Do You Know How Homeownership is Vital to Nashville’s Success?
One of the benefits, the economic impact of homeownership, is well documented. The housing market and new construction have pulled us out of six of the last eight recessions. The housing sector directly accounted for fifteen percent of America’s total economic activity in 2011.
In addition to the economy, a large number of positive social benefits have also been documented to be driven by homeownership and the housing market. Improvements can be found in the areas of education, health, crime, public assistance and property improvement.
Let’s see how these benefits directly affect the economy and the Nashville community.
Economic Impact of Real Estate Activity in Nashville
Based on the latest data available from the National Association of Realtors and the Bureau of Economic Analysis, the real estate industry in Tennessee accounted for $33 billion or nearly 13% of the Gross State Product in 2011. These contributions were derived from home construction, real estate brokerage, mortgage lending, leasing, appraisal, moving and other related services.
Every time a home is sold in Tennessee, more than $11,000 in income is generated, $5,600 is spent on consumer items related to the household, and nearly $3,000 is spent on renovations in the first two years. Every home sale in 2011 led to nearly $20,000 in economic impact to Tennessee.
I expect 29,700 homes to be sold in Metro Nashville in 2013, and this should lead to more than $594 million in economic benefit to Nashville this year. On top of this direct benefit, home sales also generate indirect spending that is estimated to be $9,484 per home sold.
The total direct and indirect economic impact of housing on Nashville is closing in on one billion dollars per year in 2013.
Social Impact of Real Estate Activity
While the economic impact is easy to see, many people fail to see the societal benefits of homeownership.
Several studies show that homeownership has a significant effect on the success of children and their education. What is less certain is the reason why homeownership causes improved school performance. Most researchers think the stability, life management skills, and quality of life from homeownership are the causal link between the two.
Homeowners are happier and healthier than non-owners. Certainly other factors such as income and education also lead to happier and healthier people. Recent studies of low income individuals who recently became homeowners report found higher levels of satisfaction in life, self esteem and physical health. In addition, not owning a home was shown to negatively affect the number of people who reported to be in excellent or very good health.
Homeowners are statically less likely to become victims of a crime and have more incentive to participate in crime prevention programs than non-owners. The statistics on crime are consistent with theories on social disorganization. By living in a stable housing environment, crime rates are lower due to the structure of the community and extensive social ties.
Homeowners are more likely to have a well maintained home. This is not only an economic benefit to the community, but it also promotes safety and raises mental health. Do not take this as a criticism of landlords as they have a financial interest in ensuring that their properties are well maintained. Mobile household are less motivated to maintain and may ignore damage or needed repairs.
The positive social and financial benefits of homeownership are compelling. As a Realtor and member of the Nashville community, we need to do more to reverse the recent downward trend in homeownership. I believe we all have a part in building a strong Nashville. Will you join me?
Why do you value homeownership?