“A housing revival is key to any optimism about the broader economy and jobs,” Mark Zandi, chief economist at Moody’s Analytics, writes for The Washington Post.
Zandi notes that in every recovery since World War II a strengthening housing market has powered economic growth.
“Now that housing is finally getting its bearings, it will turn from an economic headwind into a tailwind and become a significant source of jobs,” Zandi notes. “There will be more construction jobs, construction-related manufacturing jobs, transportation and distribution jobs, retailing jobs, financial services jobs and a range of service jobs from cable hookups to landscaping. A better housing market is the principal missing link to a better job market.”
Zandi notes the “housing renaissance” already taking shape: Housing is at record highs for affordability, due to falling home prices the last few years and record low mortgage rates. Plus, rents are rising, leading more renters to realize that home ownership might make more financial sense than continuing to rent. Also, a growth in household formation is a promising sign the housing market will continue to grow.
“A housing renaissance has begun,” Zandi says. “Driving this optimism is one certainty: Owning a home has never been as attractive.”
Source: “Housing’s Renaissance Could Lead to an Economic Recovery,” The Washington Post (Jan. 4, 2012)