The Real Estate hails as one of the largest industries in the United States economy. The significance in its contribution lies in the provision of jobs for the millions of American citizens and the same time serving to generate billions of dollars in the economy yearly. Furthermore, real estate is a crucial wealth builder for the American citizens. Notably, owning homes is an integral aspect of the American dream. Different methods exist on checking the impact of the real estate on the American society and economy as discussed below. While most analyses base their analytic programs on the economic output, social and political institutions of the society are also affected by the industry.
Impact on the Economy of the Nation
Gross Domestic Product (GDP) measures the goods and services produced in a given economy at a specific period. The housing sector directly and significantly contributes to the production activity overly. Resident fixed investment and housing services are the two items that are directly linked to the real estate sector. Scholars define residential fixed investment to consist of value-put-place of the housing units that are new or have newly been put in place. Additionally, they include mobile homes productions, brokerage gaining commission from the sale of homes and properties, and expenditure that is related to not only improving but also on the addition of new units to the existing ones (Botzem & Dobusch, 2017) . Lastly, they also include the net purchase of structures from relevant government agencies.
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Housing service, on the other hand, is relevant and confined to the personal purchase and expenditure by the United States residents. Usually, the service comes in the form of rent to the tenants while for the homeowners, it reaches an equivalent of the lease. Core and worth noting is the fact that the approach uses daily consumption to measure the homeownership flow of resources and services. Through the model, it becomes possible for one to assert the value denoted to particular ownership by analyzing the amount held by a specific investment in the long run. The equivalence of rental services is the charges the homeowners would have made had they opted to lease their product to other people instead of having the place to themselves. Considering implicit rent is not susceptible to market rent as in the case of a renter paying their landlord, the estimation holds that the rental ownership is a mirror of the homeownership in the nation (Büdenbender & Golubchikov, 2017) . Over the years, the GDP contribution from the real estate is noted to have an upward movement, which is positive and essential to promoting the wellbeing of the economy.
By constructing homes, a direct contribution is made to the nation’s GDP depending on the value allocated to the constructed building. Regardless of the increase, the sales price hinged on existing homes is not included in the nation’s domestic output calculation, and furthermore, it does not represent any new entry in the system. However, purchasing a home brings a different scenario where it is mandatory for it to be present in the GDP calculation. The inclusion is an inspection of the home, fees allocated to the attorney, origination fee of the loan and all other related payments. Additionally, the transfer payment of all involved parties has to be presented with the GDP calculation and failure to account for everything results in tax fraud. The process of selling homes naturally is more involving and costly regardless of whether the sale is made by the individual or via a company agent (Rogers, 2018) . Although the housing move expenditure does not appear in the housing sector, they must also be presented and analyzed.
Through the examination of the expenditure survey, which is a system containing detailed information on the expenditure by the household, it becomes a reality for the government and related organizations to set up a pattern of consumer spending especially for homeowners. Through a comparison of the home spending by recent buyers against the rest, homeowners move cost can also be estimated. On the other hand, an analysis of the home sales number, and the analysis of the preemptive moves can be estimated coupled with the post-move and cost of moving attained by each homeowner.
In the end, economic activities have a Keynesian multiplier effect on the economy. Purchasing a home often results in spending on other aspects of the economy including landscaping and appliances. Indeed, the income earned by other sectors related to home ownership often ends up being recirculated in the economy for it to spend, which also ends up generating additional income and purchases to the economy. The multiplier degree is also dependent on the monetary policy with specificity on the crowding out and accommodation effects (Barkham, Bokhari & Saiz, 2018) . Estimation by existing research findings asserts the probability of a continuous increase in the GDP on a yearly basis depending on how many properties are sold or transacted.
Expenditure by the consumers has time to time caught the attention of analysts, policymakers, and the general public. According to research findings, stock markets have a direct effect on both consumer spending and the real economy. The wealth of the paper, as well as its destruction, can have a negative or positive effect on the market. Although the wealth effect allocated to home equity is not extensively research in the field, the findings by the Federal Reserve Commission show that home equity comprises the largest total household component assets (Cerutti, Dagher, & Dell'Ariccia, 2017) .
