The Calculated Risk Blog is a highly recommended read. This week there was a post with this chart on the growing distinction between new and existing home sales. The phrase used is "Distressing Gap."
In the post, some important points were made about the increased value to employment and the economy from new construction home sales.
|
|
|
Graph posted with permission from Calculated Risk blog
|
The impact on the local economy of new homes construction is very great.
A
report prepared by the
NAHB in June 2009, gave a very detailed presentation of the economic impact of new construction for local communities.
The model used estimates "impacts on income and employment in 16 industries and local government, as well as detailed information about taxes and other types of local government revenue." The model "estimates of the local impacts of building 100 single family units, 100 rental apartments, and $10 million worth of spending on residential remodeling (equivalent to 100 remodeling jobs at $100,000 each)1 in a typical U.S. metropolitan area, "
The estimated 1 year local impact of 100 single family new construction homes:
- $21.1 million in local income
- $2.2 million in local govenment revenue
- 324 local jobs created
The estimated continuing annual impact of 100 single family new construction homes"
- $3.1 million in local income
- $743,000 in local government revenue
- 53 local jobs created
Similar estimates are provided for multi-family construction and residential remodeling.
The information from these studies should be emphasized and understood. We are all fully aware that new construction has fallen off, but I assumed that the drop was in line with the drop in home sales in general. The statistics in the Calculated Risk post show that new home sales have fallen significantly more than existing home sales.
This is not good for local economies to have such a disparity between existing home sales and new construction home sales.
The push for First Time Home Buyer with the tax credit and the increase in distressed properties are cited in the Calculated Risk post as major contributing factors to this growing gap in new and existing home sales.
To those factors I would add the loss of many construction financing programs, and the general tightening of qualifying standards in general that has pushed a very large portion of potential buyers out of the market - many of them minorities. On that topic, I will write more later.
;)
;)
