Economist tells builders benefits of construction
Construction of 1,000 new homes in the Tri-Cities in 2008 will pay for itself in about six years, said an economist with the National Association of Home Builders.
Elliot Eisenberg explained the economic benefits of new home construction in Benton and Franklin counties to a group of about 25 at the Pasco Red Lion on Tuesday.
The economic model uses 2008 local numbers, including $224,225 for the price of a new home, $9,000 for the raw land cost, $5,081 in fees and $2,999 for the average property tax cost in a year.
Eisenberg broke the economic benefits into three phases — construction activity, ripple effects and ongoing effects. Actual construction of 1,000 new homes in the bicounty area in 2008 generated more than $108 million in local income, about $21.5 million in local taxes and supported 2,650 jobs, he said.
The ripple effect — when workers spend their income in the community — is about half the size of the construction phase, bringing in about $51.6 million locally.
There were 1,168 new home permits issued in the bicounty area in 2008, according to the Home Builders Association of Tri-Cities. He also detailed the costs of constructing a new home, including about $7,400 each year to pay for teachers, police officers, health services and other salaries.
A one-time $35,500 cost also is calculated for capital needs such as schools, hospitals, sewer systems, and other infrastructure. After the first year of new construction, which includes the construction and ripple effect phases, the 1,000 new homes generate about $3.4 million in revenue for local government each year, he said.
If that money is used to pay off the infrastructure investments, the debt will be paid in just less than six years. Though it’s longer than the national average of about three years, he made the comparison to paying off a mortgage, which wouldn’t happen in such a short time.
The economic model was developed by the national association about 13 years ago and has been used for more than 530 studies, Eisenberg said.
Source: Tri-City Herald