October 15

by Florida Real Estate Camp

Real Estate within US

Real Estate and the Nation

Real estate and the housing market play an important role in the U.S. economy. At the individual level, roughly 65% of households are owner occupied, homes are often a substantial source of household wealth in the United States, and housing construction provides widespread employment. At the aggregate level, the housing market accounts for a significant portion of all economic activity, and changes in the housing market can have broader effects on the economy. (Source) 

In 2018, real estate construction contributed $1.15 trillion to the nation's economic output. That's 6.2% of U.S. gross domestic product. It's more than the $1.13 trillion in 2017 but still less than the 2006 peak of $1.19 trillion. At that time, real estate construction was a hefty 8.9% component of GDP. (Source)

Construction is the only part of real estate that's measured by GDP. But real estate affects many other areas of economic well-being that aren't measured. 

According to the National Association of Home Builder's, their industry accounted for 13.6% of U.S. GDP in the first quarter of 2009, which is down from 2005's numbers of 16.7% of US GDP (As cited by Kruger, 2009)  

 Industries and Real Estate

The Commercial Real Estate industry consists of companies that construct or develop commercial, industrial and multifamily residential property or provide commercial real estate services including renting, leasing, managing, buying and selling real estate. Other related services, such as appraisals and consulting, are also included. Construction and activities related to utilities and energy, such as power plants or water treatment facilities, also depend on Real Estate Activities. 

For example, a decline in real estate sales eventually leads to a decline in real estate prices. That lowers the value of all homes, whether owners are actively selling or not. It reduces the number of home equity loans available to owners. This ultimately reduces consumer spending.

Professional Services

Brokers open a business and provide a place for Sales Associates & Broker Associates to operate.  Services of Real Estate Require Expert Knowledge.  Real Estate Professionals are relied upon for Expert Knowledge in these three areas:

  • Knowledge of Property Transfer - Property Transfer is the actual transaction involved in Real Estate.  We think of it as closing on a deal. However the knowledge of Property Transfer is very detailed and involves Title transfer, property taxes, financing, and local zoning considerations.  It is your job a as Real Estate Professional to know and understand Fine details associated with  such.  
  • Knowledge of Market Conditions - Market conditions relate to knowing prices and how it relates to the climate of buyers and sellers.  This can include knowing legislature updates that may affect the market.  Buyers will rely on Real Estate Pros to advise them on making offers and listings.  Purchase offers and Property Listings are heavily related to Market Conditions.  Most of us have heard of a buyers market or a sellers market.  These phrases attempt to make a prediction on the current status of Real Estate Market Conditions.  However, as an Expert (One who holds a License) you will be relied upon to educate, inform and help your clients key decisions. 
  • Knowledge of Marketing Real Estate including marketing the Real Estate Business. You may need to make phone calls, send emails, or go talk directly to someone.  Marketing Real Estate is a huge component of your new role.  Attracting Buyers and Sellers is an ongoing task.  

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Unit 1 The Real Estate Business (1)

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