Steve Doyle’s Blog

A new study from the Sacramento Regional Research Institute: “The Economic Benefits of Housing in California”, August 2008, has just been released and its findings are remarkable! The direct impacts of new housing construction contributes about $40 billion to the California economy and employs over 266,000 people.

If you consider all the industries involved in housing in California (including remodeling, brokerage, property management, financing, etc) the economic contribution jumps to $345 billion! There are 1.2 million people are employed in these fields. That is a major impact. How big? Consider that the total economic output for the State of California in 2007 is estimated at $3.2 trillion. At $345 billion, the housing industry is 11% of the state’s economy! That is the largest individual industry sector in the California economy.  And, with only 1.2 million employees, housing only accounts for 5.8% of California’s workforce! To put that another way, each employee in California’s housing industry contributes $293,347 to the state’s total economic output.

These numbers are truly remarkable considering the health of the housing industry in California. Employment in new home construction for 2007 is off 28% from the 2006 levels. Economic output is down 28% from 2006 to 2007. The supply of new home construction dropped from 160,502 homes in 2006 to 110,073 new homes in 2007, a fall of 31%. Despite this reversal, housing continues to lead our state’s economy.

There is an old adage that says construction will be the first industry to decline in an approaching recession, and it will be the first industry to lead us out to a new period of economic growth. It is now time for the state and local governments to find ways to encourage housing production and to stimulate home purchases.

If you are interest in more details about the Sacramento Regional Research Institute’s Report, you can find a copy at: http://www.mychf.org/tasks/sites/chf/assets/File/Economic_Housing_study_08(1).pdf