David Crowe Chief Economist November 13, 2013 Home Building Impact

WHY Reject New Homes  Property tax is insufficient to pay for new service demands  New homes bring traffic congestion, crowded schools, ‘different’ neighbors  Environmental damage  Fields and forests disappear

LOCAL ECONOMIC IMPACT Construction phase Jobs Materials Local fees, taxes, contributions Ripple or feed-back from construction Wages spent in local economy Occupancy phase Earnings spent in local economy

Areas Covered by NAHB Local Impact Studies ( Over 750 Done So Far)

Typical relationship is that more jobs require more homes But, also true that more homes produce more jobs………

Phase I CONSTRUCTION Value of Construction + Services Provided at Closing + Permit / Hook-up / Impact Fees Value of Construction + Services Provided at Closing + Permit / Hook-up / Impact Fees Model of the Local Economy Local Income and Taxes

Phase II RIPPLE Spending on Locally Produced Goods and Services Spending on Locally Produced Goods and Services Model of the Local Economy Local Income and Taxes from Phase I Local Income and Taxes from Phase I

Phase III OCCUPANCY Spending on Locally Produced Goods and Services Spending on Locally Produced Goods and Services Model of the Local Economy Local Income and Taxes Income of Occupant in New Housing Unit + Increased Property Taxes Income of Occupant in New Housing Unit + Increased Property Taxes

Assumptions of the Model Inputs To Model Single-family Average house price: $321,000 Average raw lot cost: $40,000 Permits/Infrastructure: $7,915 Annual property taxes: $2,810

Economic Impact of Single-family & Multifamily Home Building 1 st - Construction phase 2 nd - Ripple effect from construction phase 3 rd - Occupancy phase

FIRST YEAR IMPACT: Single-family Construction - Every 100 Homes INCLUDING: 147 Jobs in Construction 32 Jobs in Wholesale and Retail Trade 17 Jobs in Business and Professional Services * One job represents enough work to keep one worker employed full-time for a year.

FIRST YEAR IMPACT: Single-family Ripple INCLUDING: 29 Jobs in Wholesale and Retail Trade 15 Jobs in Eating and Drinking Places 17 Jobs in Health, Education and Social Services 12 Jobs in Local Government

Total Single-family Impact: First Year Construction & Ripple

ONGOING Single-family ANNUAL EFFECT INCLUDING: 14 Jobs in Wholesale and Retail Trade 7 Jobs in Eating and Drinking Places 5 Jobs in Local Government 7 Jobs in Health, Education and Social Services 38% from real estate tax

NEW HOMES REQUIRE: Fire and police protection Garbage collection Parks and recreational opportunities Roads Correctional facilities Primary and secondary education Etc. INFRASTRUCTURE

Where’s Data/Facts? Local government budgets Federal government surveys Model estimating relationships

Required Current Expenses per Unit

Required Capital per Unit

Does new construction pay for itself? The benefits of construction & The costs of construction Now that we know:

For each single-family unit -- By the end of the 2 nd year economic impacts offset fiscal costs. By the end of the 2 nd the debt is fully paid off By the 3rd year, net is $289,900 thereafter Yes it does!