumber futures & NAHB Framing Lumber cost index. They are in the dumper. Grain futures are going thru the roof due to large crop losses in Russia & Canada. That may, may, trigger the start to inflation. The US manufactures very little these days, so, what sector do you think will bring us up & out??
Mike - I don't currently see any area that I think holds much promise. This is a "go to the moon" moment in time. We need our leaders to lead, to take the bold, difficult and politically damaging steps that will bring some stabilization; then we can look to future growth. We do have a crumbling infrastructure that is in desperate need of repair; and we could have made a serious commitment to green energy manufacturing, but we let the Chinese beat us to that. With the politicians in DC busy playing "politics," I'm not very optimistic about a turn-around in the near-term.