Economists' Outlook

Housing stats and analysis from NAR's research experts.

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses international trade.

  • Fresh data from the Federal Reserve showed that housing equity (home value minus mortgage outstanding) rose to $6.67 trillion in the first quarter, a gain of $425 billion.  A small gain in home prices has a sizable impact in the aggregate to the homeowners’ net worth.  But at the height of the housing bubble, the net worth in residential real estate was $13.5 trillion.
  • International trade pulled back in April with both exports and imports falling.  Exports fell 0.8 percent, while imports fell 1.7 percent.  Despite a one month setback the overall trend is still a healthy recovery in the sector.  Export growth has been particularly strong from mid-2009.  Many U.S. companies from Coca Cola to Caterpillar and from Intel to Microsoft sell more abroad than in the U.S.  However, exports need to steadily grow faster than imports to meaningfully narrow the trade gap.
  • A wrong way to narrow the trade gap would be by enacting tariffs.  Note in the chart below that sharp declines in exports and imports occur in times of economic recession.  So let’s hope the April decline is a one month anomaly.
  • One of the most important historical examples occurred in 1871 when German-speaking people in formerly independent-like countries Hanover, Brandenburg, Bavaria, and the like united to create a country called Germany.  This formation removed all tariffs between the provinces and therefore naturally accelerated the trading of goods and services across provincial border lines.  The increased competition thereby turned Germany into a major economic player.  America likewise is very fortunate to have no tariffs between states, say of selling Maryland-made goods in Virginia.
  • Increased international trade will also mean a greater number of REALTOR clients with international backgrounds in rentals and home buying.  For commercial practitioners, there is always an increase in demand for industrial and warehouse spaces when international trade rises.

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