Homebuilding adds up to 'a lot of bang for the buck' in F-M economy
FARGO--A new study on the economic impact of homebuilding here shows a "home run hit" of positive benefits. Robert Dietz, chief economist for the National Association of Home Builders, discussed results of the new report Tuesday, Oct. 25, during ...
FARGO-A new study on the economic impact of homebuilding here shows a "home run hit" of positive benefits.
Robert Dietz, chief economist for the National Association of Home Builders, discussed results of the new report Tuesday, Oct. 25, during a news conference hosted by the Home Builders Association of Fargo-Moorhead.
The national group developed this study model about 20 years ago, looking into the direct impacts that come from construction, material costs and taxes, how those wages and profits are spent in the community and how occupants of new housing units contribute to the local economy and tax base over the next 15 years.
"The study here indicates that you get a lot of bang for the buck for homebuilding here in the Fargo metropolitan area," he said.
To determine the impact, researchers assumed the average single-family home was priced at about $255,000, had an average $25,000 lot cost, paid about $1,280 in permits and infrastructure costs and had annual property taxes of about $1,000.
The study used 2015 new housing numbers of 1,149 single-family homes and 1,252 multifamily units in the Fargo-Moorhead area, which includes all of Cass and Clay counties.
It looked into direct construction impact, such as the 1,910 local jobs supported by the construction of those 1,149 single-family homes, as well as the "ripple" effect as those construction wages and profits were spent locally and how occupants would affect the economy.
To get the net economic benefit, the study factored in infrastructure costs, such as additional fire and police protection demands and new parks and roads required by the addition of more housing.
Some communities can take years before the economic benefit outweighs infrastructure costs, according to Dietz, or may not get to that point ever.
"This study for this area is actually sort of the home run hit, which is housing basically pays for itself almost right away," he said.
According to the study, those 1,149 single-family homes achieved the breakeven point within the first year on the market and are on track for $85.3 million of net economic impact over the first 15 years.
The 1,252 multifamily units weren't projected to reach the breakeven point until two to three years after construction, but still had a $27.5 million positive net economic impact over 15 years.
While the report was good for the area, Dietz said there are things the community can do to preserve this impact, including instituting policies such as the flood diversion project that can protect the existing economic base and prevent a decreased demand for housing.
Home Builders Association of Fargo-Moorhead President Tom Spaeth also brought up the diversion project, telling reporters that residents need to vote in favor of sales tax extensions on the November ballot as it would provide funding in "the most economical, practical and fair method."
Without voter approval, Spaeth said the project could lose state or federal funding, preventing the diversion from going forward, or it could have to be paid with property tax increases and new special assessments.
"Not just the housing industry-every industry involved in the whole metro area would be impacted by this," if voters don't approve the extensions, he said.