The housing market SHOULD be depressed. Is you bought ten years ago, your house is still worth probably 25-75% more than what you paid. This for an asset that has a simple purpose, no earnings, and for which gains - absent a bubble - should be modest. Want an improved economy? Don't put your faith in a housing market like we had.
In fact let's consider the situations where real estate gives better than standard returns:
- Network effects: In a place like Silicon Valley, having a lot of engineers in one spot means companies can build up, so new engineers come in, so more companies build... A rare and possibly unsustainable occurrence.
- Exploitable resources: Find gold on your land - or oil or old-growth mahogany - and the value will quickly increase. May yield above average returns if you don't count the effort of finding / identifying the resources, the costs of extraction, and any decrease in land value after it's all gone
- A straight out bubble - Been there done that. See also Japan, South Seas, Florida. Note that fraud is often involved.
Certainly people can and do make in real estate, if they spend their lives doing it. Purchase land, build homes or offices, charge rent, sell improved property, and the money will roll in. That's not the same - not even close - to purchasing a house with the expectation that in three years you'll be able to buy a bigger one. And if there's no similar excessive demand, the increase in housing can only be proportional to increases in population. If that's your growth engine, or even a significant portion of your economy, where are these new people going to get money to pay for the housing? Because THAT would be your actual economic engine.
I do wonder how people can consider housing and construction,still, as a primary driver of the economy. (As opposed to a significant indicator, dependent on a true driver.) In the 30s, was there a lot of discussion on how to reinflate the stock market?
(Actually, if true, that wouldn't surprise me at all. )
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