Well looking at US numbers since they're easier to find, they estimate housing as % of GDP as currently only 2.3% and peaking at around 6% during the US Housing Boom. This encorporates all supply and support jobs for the Housing sector like Electricians, Construction Workers, Real Estate Agents etc.Mark77 wrote: ↑Yeah then you have to add the construction sector, and the sectors that supply it extensively. But the precise number doesn't matter -- I think we can agree that it is a substantial part of the Canadian economy.
A quick Google indicates that the source of the number was from the Conference Board:
(and the question asked by the blogger is very pertinent as well -- just where will the demand come from when this sector falls apart? I agree with the premise of the question -- the BoC has a very serious problem on its hands and probably is in significant danger of finding itself behind the curve in terms of policy rate cuts and stimulus of the non-housing sector).
I know quoting a blog is just repeating hearsay, but certainly the 27% figure has appeared a number of times. In short, in much of Canada, housing is pretty big business.
http://bipartisanpolicy.org/projects/ho ... ic-economy
"The construction of new housing is an integral component of the economy. From 1980 to 2007, residential fixed investment, the Bureau of Economic Analysis’ measure of the economic value of new home construction and remodeling, contributed on average 4.5 percent to the U.S. GDP. During the boom years from 2004 to 2006, it constituted an even greater amount, peaking at 6.3 percent of GDP in the last quarter of 2005. However, when the housing bubble began to burst in 2007, new home construction’s share of GDP plummeted. As of the third quarter of 2011, residential fixed investment was only contributing 2.2 percent to GDP, 2.3 percentage points below its historical average. This suggests that the economy is, in effect, missing 2.3 percent of GDP because of the distress in the housing industry."
So since our economy and real estate sector is probably close to the US at the peak, lets take that number from 27% down to a modest 7%, which is even higher than has ever been registered in the US. It's still a substantial number, but still a small percentage of the entire economy. Would their be a hit to GDP in the effect of a 20% drop in housing, of course, but it would still only impact GDP by around 1%, hardly crippling the economy and driving the crash to 50% or more.