Clifton Park Homes for Sale, Local Real Estate Agent. An Economic Boom From Homes?
By Dan Miller, The Patriot-News, Harrisburg, Pa.
Mar. 5-New homes pump far more into the midstate economy in tax revenue and jobs than they cost in added spending by local governments and school districts, says a study for the Home Builders Association of Metropolitan Harrisburg.
The study is based in part on single-family houses built in the midstate with prices averaging $406,000, a figure an association official conceded is higher than what most new homes are selling for here today.
Municipal and school district officials and other observers say whether development pays for itself depends on many factors. They include the services required by development, such as roads or increased police, and the costs to school districts for additional children.
"If a school district is only adding two or three houses a year, then the district can probably absorb the students without substantial cost," said David Davare, the director of research services for the Pennsylvania School Boards Association. "But if you are putting in a 300-unit development that will have 900 bedrooms with 1.2 children per bedroom, that's allowing more students than the district can absorb."
Clifton Park Homes for Sale, Local Real Estate Agent. An Economic Boom From Homes?
The study is based on a sampling of 100 single-family houses built in Lower Paxton Twp. in 2008 with values averaging $406,000. It also uses the township as the setting for a hypothetical development of 67 town houses with an average value of $255,000, which is closer to what is currently being built.
The study found that over 15 years, the new housing would generate a combined $29.2 million in tax revenue, jobs and economic spin-off benefits compared with $13.8 million in new costs.
Benefits exceed costs after one year, with the new housing producing net income of $512,000 to local governments in the first year and $1.1 million every year thereafter, the study says.
Elliot Eisenberg, a senior economist with the National Association of Home Builders, conducted the study based on a model the national organization has applied in more than 600 markets across the country.
Neither the local association nor the Greater Harrisburg Association of Realtors could provide a figure for the average value of new homes sold in the midstate.
Clifton Park Homes for Sale, Local Real Estate Agent. An Economic Boom From Homes?
The U.S. Census Bureau reported an average price of $472,500 for a new home sold in the Northeast United States for the last three months of 2009 and a median of $323,200.
According to the Central Penn Multi-List, which tracks all home sales throughout Cumberland, Perry, Dauphin and northern York counties, the average price for all homes sold in the midstate in 2009 was $180,228, while the median was $161,900. The average has dropped 5.1 percent since 2007, and the median is down by 2.5 percent.
George Wolfe, Lower Paxton's manager, questioned the study's conclusions, saying it doesn't take into account the impact of multiple housing developments over time.
He recalled an anecdote from the manager of a small borough who said he'd have to double the size of his public works department just to plow snow for one proposed development.
"It doesn't cost much more until you reach a threshold where you need a new community facility like a school, park or a new fire station," Wolfe said.
"A 100-unit development may not need a traffic signal, but you get three or four or five, and you need a traffic sign and an intersection, and you have not generated revenue from any of those developments to do that," he said.
Many municipal officials cite those costs to argue that Pennsylvania should allow local governments to charge developers so-called impact fees for projects.
Clifton Park Homes for Sale, Local Real Estate Agent. An Economic Boom From Homes?
Timothy Kelsey, a professor of agricultural economics at Penn State who studies development, said generalizations about the financial impact of new housing don't hold up because the impact depends on factors such as the housing cost and the type and cost of services in a municipality or school district.
"If you have expensive local schools and the development brings in a lot of kids, then the cost will be much greater than if the school district already has low tax rates and a low cost of providing education," he said. New homes produce construction jobs as the study says, but this is a short-term benefit that can only be kept going by continually building, Kelsey said.
Studies by Rutgers University professor Robert W. Burchell and others have found that the developments most likely to have a positive fiscal impact on municipalities and school districts are research parks, general office parks, industrial developments, high-rise garden apartments, age-restricted housing, and one- to two-bedroom condominiums.
Eisenberg said his study model assumes strong correlation between the new homes' value and the degree homes offset local costs.
For example, a new home valued at $300,000 still contributes more, but the spread between benefit and cost is less than that of a new home valued at $406,000, which generates more property tax and most likely higher income tax as well, Eisenberg said.
New housing almost always at least pays its own way, he said, because developers don't profit by building cheap housing.
"It's not that all houses pay their way but that new houses pay their way," he said. "These homes are helping augment the cost imposed by the other homes. Lower-priced houses are getting a subsidy."
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