Housing Market Boosted Economy

The housing industry accounted for a larger share of the economy in Southern California over the last six years than in any other region in the U.S., according to a report that will be released today.

The findings, which will be announced in Washington by a consortium of industry groups, confirm the role housing played in buffering the region and the nation against recession. The robust housing market was a key reason that Southern California experienced only a mild slowing in economic growth, the report showed, while the Bay Area and other parts of the country recorded a sharper decline.

More than half of the growth in the region’s gross domestic product since the mid-1990s has been due to boom-like activity in housing and rising home prices, according to Economy.com, a data tracking firm in West Chester, Pa., that compiled the report.

Higher prices “lifted equity significantly and increased the willingness of consumers to spend on everything else,” said Mark Zandi, the firm’s economist. Home buying and home building, along with brisk consumer spending, were the main reasons the recession was one of the mildest in history.

American homeowners received about $90 billion in cash-out mortgages that were refinanced last year, according to Freddie Mac, a major secondary lender.

Demand for new housing eventually will diminish as more consumers find homes and the costs of borrowing increases. But the drop-off in Southern California will be milder than elsewhere because of an inadequate amount of planned construction to handle growth.

Among the other markets that got a big economic boost from housing were in Orlando, Fla., Miami and Tampa, Fla. Those that received the least benefit included Detroit, Memphis, Tenn., Salt Lake City and Austin, Texas.