What is a better holiday convesation topic than real estate?
One expert, Scott Colbert, states the HOUSING MARKET ALONE would be enough to create a recession.
Scott Colbert is a chief economist with Commerce Bank, based in Kansas City, MO which has a commercial lending prescence in the Middle TN.
“The ‘amazing drop’ housing experienced was recession-worthy, even if all other sectors stayed the same”, Colbert said.
Which, of course, they didn’t.
Fixing the housing market is the subject of a report, in which an effort by U.S. Sen. Bob Corker, R-Tenn., proposes to create a private mortgage market. Such proposals are spurring vigorous debate in Washington and within the business community.
Let’s consider the weight of the housing industry.
“Typically, residential construction is about 4 percent of the country’s gross domestic product,” Colbert said. In addition, “housing intersects with the rest of the economy in such a way that it’s multiplier effect greatly expands the impact it has on the overall picture.”
“At the technical end of the recession, residential real estate was 2.6 percent of GDP. That made for about 600,000 single-family and multi-family structures, compared to about 2.1 million at the housing market’s 2006 peak,” Colbert said.
What did this drop coincide or influence: the 2008 financial crisis, the grinding halt of the auto industry and soaring unemployment.
“Fixing it,” Colbert says, “is not only a function of public policy but also of chewing through all the inventory out there. And, of course, it’s all just one piece of the puzzle.”
(originally posted December 19, 2011 8:31 PM | 92 views on trulia)