The estimation by NAR is that the build-up in home equity arising from the appreciation of prices exceeds $700. Gains from the survey assert a tax-free due to the preferential home purchase and sale treatment as per the tax code. The home appreciation price set to impact the home is estimated to be greater than that gained from stock markets due to the egalitarian ownership of the homes when compared to stock pricing. Regardless of how one looks at the estimated figures, they are not insignificant amounts.
Alternatively, housing contribution to the economy can be achieved by household expenditure examination. According to the Bureau of Labor Statistics, their findings provide an overall expenditure by the consumer about the economic impact, such that, consumer spending is essential for economic development.
Although the out-of-pocket expense by consumers on a monthly basis is large, the full payment accorded to financial intermediaries including insurance companies are not in the inclusion of the GDP calculation. The net value gained from financial intermediaries are included in the calculations. The computation of this factors coupled with other factors includes compensation to employees, income earned on rentals, and profits gained by corporates. The GDP in effect receives only a small amount from the mortgage payments and insurance premiums as per the earlier discussions (Wang, & Xie, 2015; An, Fisher, & Geltner, 2016) . The rest is nothing more than redistribution of income occurring between the borrowing parties and their lenders amongst the policyholders in the insurance department.
The livelihood of many people is dependent upon the real estate industry. According to monthly employment listing reports, the industry’s payroll stands out from the rest. Additionally, by tracking the employee’s occupational codes allocated by the Standard Industry Code, both the Real Estate and Leasing Companies that comprise the most establishment engaged in both buying and selling practices are the leading employers.
Additionally, the housing sector direct contribution is also essential in the general direction taken by the nation’s economy. Historically, in the last recessions of the economy both in the 1980s and 1990s, the drop in the housing pricing sector was drastic. Conversely, while housing drops drastically, it also rises from the chaos of recession at the same pace making it the most improved when compared to industries. Factually, the housing industry is the leading change implementer in the economy regardless of whether the previous season was one of depression or recession. Generally, changes and disruptions that occur in the housing sector tend to have a negative impact on the economy, a fit that calls for all related parties including policymakers to be considerate before making decisions that could impact the economy ( An, Fisher, & Geltner, 2016) .
Economic slowdowns result in a reduction of the interest rates by the Federal Reserve System. Consequently, the interest fall is a buffer that shields the housing sector as well as becoming a stimulus for the industry to advance. Dropping mortgage rates also present the possibility of the monthly mortgage payments falling, which also means a lowered expense in purchasing the houses.
Furthermore, homeowners opt to refinance mortgages by using the falling interest rates, which leaves additional spending money that tends to counter the downturns in the economy. For example, the economic slowdown that characterized mid-2000 to 2001 shows the play out of the presented scenario. Housing and homeownership began declining in 2000 due to raised interest rates by the Federal Reserve Commission. However, due to the economy cooling drastically, cutting the prices was the best option for the Fed which begun in 2001. The rebounds and subsequent rises have given the Fed a chance to salvage and prosper the economy even in the face of much uncertainty.
Impact on the Community
Constructing new homes is a job provider for the affected communities, which also is advantageous due to the higher tax by both the state and the federal government. As per different surveys, construction of a single unit requires a combination of manual labor and white-collar jobs including engineering, planning, and designers. This estimate tends to increase on a yearly basis, and with family systems increasing, the population needs housing programs in place. As such, the real estate comes in as the solution bearer promoting and building different houses that endeavor and encourage both the economy as well as helping the involved parties make a living and provide for their families (Cloutier, Hosseini, & White, 2017; Manning et al., 2015; Chuangdumrongsomsuk, & Fuerst, 2017) .
Over seventy percent of all revenue in taxes raised by local governments is as a result of property taxes. On the other hand, over forty-three percent of the national rates is a result of home taxations. As such, the more homes are constructed, the more the tax base increases, which results in the expansion of the American economy. Furthermore, with home prices outpacing the inflation rate by huge margins, local taxation systems are predicted to continually outpace the system as well as promote improved economic conditions of the industry.
Aside from the revenue gained from the taxation process, intangible is among the benefits of homeownership. Homeowners do not have to move with the same frequency of renters; thus, they are stable in their neighborhood. Due to the home neighborhoods, they gain social and community involvement that helps prevent crime commitment as well as protect the social states of the homeowners. Furthermore, to the homeowners, having a stake in the neighborhood also promotes a sense of development and concern for the well-being of the community members. Due to the behavioral events and changes, society puts in place measures that recognize and promote development.
