What Is the Strongest Tailwind to Today’s Recovering Economy?

<article class="post-2060 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-2060"><span class="entry-date">March 17, 2021</span><div class="entry-header center-block text-center"><h1 class="entry-title">What Is the Strongest Tailwind to Today’s Recovering Economy?</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=What+Is+the+Strongest+Tailwind+to+Today%E2%80%99s+Recovering+Economy%3F&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-is-the-strongest-tailwind-to-todays-recovering-economy%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="What Is the Strongest Tailwind to Today’s Recovering Economy? | Simplifying The Market" class="webfeedsFeaturedVisual wp-post-image" decoding="async" link_thumbnail="" loading="lazy" sizes="auto, (max-width: 549px) 100vw, 549px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105354/20210317-KCM-Share-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105354/20210317-KCM-Share-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105354/20210317-KCM-Share.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>Last year started off with a bang. Unemployment was under <a href="https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm">4%</a>, forecasters were giddy with their projections for the economy, and the residential housing market had the strongest January and February activity in over a decade.<span id="more-44031"></span></p>
<p>Then came the announcement on March 11, 2020, from the World Health Organization declaring COVID-19 a worldwide <a href="https://www.ajmc.com/view/a-timeline-of-covid19-developments-in-2020">pandemic</a>. Two days later, the White House declared it a national emergency. Businesses and schools were forced to close, shelter-in-place mandates were enacted, and the economy came to a screeching halt. As a result, unemployment in this country skyrocketed to <a href="https://www.bls.gov/opub/ted/2020/unemployment-rate-rises-to-record-high-14-point-7-percent-in-april-2020.htm?view_full">14.9%</a>.</p>
<p>A year later, the economy is recovering, and the U.S. has regained more than half of the <a href="https://www.bls.gov/opub/ted/2021/number-of-involuntary-part-time-workers-in-february-2021-down-from-record-highs.htm">jobs</a> that were originally lost. However, some businesses are still closed, and many schools are still struggling to reopen. Despite the past and current challenges, there is one industry that’s proven to be a tailwind helping to counter all of these headwinds to our economy. <strong>That industry is housing.</strong> Remarkably, the residential real estate market (including existing homes and new construction) has flourished over the last twelve months. <a href="https://www.cnbc.com/2021/01/22/existing-home-sales-in-2020-were-highest-since-in-over-a-decade.html">Sales</a> are up, <a href="https://www.simplifyingthemarket.com/2021/03/02/home-prices-what-happened-in-2020-what-will-happen-this-year/?a=712984-fa409495d5d70154d03a25e81e9540e2">prices</a> are appreciating, and more new homes are being <a href="https://www.census.gov/construction/nrs/pdf/newressales.pdf">built</a>. The housing market has been a pillar of strength in an otherwise slowly recovering economy.</p>
<h4><strong>How does the real estate market help the economy?</strong></h4>
<p>At the beginning of the pandemic, the <em>National Association of Realtors</em> (NAR) released a <a href="https://www.nar.realtor/blogs/economists-outlook/every-home-sale-adds-more-than-88000-to-the-economy-how-do-home-sales-affect-the-economy-in-your">report</a> that explained:</p>
<blockquote>
<p><em>“Real estate has been, and remains, the foundation of wealth building for the middle class and a critical link in the flow of goods, services, and income for millions of Americans. Accounting for nearly 18% of the GDP, real estate is clearly a major driver of the U.S. economy.”</em></p>
</blockquote>
<p>The report calculated the total economic impact of real estate-related industries on the economy as well as the expenditures that resulted from a single home sale. At a national level, their research revealed that <strong>a single newly constructed home had an economic impact of $88,416.</strong></p>
<p>Here’s how it breaks down:<a href="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105352/20210317-MEM-Eng-1.jpg"><img alt="What Is the Strongest Tailwind to Today’s Recovering Economy? | Simplifying The Market" class="aligncenter wp-image-44033" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105352/20210317-MEM-Eng-1.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105352/20210317-MEM-Eng-1.jpg 1000w, https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105352/20210317-MEM-Eng-1-400×300.jpg 400w" width="650"/></a>The map below shows the impact by <a href="https://www.nar.realtor/reports/state-by-state-economic-impact-of-real-estate-activity">state</a>:<a href="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105350/20210317-MEM-Eng-2.png"><img alt="What Is the Strongest Tailwind to Today’s Recovering Economy? | Simplifying The Market" class="aligncenter wp-image-44032" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105350/20210317-MEM-Eng-2.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105350/20210317-MEM-Eng-2.png 1000w, https://files.simplifyingthemarket.com/wp-content/uploads/2021/03/16105350/20210317-MEM-Eng-2-400×300.png 400w" width="650"/></a>The impact of an existing home sale is approximately $40,000.</p>
<p>Real estate has done more for our economic wellbeing than virtually any other industry over the last year. It’s been a beacon of light during a very challenging time in our nation’s history.</p>
<h3><strong>Bottom Line</strong></h3>
<p>Whether you’re buying a newly constructed home or one that already exists, you’re making a positive economic impact in your local community – and it’s a step toward your homeownership goals as well.</p>
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