Report Cites Economic Benefits of California Home Building - 3/15/2004 - Mortgage Loan Refinance Debt Equity

Report Cites Economic Benefits of California Home Building

New housing production each year brings about $40 billion to the California economy and creates an estimated 359,000 jobs, according to “The Economic Benefits of Housing in California,” which was prepared by the Sacramento Regional Research Institute.

Half of the economic boost comes as a direct result of new home construction, the study finds, while the balance is from industries that supply goods and services to the construction industry and from retail and consumption sectors that service the employees of the construction industry and its supplier industries.

Every dollar spent on new housing construction in California generates approximately $1.95 in total economic activity, the study says.

Looking at the larger picture, housing’s economic impact extends beyond the construction of new units to ongoing sales, financing, brokerage, repairs, management and operation of existing housing units, according to the institute’s research.

“When all facets of the housing sector are considered — including new home construction, residential real estate transactions, expenditures of home owners, employment, maintenance and operation of housing and the expenditures of employees of the housing sector and its supplier industry,” Sacramento researchers estimated that housing annually:

• Contributes more than $257 billion in economic activity in the state
• Generates 821,000 jobs
• Accounts for roughly 13% of the state’s total economic activity

The report based its findings on data from 1997-2001, when annual housing production averaged 132,000 units.

According to the state’s department of finance, the amount of housing actually needed to meet demand over the past 12 years averaged closer to 230,000 units a year, suggesting the significant potential for additional economic growth.