Community News

The prospect of building or occupying a brand new home is always a very exciting and occasionally stressful time for potential owners. There is the anticipation of choosing a floor plan, picking out colors and finishes, and knowing you are the first one to reside in the home. Aside from the personal joy, along with a few expected tense moments, the process of new construction plays an integral part in a local economy. The economic benefits are much broader than is first expected. Housing construction is essentially its own economic powerhouse which provides a roof over heads, jobs for many industries, and the ability to attract new businesses to an area.

Though the builder or general contractor is often thought to be the most important role in new home construction, the process incorporates so many steps from a draftsman or architect at the very beginning to landscape designers and installers at the completion of the project. Each house that is built employs excavators, concrete foundation and flatwork employees, framing carpenters, roofers, siders, electricians, plumbers, HVAC workers, insulation companies, drywallers, finish carpenters, painters, flooring professionals, and lumber yard staff. These are direct jobs that are impacted by the building process. The more indirect effect comes in the form of the planning professionals, attorneys, and engineers who set up subdivisions. The process also helps to employ title companies, insurance agents, lenders, Realtors®, and appraisers. At or after occupancy, there are movers, rental companies, cable and internet providers, and appliance and furniture stores among others.

The National Association of Home Builders (NAHB) estimates that three jobs are created for each new single-family home built. They further tout that housing is "Made in America" as most products used are produced within the US. Our local home builder's organization, the Southwest Montana Building Industry Association (SWMBIA) prepared a report in January 2011 titled "The Local Impact of Home Building in Bozeman, Montana".  This article is a good indicator of construction numbers on a more local basis and can be found in full on their website (www.swmbia.org).  During their one-year study period, 139 single-family homes were built in the City of Bozeman, 536 local jobs were impacted, $25.2 million in local income was created, and $2.7 million in taxes and other revenue for local governments was generated.  Having a strong building market produces a "ripple effect" from the additional funds industry workers have to spend in the local market.  A substantial portion of their earnings are invested back into the community in the form of groceries and dining, entertainment, retail, and other services.  As continued "re-spending" occurs, those dollars multiply many times in the immediate area, including capital improvements and increased staffing and wage base. 

In an attempt to forecast what might happen in terms of new construction for 2012, it is important to look at the number of sales of vacant building lots.  According to the Southwest Montana Multiple Listing Service (MLS), there have been 54 sales of building lots in Area 1 (Bozeman city limits) through May 4th of this year.  Additionally, there are 39 lots currently pending scheduled to close.  In comparison, there were only 74 lots sold in all of 2011.  Furthermore, in Area 2 (Bozeman area outside of city limits) there have been 31 sales this year to date with an additional 51 lots under contract compared to 68 total sales in 2011.  To delve more into local statistics, 43 of the total 189 residential sales in Area 1 (single-family and multifamily) thus far in 2012 were reportedly built in 2011 or 2012 (translating to new construction comprising 23% of year-to-date residential sales).

As our real estate market begins to recover and new construction starts to occur, it is important to recognize the job creation and economic stimulus provided by each and every new home.  So the next time you find yourself driving behind or  passing a truck loaded with trusses, lumber, or roofing materials, think "ripple effect"... smile, wave and shout "Thank you!"