More and more people are flocking to central Ohio to take advantage of our healthy job market, economic prosperity and many cultural benefits. Accompanying this population growth is the very real demand for more housing.
On Aug. 12, 2020, the Builder/REALTOR® Alliance Committee (BRAC) hosted a presentation – “NIMBY to YIMBY – Part 1” - where speakers Jon Melchi (Executive Director, Building Industry of Central Ohio) and Brent Swander (VP of Government Affairs, Columbus REALTORS®) discussed the need for more new construction, obstacles to growth, and the economic benefits of new development.
We face many challenges when it comes to new home inventory supply. Increased costs, uncertain land use and zoning policies, lot availability and NIMBY-ism.
Smart, reasonable and responsible growth provides incredible opportunities for our communities. But taking advantage of these opportunities requires a change of attitude from “Not in my back yard” to “Yes, in my back yard”.
NIMBY-ism is a real threat to new development, not only in central Ohio but across the country. Many of the concerns expressed by those who oppose new construction are unfounded and have been negated by research.
In this article, we’ll share some of the concerns and studies that dispel the myths used to confront new home development.
We need more housing
Central Ohio is an incredible place to live! Our job market, economy, amenities, services, and cultural opportunities have been drawing new residents for the past many years.
According to the Insight2050 report, central Ohio is expected to grow by up to 1 million people by 2050. An unprecedented 81 percent of our region’s future household growth will be households without children.
While this includes Millennials, this growth will be driven substantially by an increasing number of “empty nesters” (one and two-person households) as the Baby Boomer generation reaches later stages of life in numbers greater than any previous generation.
A housing study1 by the Building Industry of Central Ohio (BIA) indicated central Ohio needed to build more than 14,000 additional housing units per year to keep up with growth and demand.
At the time, the Columbus MSA was building about 8,000 units per year, up to 15,000 fewer than many of our competitive cities.
The good news is that the National Association of Home Builders (NAHB) reports that 2020 new home sales were up 20 percent in the Midwest and permits were up 12 percent for single-family and 181 percent for multifamily in the Columbus area during the first half of the year.
The bad news is that we are still not where we need to be to meet the demand for housing.
According to a study2 (and subsequent book) by three Boston University professors, community land use regulations reduce housing production by creating a political process that amplifies the voices of housing opponents.
The researchers combed three years’ worth of meeting minutes from 97 cities and towns in Eastern Massachusetts and found nearly two-thirds of residents who stood up to speak about proposed housing developments did so to oppose them, while just 15 percent spoke in support.
The typical person who speaks at a meeting is eight years older than the average local resident, has lived in a home more than five years longer than average, is more than twice as likely to vote as the typical resident and is also far more likely to be white.
The study showed that these “neighborhood defenders” were able to raise concerns that lead to lengthy delays, higher development costs, and smaller projects resulting in a diminished housing stock and increased housing costs.
Locally, we have seen citizens initiate several ballot initiatives to overturn approvals by Zoning Commissions and Trustees. We’ve also seen, in recent years, more anti-development persons running for public office simply to hold up projects.
In order to fully appreciate the positive impact residential construction has on a community, it is important to include the ripple effects and the ongoing benefits.
Only one public school child for every three homes
Public education accounts for almost 40 percent of local government direct expenditures per housing unit, based on data from the Census of Government. School impact fees on new construction are typically determined in part by assumptions about the number of children in public schools per housing unit.
The most recent 2018 American Community Survey (ACS) data show that, on average, there is less than one public school child for every three housing units in Ohio. See chart above for a more detailed break-down.
New construction 0.312 students
Existing homes 0.317 students
Multi-family 0.151 students
Economic impact of home sales
Real estate has been, and remains, the foundation of wealth building for the middle class and a critical link in the flow of goods, services and income for millions of Americans. Accounting for nearly 17 percent of the GDP, real estate is clearly a major driver of the U.S. economy.
In Ohio, the real estate industry accounted for $103.1 billion or
14.8 percent of the gross state product in 2019.
Homebuilding generates substantial local economic activity, including new income and jobs for residents, and additional revenue for local governments.
The National Association of REALTORS® (NAR) calculated the total economic impact of real estate-related industries on the state economy, as well as the expenditures that result from a single home sale, including aspects like home construction costs, real estate brokerage, mortgage lending and title insurance.
$14,607 Income generated from real estate industries — commissions, fees and moving expenses, or income to real estate industries, associated directly with the purchase estimated at about 9 percent of the median home price.
$4,650 Expenditures related to home purchase — Furniture and remodeling expenses
$9,243 Multiplier of housing-related expenditures — income earned in other sectors of the economy as a result of a home sale re-circulated into the economy
$27,050 New construction — Typically, one new home is constructed for every six existing home sales so, for every existing homes sale, 1/6 of a new home’s value is added to the economy.
$55,550 Total Economic Impact
Another NAHB study3 looked at the economic impact that residential construction has on the U.S. economy.
These latest national estimates showed that:
Conclusion: Collaborating with our regional partners such as MORPC, BIA, One Columbus, Mid-Ohio Development Exchange (MODE) among others, can help bring about real change.
Please share this information with your clients, friends, and community to help educate the public that smart growth will not only help their communities, it is an investment in their own prosperity.