Housing's ripple

Construction of new homes brings job growth throughout the regional economy and more jobs, in turn, spur even more residential construction.

A study commissioned by the Builders Association of Northern Nevada estimates that the construction of approximately 3,200 single-family homes in the region in 2006 will result in the creation of 3,175 permanent jobs during the next 10 years.

Those jobs, essentially, one new job for each home that's built, will come in fields ranging from banking to retail and wholesale trade. And they're in addition to the jobs estimated at about 8,000 that are created as a direct result of spending on construction.

The study was conducted by Elliott Eisenberg, a housing policy economist for the National Association of Homebuilders. He used data compiled by the Bureau of Business and Economic Research at the University of Nevada, Reno.

While the conventional wisdom holds that creation of new jobs in the local economy drives housing construction, Eisenberg said it works the other way, too.

When a homebuilder spends money on labor, materials and professional services, that money percolates through the region's economy boosting everything from retail sales to tax collections.

The first-year impact from the construction of 3,200 homes, Eisenberg said, is the creation of about 11,250 jobs 7,940 of them in construction.

But the ripple continues for years, the economist said, as the families who move into homes purchase items large and small.

As jobs are created throughout the economy and workers move to the area to fill vacant positions, even more housing is required. Builders figure roughly that the arrival of 2.5 new people in the area creates demand for one new house.

Eisenberg said the economic effects of home construction shouldn't be lost on local officials. Even in the first year that a home is built in the region, he said, the increased tax revenue that results both directly and from the ripple effects more than pays the cost of delivering public services to a new house.

And the first-year net income to local government of $78 million the taxes generated by construction activity less the costs of providing services to 3,200 new homes continues at a pace of about $9 million annually, the study found.

Brian Bonnefant of UNR, who prepared the basic data used in the economic study, said the average value of a new home built in Reno last year was $411,621. The average in Saprks was $413,697.

Land costs, Bonnefant said, ran about $44,447 per new home in Reno and about $35,816 for each of the new homes built at Sparks.