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Monday, March 8, 2010

New Homes = Revenue + Jobs

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Elliot Eisenberg, Ph. D., Senior Economist, National Home Builders Assoc.               

Revenue generated for area communities by home building outweighs costs by more than 2-to-1, according to study

HARRISBURG, PA—An economic impact study using a representative sample of new housing in the Harrisburg metropolitan area shows that home building pays for itself more than twice over with local tax revenues and jobs.


The study concludes that a representative group of 100 single-family and 67 multifamily homes built in the Harrisburg metro area in 2008 will generate a cumulative $29.2 million in revenue over a 15-year period, more than offsetting $13.8 million in costs.


The study was conducted by Dr. Elliot Eisenberg, senior economist with the Housing Policy Department of the National Association of Home Builders (NAHB), using an NAHB study model that that has been applied in more than 600 economic analyses all over the country.


“These results show that home building is more than paying its own way and should put to rest any notion that existing homeowners are subsidizing new home construction in this area,” Dr. Eisenberg said. “This result tells me that local residents should be thanking the building industry for footing the bill for a lot of municipal services.”


The study also notes that the home building industry was the eighth largest employer in the Harrisburg area in 2008.


“It is important for us to look closely at these numbers,” said David Thompson, president of the Home Builders Association of Metropolitan Harrisburg (HBA). “We’ve been saying for a long time that local home builders are doing their part to build communities and these numbers show that we are a very important player in the overall economic health of the Harrisburg area economy.”


Dr Eisenberg presented the study findings February 17 to a meeting of elected officials, municipal executives, planners, builders, bankers, real estate professionals, and economic development officials at the Colonial Golf and Tennis Club (formerly the Colonial Country Club). The presentation was sponsored by HBA and the Pennsylvania Housing Finance Agency.


Eisenberg used Lower Paxton Township and the construction of 100 single-family homes with an average value of $406,000 and 67 multi-family homes with an average value of $255,000 as the sampling base for the study.


The study took into account housing-associated costs for education, police and fire protection, streets and highways, water and sewage, recreational facilities, electric utilities, and transit.  Even so, the benefit-to-cost ratio was positive. “Over 15 years, based on all the input, 100 single-family units and 67 multi-family units will generate a cumulative $29.2 million in revenue for local governments—but only $13.8 million in added costs,” Eisenberg said.

Even by the end of the first year after construction, according to the study, the economic contributions more than offset the costs, resulting in a fiscal surplus to local governments. Based on the sample, single-family and multi-family housing will produce net income to local governments of $512,500 the first year and $1.1 million every year thereafter.


Additional study conclusions:


The construction of 100 single-family homes with an average value of $406,000 will result in 431 temporary jobs and 66 permanent jobs over the first 10 years after construction, while also generating $67.8 million in local income and $13.9 million in local tax revenue.


The construction of 67 multifamily homes with an average value of $255,000 will result in 184 temporary jobs and 35 permanent jobs over the first 10 years after construction, while generating $31.2 million in local income and $6.4 million in local tax revenue.


Economic benefits do not end with construction. Additions and alterations to the homes in the sample will create 100 temporary jobs and four permanent jobs in the first 10 years after construction, while generating $5.4 million in local income and $2.5 million in local tax revenue. Maintenance and repair work on the homes will create 73 temporary and three permanent jobs in the same period and will generate $4 million in local income and $1.8 million in tax revenue.


Eisenberg holds a bachelor’s degree in economics from McGill University and master’s and Ph.D. degrees in public administration from Syracuse University. He is such a frequent and sought-after speaker on housing and housing-related topics that he spends about 60 percent of his time away from his Washington, D.C. office and has visited hundreds of cities. He is the creator of the multifamily stock index and the author of numerous articles that have been featured and quoted in Business Week, Forbes, and Fortune, among others.

Copies of the complete study are available from HBA. Please call Director of Governmental Affairs Keith Ashley at (717) 232-5595 or send your request to him at kashley@harrisburgbuilders.com.


HBA is an association of building and remodeling professionals and related companies. HBA membership includes over 800 business organizations. It is affiliated with the National Association of Home Builders and the Pennsylvania Builders Association.


To learn more about the Home Builders Association of Metropolitan Harrisburg, visit www.harrisburgbuilders.com.

The Pennsylvania Housing Finance Agency is the Commonwealth’s leading provider of capital for affordable homes and apartments. Created to help enhance the quality and supply of affordable homes and apartments for older adults, persons of modest means, and persons with disabilities, the agency operates homeownership programs, rental housing development initiatives, and a foreclosure prevention effort. In nearly 35 years of existence, PHFA has provided $8 billion in funding and tax credits for home mortgage loans and apartment units, while saving the homes of tens of thousands of families from foreclosure.

To learn more about the Pennsylvania Housing Finance Agency, visit http://www.phfa.org/.