July 9, 2005

ENGINES:

Boom in Jobs, Not Just Houses, as Real Estate Drives Economy (DAVID LEONHARDT, 7/09/05, NY Times)

Danilo Molina has never flipped a house to make a quick profit from rising real estate values. He has not refinanced a mortgage. He does not even own a home.

Nonetheless, the decade-long housing boom has been very good to Mr. Molina, a slight 21-year-old with a shy smile. He has been working on construction crews since he arrived in this country from El Salvador six years ago, and today he supplies workers, including himself, to build new houses in this fast-growing county roughly 50 miles northwest of Washington.

"I saw my friends - they make money," he said on a sun-baked recent afternoon in front of a half-finished house, describing his career choice. "Now I've got a small company."

Mr. Molina is one small part of what might be called the real estate industrial complex, the economic engine that has become one of the few reliable sources of growth in recent years. Encompassing everything from land surveyors to general contractors to loan officers, the sprawling sector has added 700,000 jobs to the nation's payrolls over the last four years, according to an analysis by Economy.com, a research firm.

Combined, the rest of the economy has lost nearly 400,000 jobs over the same span, which stretches back to the start of the most recent recession, in 2001.

For all its benefits, the newfound power of real estate has also left the country vulnerable to a housing slowdown, which many economists expect over the next few years. Residential housing now makes up 16 percent, or $1.9 trillion, of the gross domestic product and is the economy's largest single sector, slightly bigger than the industries and services that supply health care, according to Economy.com.


Mr. Molina and his employees need to live somewhere too.

Posted by Orrin Judd at July 9, 2005 8:04 AM
Comments

Keep the faith, OJ. We're going to get 200 million more people in the next five years. That will support those 33% increases in housing prices every year.

Dreamer. This is a bubble.

http://www.gold-eagle.com/editorials_02/lechner113002.html

Posted by: Brandon at July 9, 2005 11:46 AM

One needn't read past "gold" in the link to know we're headed to bunkerville. Here's a hint for you though---all those guys who think you should buy gold expect you to bury it in your basement. Your basement is under a house....

Posted by: oj at July 9, 2005 11:49 AM

--Combined, the rest of the economy has lost nearly 400,000 jobs over the same span, which stretches back to the start of the most recent recession, in 2001.---

He wishes.

2000, David, not 2001.

Posted by: Sandy P at July 9, 2005 10:29 PM
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