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Benefits Outweigh Costs of New South Carolina Housing
New homes generate an average of $1,412 more than they cost local governments, according to an independent study released by the South Carolina Association of Realtors® and the Home Builders Association of South Carolina.
Examining the development of 1,091 units in six residential subdivisions in Berkeley, Greenville and Lexington counties, the study — prepared by Impact DataSource, an economic research firm in Austin, Texas — estimated that the activity added more than $2.9 million of additional revenue to local taxing districts on a one-time basis and 1,448 direct and indirect construction jobs.
The developments then continue to generate surplus community funds through taxes, spending by the new residents and an increased demand for workers. The annual personal income of the residents of the subdivisions was calculated at more than $78 million.
The estimated $6.7 million in the annual benefits of the development to cities, counties and school districts exceeded the $5.1 million in annual costs by more than $1.5 million, the study found.
Of the $25.2 million spent by the developers on the six subdivisions, $11.8 million was for infrastructure dedicated to local governments and utilities, including streets sidewalks, drainage improvements and off-site improvements.
The study points out that most South Carolina governments have adopted policies and ordinances that shift almost all of the cost of new residential development and related infrastructure to the developer, builder and, ultimately, to the new home owner.
Because government services such as police stations, fire stations, utilities and schools tend to serve large benefit areas, the growth in the tax base associated with each individual development is sufficient to cover any marginal costs, the study says. For instance, the money generated by new families joining a school district provides more than enough funds for schools to pay for extra classrooms, teachers and learning materials.
For the complete study, click here.
Local Economic Impact Studies Available from NAHB
NAHB’s Housing Policy Department maintains economic models to estimate the local economic impact of home building.
One model estimates the economic benefits — including the effect of the construction activity itself, the economic ripples that occur when income earned from construction activity is spent and recycles in the local economy and the ongoing impact that results from new homes becoming occupied by residents who pay taxes and buy locally produced goods and services.
A second model estimates the costs home building imposes on local governments for supplying education, police and fire protection and other public services.
Together these models can be used to show that, from the standpoint of local governments, home building usually pays for itself.
The NAHB models are calibrated to a typical metropolitan area using national averages, but they can easily be adapted to a specific local economy by replacing key housing market variables.
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Areas covered by NAHB Local Impact Studies |
More than 350 customized reports analyzing residential construction in various metropolitan areas, non-metropolitan counties and states across the country (darker shaded areas in the map above) have been produced by NAHB’s Housing Policy Department. The reports have analyzed the impacts of specific housing projects, as well as total home building in areas as large as entire states
The models analyze single-family construction, multifamily construction or a combination of the two; specific cases of active adult housing projects; multifamily development financed with Low-Income Housing Tax Credits; and the local impact of residential remodeling.
For more information about the NAHB models, applying them to a particular local area, or the current price for this service, click here, or e-mail Elliot Eisenberg at NAHB, or call him at 800-368-5242 x8398.
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