Tuesday, January 22, 2008

Home Building Brings Millions into the Local Economy

Reports from a national level senior economist show that building just 100 new homes in the Midwest region of Georgia generates over $43 million dollars in local income and over $8 million dollars in local taxes over a 10 year period.

Dr. Elliot F. Eisenberg, senior economist for the National Association of Home Builders, spoke at Fayetteville First Baptist Church last Thursday night at an event on the economic impact home building has on our local economy.

Organized by the Home Builders’ Association of Midwest Georgia and the Fayette County Board of Realtors, Eisenberg’s presentation covered two areas: how monies generated from building new homes flow in the local economy and the costs to the local area to support that growth.

Eisenberg analyzed the impact of new home construction in three phases: the construction phase, the ripple effect and the occupancy phase, and then compared it to the cost of public services like roads, education, fire, police, hospitals and, of special concern, water. Using data supplied by the federal census, the numbers show that new homes in our local region actually pay for themselves in just 7 years.

Eisenberg reports the first year’s impact during the construction phase of 100 new homes generated over $9.2 million in local income, $818,000 in local taxes and created 140 local jobs. But the effect doesn’t stop there. Eisenberg explains that an ongoing economic ripple is created as those who profit from the home building industry spend that money in the local economy.

“The ripple effect lasts for a year following the completion of the home and is approximately 50% of the construction phase,” states Eisenburg. “The occupation phase lasts as long as the house is occupied.”

Eisenburg reports that the first year impact of the ripple phase generates an additional $4.4 million in local income, $499,000 in local taxes and 70 jobs. The occupancy phase produces $3 million in local income, $727,000 in local taxes and creates 52 local jobs.

“These numbers are impressive,” said Lynne Bride of Harry Norman Realtors. “We want people to know that this area is a great place to be and that new growth doesn’t have to cause problems.”

New homes do require fire, police, garbage collection, new parks, roads, schools and they also create new demand for water and other utilities. But findings show that by the end of the 7th year, the cost to support every 100 new homes is fully paid for with an ongoing surplus of $166,946 thereafter. This is the equivalent of municipalities paying off entire sewer systems, schools and more in only 7 years.

Eisenberg asks to contrast that kind of pay off with “car loans lasting 5 years” and asking the question “How fast did you pay off your student loans?”

Eisenburg further explains that without the economic stimulus from new home construction, local economies start to decline pointing to other areas of the country where home construction is stagnant.

“This is an exciting area,” said Eisenberg. “Home ownership is still affordable here and has the ability to pay for itself in seven years.”

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