Just How Much Does Housing Affect the Economy?
We’ve all heard that the real estate industry has an impact on the economy, but is it possible to see just how much? The answer is yes, according to a new post from the National Association of REALTORS® Economists’ Outlook blog, which highlights housing’s share of gross product for every state in the country. In 2013, the value of construction (as well as real estate, rentals and leasing) accounted for 16.8 percent of gross domestic product. However, many states exceeded that number, especially in the Northeast and West. And while housing has quite an impact on every state’s economy, home sales also have an economic impact at the local level, factoring in commissions, home improvement expenditures and services for a new home.
Economic Impact of Real Estate Activity in Ohio
The Real Estate Industry accounted for $81,594 million or 14.5% of the Gross State Product in 2012.
Economic Contributions are derived from …
- Home construction
- Real estate brokerage
- Mortgage lending
- Title insurance
- Rental and Leasing
- Home appraisal
- Moving truck service
- Other related activities
When a Home is Sold in Ohio
Income Generated from real estate related industries is $11,349
Additional expenditure on consumer items such as on furniture, appliances, and remodeling is: $4,494
It generates economic multiplier impact. There is a greater spending at restaurants, sports games, and charity events. The size of this “multiplier” effect is estimated to be: $7,605
Additional home sales induce additional home production. Typically one new home is constructed for every 8 existing home sales. Therefore, for each existing home sale, 1/8 of new home value is added to the economy which is estimate in the state to be: $15,763
The Total Economic Impact of a Typical Home Sale in Ohio
Median Priced Home: $126,100
Total Income Derived from a Sale of a Home: $39,210
Sources: NAR; Bureau of Economic Analysis; Census; NAHB; Macroeconomic Advisors;