Impact on Individuals
Notably, home ownership has provided individuals with a means to accumulate wealth that will help them live modest lives in future while at the same benefitting the individuals by way of sheltering them. Figures from FRSCF on the tabulation of individuals’ household wealth indicates that home equity stood as the most significant component of the entire wealth. Primary residence equity accounted for 28 percent of the summation of the family asset. Moreover, the same study indicated that 12.8 percent of households owned some form of residential estate on top of the primary residence. Importantly, the value attached to the asset in additional residential property provided for another five percent of the entire household asset. Retirement accounts offered the most significant financial assets beyond the primary residence posting 19.8 percent of the total. Notably, the very individuals with an income of over $100,000 annually had the home equity portion of their wealth falling below 50 percent of the entire household wealth. A different survey indicated the dominant significance of home equity in establishing household net worth. The Program Participation periodically gathered the asset and wealth as a supplement on the core questions concerning labor force participation, demographic characteristics, income, and program participation. Broadly, in 1995, the median household worth stood at $40,000 while the median home equity representing homeownership for households was $50,000. Overall, home equity provided the largest share related to household net worth representing 44 percent of sum net worth. A large segment of the society identified private home ownership as the vehicle for one to accumulate wealth. Also, portfolio diversification plays a significant role in home investment. The US has experienced a steady rise in home prices in recent years registering low volatility compared to stock and bond prices. Past trends indicate that the standard deviation related to stocks and bonds stood at 20 percent and 9 percent respectively. The standard deviation for housing stood at about 4 percent. Also, the correlation between bond or stock prices and home equity was very low. Importantly, homeowners benefited immensely from the availability of easy home equity loans. Ideally, whether home equity loans existed as a credible source or security or a source of funds, it added significant value to home ownership (Botzem & Dobusch, 2017; Büdenbender & Golubchikov, 2017; Rogers, 2018) .
The Contribution of Housing to the Society
Researchers have reached a unanimous consensus that while all else stands equal, home ownership provides a positive impact on children living in a particular household. The children benefit in very many ways including increased educational attainment, increased lifetime yearly income, and reduced teenage pregnancy among others. Much as the benefits to the society cannot be readily established, researchers state that homeowners get involved more in community affairs than renters and governments. For instance, homeowners participate more in activities such as voting and non-professional organizations. Besides playing an active role in civic duties such as voting, homeowners spend most of their time in their homes, which adds familiarity and stability to their neighborhood. The homeowners also tend to spend more of the finances and time maintaining their residence. Homeowners also have a high chance of having direct ownership in other business ventures than renters. Homeowners have more capital at their disposal which makes it easy for them to invest and own other businesses apart from the apartments already in their possession. Renters, on the other hand, have little capital at their disposal, which makes it difficult for them to invest and own other businesses. The low income that they have goes towards meeting their immediate needs such as buying food, medication, and education. It is important to note that homeowners receive extra income from their other real estate investments, which makes it easy for them to access bank loans that they invest in other businesses. The fact that homeowners have the capital or sources of money at their disposal increases their chances of ownership even if they get into a partnership. However, renters always prioritize home ownership in their lives for they believe receiving rent as opposed to paying rent to provide the only sure path from their state. Renters always strive to own a house as a way of freeing their finances for other investment options (Chuangdumrongsomsuk, & Fuerst, 2017; Barkham, Bokhari & Saiz, 2018) .
Conclusion
Renters believe that real estate provides a sure of a way of investing their hard-earned cash. The fact is that real estate, unlike other forms of investment, appreciates with time which minimizes chances of losses. Real estate also provides longevity in that it is a lifelong investment and one can benefit from the same and then pass down the ownership to children who can also benefit from the same. Real estate also stands as the only investment that the owner can partake in its use. Most renters live in the houses once they complete the ownership procedures. Homeowners who rose from renters have a firm belief that the only sure way one can own real estate property is by living in the same property. The close monitoring ensures that they look out for any signs and damages and move with speed to fix the problem. However, the nation stands to gain the most considering the presence of a system that has the power to alter and promote a safe economy, which is in the form of real estate.
References
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