I haven't spent the time to look through enough data to conclude 1) how 'diversified' our economy is, 2) whether that diversification is good and or would lead to a resilient economy, and 3) how a real estate sector negative shock would impact the overall economy.

Anyways, while typing this I got interested so I dove a little deeper into BEA data by state re. real estate & construction for all states looking for 1) dominance of real estate & construction sectors as % of gdp, and 2) the 10 year change especially looking at 2006-2009, the period of the housing bubble crash.

Somewhat interesting findings.

For 2016, states with real estate & construction as % of GDP are the following (alphabetical):

State, construction %, real estate % Arizona, 4.1%, 15.9% California, 3.6%, 16.9% Florida, 4.8%, 16.7% Hawaii, 6.2%, 20.0% Maryland, 4.4%, 17.0% Nevada, 4.8%, 16.0%

New york's close but not even rly top.

And when looking at time series, real estate stays very steady relative to the overall economy and simply max-min shows less than a 2% change in those states from 2006-16, with no major drops occurring around the housing crash. The biggest loser and victim of 'reversion to mean' is actually construction. Arizona went from 9.0% (2006) - 4% 2010-2016, Florida 8.2% - 4.5-4.8% range, and Nevada from 10.5% - 4.1-4.8% range. Hawaii didn't see much change.

In absolute terms, Arizona, Florida, and Nevada suffered big decreases in construction, as did California to an extent. Although California, Florida, and Nevada have seen some recovery in construction.

In absolute terms, real estate also was hit by the housing crash (around 3-5% yoy drop with Nevada being outlier at 12%) but to far less a degree than construction's ~20% yoy drop. Real estate also recovered faster than construction and in many places did not drop relative to overall GDP.

TLDR: Construction is what gets hit by a housing market crash. Real estate including rental and leasing (industry classification) stays relatively constant as % of GDP. Arizona, California, Hawaii, Maryland and Nevada are states big on real estate & construction.