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Residential Development Pays for Itself – And More!

Anti-growth advocates and the hopelessly naïve are quick to contend, without offering any corroborating evidence, that development must be forced to “pay for itself”, implying (1) that it does not now do so, and (2) that the imposition of new taxes on development is, therefore, justified.  The facts do not support these contentions.

According to a study by the National Association of Home Builders (NAHB) , building 1000 new single-family homes in North Carolina generates – in just the first year – more than 2,200 jobs, nearly $85 million in business and wage/salary income, and more than $11 million in state and local revenue.  The sale and occupation of those 1000 new homes results in ongoing benefits of nearly $26 million in business and salary/wage income each year, nearly $9 million in state and local tax income each year, and the creation of more than 825 jobs each year.

A recently released study by Dr. John Connaughton and R.E. Madsen of UNC-Charlotte corroborates the earlier NAHB study and dramatically illustrates the importance of residential construction to the economy of North Carolina.  Connaughton and Madsen’s 2005 study  found that in 2004, the home building industry ranked third in direct spending ($16.3 billion) and accounted for total spending of $27.7 billion.  Only wholesale trade and cigarette manufacturing contributed more to the State’s economy in terms of direct spending.  As well, residential construction was the State’s fifth largest employer.  Home building provided 136,840 direct jobs and 273,558 jobs overall.  Only state and local education, food services, state and local government, and wholesale trade employed more people.  According to a study by Dr. Donald Jud  of Economic Research Associates and released by the North Carolina Association of Realtors®, the direct and indirect effects of the combined construction and real estate industry accounted for 44.1% of the Gross State Product in 2003.

No one can argue that home building is a leading contributor to the State’s economy, but do these economic contributions actually offset the costs imposed on local governments by development?  The answer is unequivocally “YES”. 

University studies consistently prove that new residential construction “pays for itself”.  As the following histogram shows, building 100 single-family homes results in a NET positive revenue stream both during the construction phase and every year thereafter once the homes are sold: 

The housing industry is clearly the “engine that powers the economy”, and it is imperative that home builders, associates, and elected officials at the state and local level work together to remove barriers to home ownership and speed up the development approval process.  Only in this way will North Carolinians continue to enjoy the “goodliest land under the cope of heaven”.



1.     Housing Policy Department. 1997. The Economic Impact of
Home Building in North Carolina. NAHB.

2.     Connaughton, John E. and R.A. Madsen. 2005. Estimating the Economic Impacts of the Residential Construction Industry on the North Carolina Economy. UNC-C

3.     Jud, G. Donald. 2005. Economic Research Associates,
Greensboro. Cited in NCAR ® brochure Real Estate, The Foundation of the North Carolina Economy.



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