No matter what state of economy a country might have, Real Estate is sure to play it’s hand in one way or another. It is one of the greatest source of income and can be considered as a source of wealth. Almost Everyone wants to know how Real Estate affects the Economy. The money you make can be invested to double or even triple it. There are a lot of ways in which you can invest that money. Real Estate occupies a large amount of it. No wonder a large portion of a country’s economy depends on it.
Real Estate can be classified into a lot of types. For example, Commercial Real Estate. Commercial Real Estate has property buildings such as rental homes, offices, manufacturing buildings. They offer jobs and services to people who are in need for it. This way, it proves as a way for millions of people to take advantage of and make lots of money. But this is just the tip of the ice berg. There are a lot of other types of Real Estates as well.
By the year 2018, Real estate or rather more specifically housing construction alone amounted to up to 6.2% of the nations whole domestic product. This amounts to a rough estimate of about 1.12 trillion dollars.
How Real Estate Has A Hand in The US Economy
GDP, Gross Domestic Product, takes only the construction of a Real Estate Property into consideration. This includes the buildings or houses or any other things you want to build in your Real Estate or the plot of land where you have invested your money in. There are scenarios in which Real Estate directly affects the Economy of a country. For example, if Real Estate prices go down, then the Real Estate prices also go down. This may cause an influx in the amount of sales.
This will be the perfect moment for a large amount of investors to make use of. Personal Consumption makes about 70% of the Real Estate economy. This means if less people tend to invest in Real Estate, then there will be less value in Real Estate properties. This will in turn lead to a fall in the economy. Further leading to a Economic Downturn. An Economic downturn will most definitely affect the unprepared. This Economic Downturn, will lead to a influx of investors resulting in a housing bubble.
How The Economy Of A Country drives Real Estate
One way or the other Real Estate and the Economy of the country are inter linked to one another. This can be in the form of the amount of land available or the people who are occupying the land. There are a lot of ways or tools used to measure the economic or Product value. They are the GDP, employment data, manufacturing data and the price of the goods.
For example, consider a scenario of an economic downturn. There are a lot of ways you can both benefit or face a loss in this situation. A REIT in a hotel building will be more affected than a REIT in a office building due to an economic downturn. Even leases can be avoided cleverly if done right. For example hotel rooms can be easily avoided by customers should there be a downturn. But the same thing cannot be said for office tenants. Their lease is usually a longer term than a Hotel room Rental.
The bottom line is that you can be more aware of your economy. You can analyze the recent trends and make your decision. Most investors take their time and make their move at the right time to make themselves a profit.
Will Real Estate Go Away?
A majority of people believe Real Estate will completely wither away in the next few years. But this is most definitely not the case. Supply and Demand are the two things available from the beginning of time itself. The Earth is a huge planet. But the population in it is also huge. As long as people need a place for their needs, there will always be a demand in place. This will cause Real Estate to bloom again to it’s place.
How Real Estate Affects Your Economy
Believe it or not, you are missing out on a great deal of the economic gains. There are a lot of ways in which you can invest in Real Estate. At the same time, making money has never been easier than it is in our generation. Whenever you buy a land for yourself, you are investing in yourself. Only you can decide whatever you want to do with that particular plot of land. You can resell it or flip it, rent it, expand it. No matter what, you will always be on the benefiting end.
You can remain on the benefiting end if you have done your research well. Usually a place which is growing and is starting to enrich itself is a place for a great investment. Panama is one such place. Feel Free to contact me or leave a comment down below if your not yet confident on how Real Estate affects the economy and I would be more than happy to help you out.
Frequently Asked Questions
Real Estate plays a very important role in the US Economy. There are 3 widely mentioned types of Real Estate. Real Estate on the rise, usually allows for a consumer to spend his/her money and causes an increase in the economy. While, a drop in the housing prices causes an adverse effect. This causes a drop in consumer effort leading to a drop in the economy.
Demand and Supply are two things that will be available on this planet earth as long as people live in it. Demand is directly proportional to the population of a particular country. If the population of a country is on the rise, then the amount of land would be less. This leads to the price of housing to go off the roof. Such is the potential in Real Estate.
Once a decent sum of money is invested in Real Estate, people will have more amount of money on the loose. Or you can consider them as disposable money. They spend this on housing which have low interest rates. This in turn leads to a housing bubble. Meaning, there are a lot of home owners or people who are unfit for investing are on the loose.
There are a lot of things affecting property value. They range from the location to the demand and supply which we saw earlier. But the first thing that affects property value right off the bat is the location of the property. The more popular the place is, the more value the property holds.
There are a lot of reasons why it is important. The fact that it contributes so much to a country’s economy itself is a great point. There is always a demand for land. This may be the need for an office or a house or anything. Real Estate is proving to be a source of income for millions of people all over the world.
Business in Real Estate can be described as one of the foremost source of income for a large number of people. It formed about 6.2% of the total gross domestic product for the US economic output. This alone proves the amount of contribution Real Estate is giving to the economy.