Oh, the sounds of spring!  Birds chirping, lawnmowers whirling, the pounding of hammers and buzzing of saws, and thankfully this spring the increased resonances associated with building new homes.  New construction not only provides great housing choices for home buyers to view, but it circulates a tremendous amount of money throughout Gallatin Valley.

Coming up with exact numbers associated with new residential construction is often a bit tricky, but checking the reports from the City of Bozeman building division is a good starting point. The most current full month reported was March 2015 when permits were issued for 23 new single-family homes, 4 multi-family units, 6 duplexes, and 4 townhomes, which the city equated to 58 housing units. These are fairly solid figures compared to years past. This brings the fiscal year-to-date total (beginning July 1, 2014) to 572 housing units. That is the highest number reported on their 30-year comparison since 2007.  The highest on the chart, however, was in 2005 which is during the height of Bozeman’s last boom.  Of course, these amounts are just for homes built within the city limits which require permits, and the impact throughout the county is much larger.  So another resource to check with is NorthWestern Energy numbers for new gas and electric hookups. According to data published last month in the Bozeman Daily Chronicle, the Bozeman area (which includes all of Gallatin County as well as portions of Madison and Park Counties) had comprised 64% of all new connections for Montana through March of this year.  Further dissected, this equated to 327 electrical hookups and 172 gas hookups.  The bottom line is that real estate in the Bozeman area is moving.
 
The obvious big picture of construction’s impact is that the buyers win by having the opportunity to purchase a brand new home, and contractors win by selling their products. But the “winning” per se goes much deeper. The paragraph below is an excerpt from the Southwest Montana Building Industry Association’s (SWMBIA) April 2015 newsletter in which the 2015 Chairman of the Board, Brian Popiel, tackled this same topic.
 
“According to economists at the National Association of Home Builders (NAHB), the one-year estimated local impacts of building 100 single-family homes in a typical metro area include $28.7 million in local income, $3.6 million in taxes and other local government revenue, and 394 local jobs.”
 
Popiel’s article furthermore points out how far and wide the impact of the construction and purchase of a new home reaches.  From furniture stores to landscaping companies, the effects continue after the home is officially sold and the new owners take occupancy. New families that move to the area contribute in the way of becoming customers to local businesses such as car dealerships, and their tax revenues become a vital part of our local funding mix for schools, roads, and the like. Linda Revenaugh, Executive Director of SWMBIA, added additional data from NAHB that quantifies the amount of money new home buyers spend in the first year after moving into their new home. Though somewhat dated, in 2007 the expenditures were estimated at $12,332 for buyers of new homes, $8,927 for those who purchased existing homes, and $4,420 for homeowners who did not move during the year.  The items considered included alterations to the property, appliances & furnishings.
 
On the national scene, 80% of all homebuilders are small businesses that build one home at a time (based on ability to finance and crew size) versus funding multiple spec homes simultaneously. According to Dr. Lawrence Yun, a National Association of Realtors economist, the housing forecast includes increased housing starts due to pent-up demand that will need to be met. Yun calls it the “Great Delay” for potential first-time home buyers who are getting married later, starting families later, and paying off student debt prior to purchasing their first home. Due to this presumption, the prediction for new construction goes from an actual figure of 1,001,000 new starts in 2014 to a forecast of 1.1 million in 2015 and up to 1.4 million in 2016.   Yun predicts that new construction will be a very crucial part of our economic recovery over the next 5 years, as the next generation settles into homeownership.
 
Whatever the scope and size of a new construction project, the money from each one still cycles its way into our local economy through the same avenues listed above all the way down to groceries and gas, keeping the circle of money flowing throughout our fine community.  So smile, say thank you, and think “trickle down” the next time you drive past a new construction site