The Home Builders Association of Fargo-Moorhead released a housing impact study for the Fargo-Moorhead metro area during a press conference today with National Association of Home Builders Chief Economist Robert Dietz.
Dietz summarized his findings and said that, over 15 years, the net economic impact estimates for building 1,149 single-family homes is $153.8 million in revenue and $68.5 million in costs, resulting in $85.3 million in net revenue. He said the NAHB model has been used in over 800 projects since 1996.
“When we consider the span of reports we’ve done over the years, the study for this area is very positive,” he says, “It shows that building can create jobs, pay taxes and expand the economic base, and that’s what you want for a community. When we evaluated your single-family market, housing pays for itself almost right away.”
The permit numbers and supporting figures used were from 2015.
Dietz explained that a typical study in other parts of the country will see a break-even point between year five and seven because up-front infrastructure and development costs are much higher. Here, costs are lower and the economic activity is more locally concentrated, resulting in a break-even, positive benefit immediately.
He referenced the sales tax extension vote coming Nov. 8 in Fargo and Cass County to fund the Metro Flood Diversion Project and permanent flood protection. Once the Diversion is constructed, it would avert the potential of flood insurance premiums increasing to $2,000 – $5,000 for thousands of households locally.
“I know you’re trying to get a permanent solution for flood control,” he says, “That’s a good example of policy where you can dedicate a stream of funds and protect the existing economic base to make sure that you don’t drive down housing demand and ensure you don’t raise housing costs. Protect the natural advantages you have and continue to grow.”
He gave examples of areas in the country where there is not enough land to grow, or policy decisions have resulted in development and infrastructure costs that limit growth. Generally, this drives up the cost of housing and affordability for the Millennial generation and young families.
HBA President Tom Spaeth, Accent Contracting, also commented on the upcoming vote and reminded voters that the extension of three half-cent sales taxes has been identified as the most economical, practical method of securing local funding for the project.
Spaeth says, “The sustained economic growth of our region demonstrates a continued need to protect our communities. The Diversion doesn’t only protect Fargo, it ensures vitality for our entire metro area and everyone who lives and works here. The continued, consistent strength of the construction, health care, higher education and retail markets bodes well for a steady stream of sales tax revenue to pay for the Metro Flood Diversion project.”
To learn more about the sale tax extension, visit fairdiversionfunding.com. For a copy of the complete housing impact study, visit www.hbafm.com or contact the HBA at (701) 232-5846 or firstname.lastname@example.org.
Dietz earned a doctorate in economics from Ohio State University. He is chief economist and senior vice president for economics and housing policy for NAHB, where his responsibilities include housing market analysis, economic forecasting and industry surveys, and housing policy research.
A federation of more than 700 state and local associations, NAHB represents more than 140,000 members. About one-third are home builders and remodelers. The rest work in closely related specialties such as sales and marketing, housing finance, and manufacturing and supplying building materials.
The HBA of F-M promotes an environment in which members and their businesses can prosper. It is a non-profit trade association of over 800 members that has been in existence since 1956: 2016 marks the Association’s 60th anniversary. Its public events include the Spring Parade of Homes, Fall Parade of Homes, Remodeled Home Tour and Red River Valley Home & Garden Show.