Economic Impact Study Shows

Home Building Pays Its Way in Indiana
 

            INDIANAPOLIS – An economic impact study conducted by the National Association of Home Builders (NAHB) Housing Policy Department shows that the home building industry in Indiana not only pays for itself, its economic impact results in new income and jobs for Hoosiers and additional revenue for local governments.
             The 10,107 single-family homes built in the State of Indiana during 2009 will generate a cumulative $1.25 billion in revenue, compared to only $1.08 billion in costs over the next 10 years. By the end of the first year the housing industry’s economic impacts more than offset the fiscal costs resulting in a fiscal surplus to local governments.  Additionally, by the end of the first year the fiscal surpluses are more than enough to pay off all debt and result in a surplus available to pay for additional government services. Collectively new single-family housing produces a net income to local governments of $166.5 million in the first year, and $322,300 each and every year thereafter.

            “These results show that home building is more than paying its own way and should put to rest the notion that existing home owners are subsidizing new home construction here in the State of Indiana,” said Dr. Elliot Eisenberg, the Senior Economist who conducted the analysis of the impact of home building here in Indiana. “This is an excellent result and tells me that local residents should be thanking the building industry for footing the bill for a lot of city, county and state services.”

 Economic Impact Study – Page 2

            The economic impact study looks at the impact of the construction industry in three phases: the construction phase; the ripple effect; and, the occupancy phase. The impact of the three phases are added up, and then compared to the cost of services such as education, fire, police, utilities, parks and recreation and roads that are required to support the new housing units.

During the construction phase, the building of every 10,107 single-family homes
creates 15,431 jobs (10,676 jobs in construction alone), generates $173.7 million in local taxes and $979.6 million of local income in the first year. The ripple effect of those homes,  which includes the wages and profits local area residents earn during the construction  period that are spent on other local goods and services, results in another 9,572 jobs, $138.2 million in local taxes and $555.4 million in local income, also in the first year.  The ongoing annual effect of those homes, which includes local jobs, income and taxes generated as a result of the home being occupied, is 5,640 jobs, $99.0 million in local taxes and $310.1 million in local income per year. 
          “It is important for us to look closely at these numbers,” said IBA President
Andy Place, Senior.  “We’ve been saying for a long time that local home builders are
doing their part to build community, and these numbers show that we are a very
important player in the overall economic health of our state and local economy.”

 The NAHB model used to determine the economic impact of the housing industry was first developed by NAHB in 1997 and has been applied to construction in more than 525 areas of the country. This study looks at the economic impact of building 10,107 single family homes across all of Indiana in 2009.  Click here for the model.

The Indiana Builders Association (IBA) is a non-profit trade association representing more than 3,500 member companies.  Members include residential builders, remodelers and businesses related to the housing industry. Learn more at www.Buildindiana.org.