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PeakTrader:

Housing's Contribution to Gross Domestic Product (GDP)
National Association of Home Builders

"Housing contributes to GDP in two basic ways: through private residential investment and consumption spending on housing services. Historically, residential investment has averaged roughly 5 percent of GDP while housing services have averaged between 12 and 13 percent, for a combined 17 to 18 percent of GDP. These shares tend to vary over the business cycle."

If the housing market expands 10% in a year, it'll add about 2% annual growth to GDP.

Unfortunately, with contractionary fiscal policy and expansion of overregulation, it won't be enough to generate a self-sustaining cycle of consumption-employment to get us out of this deep depression, although a recession, in this depression, would be mild.

The destruction of productive capacity, which likely has been over 90% cyclical and less than 10% structural over the past few years, will continue.

So, $1 trillion of real output will continue to be lost each year, unnecessarily.

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The National Association of Home Builders doesn’t give enough information. I suspect, since the housing market is smaller, a 10% expansion in that market boosts GDP growth closer to 1%.

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PeakTrader:

Although, generally, a four-year degree is overvalued, a more educated workforce increases productivity, quality of work, and competition.

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PeakTrader:

WIthout excessive, expensive, and inefficient government regulations in health care, housing, education, energy, small businesses, etc., U.S. living standards would be much higher.

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PeakTrader:

In 1950, Americans spent 21% of income on housing. In the 2000s, Americans spent 33% of income on housing (Source: 100 Years of Consumer Spending – BLS).

The goal is to improve living standards, which require both income and consumption.

1900 To 2010: Evolution Of The American Home Today: Fun Housing Facts.
June 18, 2000

“In 1900, for instance, a typical American new home contained 700 to 1,200 square feet of living space, including two or three bedrooms and one or (just about as likely) no bathrooms.

At the turn of the 20th Century, more than 20 percent of the U.S. population lived in crowded units, with entire families often sharing one or two rooms. Most homes were small, rural farmhouses and lacked many basic amenities, complete plumbing and central heating chief among them.

By 1950, the typical new home had not grown at all, averaging about 1,000 square feet. It still had just two bedrooms and one bath…50 years ago, more than 35 percent of American homes still lacked complete plumbing facilities (hot and cold piped water, a bathtub or shower and a flush toilet).

By 2000, a typical new home had 2,000 or more square feet, three or more bedrooms and at least 2 1/2 baths. We added the garage as standard, and expanded it to make room for at least 2 1/2 cars. Fireplaces and central air conditioning were built into almost every new house.

While only 46.5 percent of the U.S. population owned its own house in 1900 and 53 percent in 1950, it is estimated that at the end of this year more than 67 percent of American households will own.

Median family incomes in 1900 were $490 per year and in 1950 had grown only to $3,319. Today, a typical American family has a household income in excess of $45,000…new homes have risen from $11,000 in 1950 to more than $195,000 today.”

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I know someone who bought a house in Peabody Kansas a few years ago for $30,000. The area is likely similar to most of America in 1950, i.e. downtown less than a mile away with one general store, a gas station, post office, three traffic lights, and two police officers. The next closest town with more than a few buildings is over 20 miles away (cell phones don’t work in Peabody).

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