Home construction has far- reaching economic impact

The construction of new homes produces wave after wave of economic impact that benefits local families, businesses and governments in the communities where the homes are built. These positive effects of residential construction are far-reaching, long-lasting and seldom fully appreciated.

The first wave of economic impact is produced by the construction of new homes. Building homes creates jobs for local workers, business income for all related industries, and new revenues for local governments.

During construction, workers are employed in developing the site, building the home, supplying the materials, completing the legal and financial requirements and selling the home to new owners.

A substantial portion of the income that these workers and businesses receive is returned to the local economy as they spend the money they earn on food, clothing, housing, entertainment and other essentials of daily life. This ripple effect spreads home building money far beyond the people and businesses directly associated with residential construction.

The economic impact does not stop when the home is completed and occupied. New residents bring their spending power into the local economy. Roughly 30 percent of their income is spent with local businesses. More business for local establishments means even more jobs, income and spending.

The new economic activity also generates additional revenues for local governments. The property tax that new home owners pay is only a small portion of the new revenues and taxes that local governments receive when businesses expand and sales increase.

In a typical metropolitan area, the property taxes paid by a new home owner represent less than 40 percent of the total local government revenues generated by new residences, according to the National Association of Home Builders.

Taken as a whole, housing's economic engine contributes substantial revenues far beyond the home building industry.

(Sam Bradley is president of the Home Builders Association of Springfield and owner of Sam Bradley Homes.)