Denver real estate prices look like they are in a recovery phase. The latest report shows that in metro Denver, "home prices rose 2.5 percent compared with May but were down 3.6 percent compared with the same month a year ago[.]"
Two major cities, Dallas and Cleveland, are doing a little better than Denver, but seventeen other major cities have weaker housing markets. Markets like Detroit, Miami, and Las Vegas have seen declines compared to a year ago or more than 20%, enough to wipe out all of the equity in a home purchased a year ago with a conventional mortgage.
Also, distressed sales of existing properties have made new homes uncompetitive. In normal times, there are about six existing homes sold for every new home sold. Right now, the ratio is twelve to one.
Fundamentally, housing bubble prices caused home builders to build too many new homes, and now our economy has more houses than it needs.
Our economy doesn't need more housing now. The hard lesson of the Soviet Union's economic collapse was that producing things that people don't need doesn't improve people's standard of living and simply hides economic stagnation. Indeed, production that isn't needed is not only an unsustainable to create jobs in the long run, it also puts people who would ordinarily be needed to produce what people actually need on average out of work in the future. The lesson of holes is to first stop digging. The housing market has done that now in an extremely painful way.
GDP is a meaningful measure of standard of living only in economies that approximate a free market model sufficiently that the assumption that goods and services produced have economic value is a reasonably accurate assumption.
The demand for new housing will continue to be the case until demand for housing that can be built for current, more normal prices (close to current prices in non-bubble markets like Denver, but possibly lower still in markets that had big housing bubbles) returns due to factors like population growth and income growth in particular local housing markets. A recovery in Denver and New York won't create a market for new housing in Las Vegas or Miami.
Given the extremes that the seven year long housing bubble reached in many areas, it could be long time before home building companies have much work to do. This means that jobs in an economic recovery will have to come from other sectors of the economy.
It will be a long time before immigration by less skilled workers will be a big issue again in the U.S. economy. Many of the jobs that immigrants filled were in the construction industry. Many more were in equally ailing hospitality industry (e.g., hotel maids) and manufacturing industry (e.g., meat processing plants). Without these jobs, the incentive to immigrant goes away, and many foreign workers will give up and return to their home countries. For a while, at least, reconciling available immigration quotas under reform legislation, and the people who want to legalize their status, may be relatively easy.