It's a time of hot issues that hit so close to home in the housing community.
Immigration. Income inequality. A clear, steady employment path. An aging population.
These four issues polarize people, not because they have to but because they do. Underlying each of these issues is a cost--money, time, talent, and new ideas--in precious resources to address their respective challenges. Each is a political maelstrom in itself. Sides form. Fear of loss and fear of never having intensify. Anger boils up. Paralysis sets in.
Or, rather, people refuse to polarize. They bridge chasms. They reach a common goal. They create a way forward where there was none.
In a bifurcated and bruising societal and economic context, housing becomes either a theater for society's toughest polarizing issues to play out, or it serves as an arena for people to cobble answers--a home at a time, a neighborhood at a time, a larger community at a time--to these sharply drawn riddles society struggles with, not just here but in Europe and the Middle East and the Far East and Africa and South America.
Housing is definitionally an economic and multiplier effect. At one time it's shelter, access to vital resources, and connection to livelihood and health and it's a breeder-reactor of work, of jobs, of profits, of productivity.
Yesterday's release of final first quarter 2016 gross domestic product estimates affirm housing's foundational role in the American economy, stretching as it does into both manufacturing productivity and consumer household spending, and accounting for $1 of every $6 GDP dollars.
Housing-related activities contribute to GDP in two basic ways.
The first is through residential fixed investment (RFI). RFI is effectively the measure of the home building, multifamily development, and remodeling contributions to GDP. It includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes and brokers’ fees.
For the first quarter, RFI was 3.4% of the economy, reaching a $568 billion seasonally adjusted annual rate (SAAR) in inflation-adjusted 2009 dollars. This is the highest quarterly rate for RFI in more than eight years. The first quarter growth for RFI added 0.5 points to the headline GDP growth rate (i.e. GDP would have only expanded 0.6% absent the RFI contribution), the largest contribution since 2012.
The second impact of housing on GDP is the measure of housing services, which includes gross rents (including utilities) paid by renters, and owners’ imputed rent (an estimate of how much it would cost to rent owner-occupied units) and utility payments. The inclusion of owners’ imputed rent is necessary from a national income accounting approach, because without this measure, increases in homeownership would result in declines for GDP. For the first quarter, housing services was 12.0% of the economy or $1.98 trillion (SAAR).
Taken together, housing’s share of GDP was 15.4% for the first quarter.
As important as one in six GDP dollars is, there's another way that housing--even in its frustratingly slight and anemic upward pitch--works, and it has to do with America's flashpoint issues mentioned above: economic inequality, immigration, a clear job path, and an aging society. Literally and symbolically, housing stands for mobility. It's a core promise living in the United States has held out to its people from the get-go.
Homes--for sale and for rent--are the connective tissue between hard work and and the American Dream. Homes are, at once, aspirations and practical, have-able goals in a society that succeeds in getting past the impasses around immigration, wage inequality, insecure employment, and an immense generation of older people no longer generating wages to support their household needs.
Housing is full of talented and skilled people--leaders, followers, idea generators, doers, pragmatists, visionaries, whizzes, committed souls, crusaders, explorers, and managers--who've chosen livelihoods that center on making that connective tissue strong, pliable, adaptive, and resilient.
Life Is Good founders Bert and John Jacobs have a two-word term that fits the people who make a living as builders, as developers, as people who are part of the 15.4% of our GDP that serves as the connective tissue between hard work and the American Dream. The term they focus on is "get to."
Think about it. Do you have to do that unpleasant task today? Do you have to meet a deadline so that the next crew can come in and work on their part of a new home? Do you have to go to that planning board meeting tonight to try to get cooperation from the town on a new community that they'll one-day thank you for? Do you have to make sure the per-hour air exchange inside the home is what it needs to be so that the residents can live a healthy life?
Have to this. Have to that. The Jacobs brothers remind us that, for a lot of us, "have to" is actually "get to." We get to do these things, difficult, challenging, humbling, frustrating, repeated, below-our-pay grade, etc.
We get to participate--at each of our levels on the ground--in working on some of America's most daunting challenges. Immigration. Economic inequality. Employment risk. An aging society. All of these hot issues are smack dab in the sweet spot of housing.
Life is good.