The housing market could be a confusing market especially for starters. There are so many things and factors to consider which would eventually affect your business or transaction in the process. And perhaps one of the most basic aspects of the said market that one should understand is the basic relationship of housing market to economy and the other way around.
It is of course known to most of investors and simple real estate people that when the economy is in crisis, slump is being noticed in the housing market. But when the economy is thriving well, the housing market would definitely be energetic as prices would begin to rise. However, one should not also neglect that it is not just the economy which influences the housing market, for the housing market may also have some significant impact on the economy.
To begin with, it would be better if one could simply have a glimpse on how the economy affects the housing market. According to propertycluster, "The housing market begins with housing starts, which refers to the number of new residential projects in a specific month. When the economy is flourishing, people are more conducive to buying new homes. On the other hand, when the economy is not faring well, the likelihood of people buying new homes diminishes." In its simplest form of understanding, any rise or fall in the economy would simply mean a sale or no sale in the context of housing market, thus affecting mortgages, sale of land, raw materials, and employment in particular.
On the flip side of it, the housing market may also have some effects on the economy. But such effect as described by propertycluster is 'deeper and longer lasting'. Trend in home sales in particular affects different bodies in the local economy, and this effect reaches people such as lenders, developers, construction workers, realtors and builders.
Allied workers such as manufacturers and sellers of furniture and appliances, home improvement stores, landscapers, plumbers, electricians and lawn service technicians are also affected with the rise and fall of the housing market. Thus, if there are no sales in the housing market, livelihood of all agents involved in the supply and manufacturing aspect of the local economy will also suffer, not to mention services provided by the local government likewise dependent with taxes such as property taxes.
With the concept of housing market and economy presented clearer, one could simply grasped the intricate connection and importance of both parties to each other. When one is well the other would likewise be doing well. It is important to note that there is no coincidence when it comes to the relationship of housing market and the economy.
