Making a move in the housing market is a big decision that involves careful consideration of your personal needs, finances, and lifestyle goals. However, many people overlook one important aspect of buying or selling a house: its impact on the community. By understanding how the housing industry affects the local economy, job market, and social fabric, you can make a more informed and empowered choice when it comes to your real estate journey.
The National Association of Realtors (NAR) releases an annual report that sheds light on the economic activity generated by home sales. According to the latest data, a typical home sale in the United States generates an average of $77,000 in economic impact, including direct and indirect spending by buyers, sellers, and related industries. This impact includes expenses such as home repairs, furniture purchases, appliances, landscaping services, and real estate commissions, among others. The chart below illustrates that impact:
The image illustrates how selling a house can have a significant impact on the neighborhood’s economy. The impact is primarily attributable to the laborers needed to construct, renovate, purchase, and sell homes. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), explains how the housing industry adds jobs to a community:
“The economic impact means housing is a significant job creator. In fact, for every single-family home built, enough economic activity is generated to sustain three full-time jobs for a year, per NAHB research. . . . And one job for every $100,000 in remodeling spending.”
Another way in which the housing market affects a community is through its social and cultural ties. When a person buys or sells a house, they are not just buying a physical property but also becoming part of a neighborhood, a school district, and a community. Their presence can bring new energy, diversity, and perspectives that enrich the social fabric of the area. Conversely, when a person moves away, they may leave behind a gap in the community that affects the local businesses, organizations, and relationships. Due to the numerous ways that housing activity is connected to the economy, a recent article from Fortune notes that it may have a more significant impact than you might think:
“Housing has three direct linkages to economic activity (GDP): the construction of new homes, the remodeling of existing homes, and that of housing transactions. . . . consider the activity associated with home sales – think broker fees, lawyers, etc. – which are a sizable contributor to housing’s GDP footprint.”
In addition to its economic and social effects, the housing industry also has environmental and policy implications that can shape the future of a community. For instance, when a city allows for more housing development, it can ease the pressure on the housing affordability crisis, reduce urban sprawl, and promote sustainable growth. On the other hand, when a neighborhood experiences urban decay, it can lead to abandoned houses, declining property values, and social unrest.
Buying or selling a house is more than a financial transaction. It’s an opportunity to shape the story of your life and the life of your community. By understanding the ripple effect of your real estate decisions, you can make a positive impact on the local economy, job market, social fabric, environment, and policy. Whether you’re a first-time homebuyer, a seasoned investor, or an empty-nester downsizing, consider the bigger picture of your real estate journey and how it aligns with your values, aspirations, and community. Together, we can create a world where everyone has a safe, comfortable, and meaningful place to call home.
