GDP Depends on Real Estate Growth

James M. Weichert, president and founder of Weichert, Realtors®, one of the nation’s largest privately held real estate companies, reiterated his recent call for a federal tax credit or other incentive for home buyers. Such action, he said, would speed economic recovery and help avert a recession.

“Every home sale triggers a demand for goods and services that ripples through virtually every segment of the economy,” Weichert said. “It is my fervent hope that as our lawmakers in Washington focus on economic issues, they will act to directly encourage home buying through a tax incentive. As the single largest segment of the U.S. gross domestic product – accounting for 33 percent of all U.S. economic growth in the past several years – housing historically has been the powerful engine that drives economic prosperity. Given swift and appropriate legislative action, the housing industry can lead the way to both short- and long-term recovery.”

The economic repercussions of a home sale begin almost immediately, Weichert said. In the interval from contract signing to closing, home buyers call upon a wide range of service suppliers that typically include home inspectors, termite/pest inspectors, mortgage lenders, appraisers, title companies, insurance companies, and lawyers. When home inspections turn up problems, a handyman is employed to do fix-ups. On moving day, both parties in the transaction will need truck rentals or moving services. Even the state in which the home sale takes place benefits, as the state government receives income from the real estate transfer tax. click