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How Housing Development Impacts the Economy

April 25, 2023
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How Housing Development Impacts the Economy

By Adam Pryor

Housing development is an important component of economic growth in the United States. The construction of new homes and apartments creates jobs, generates income, and contributes to economic activity. In addition, affordable housing helps to address the loss of emergency service resources by providing low-income families with stable and secure housing options thereby decreasing crime and homelessness while simultaneously increasing workforce retention and economic activity in the local community. This helps existing businesses generate more revenue and provides opportunities for more businesses to open shop. In this article, we will explore how housing development impacts the economy and explain the economic benefits of affordable housing.

Housing development is a significant contributor to job creation, particularly in the construction and real estate industries. According to the National Association of Home Builders, the construction of 1,000 single-family homes generates nearly 2,900 full-time jobs and $110.96 million in taxes and other revenue for state and local governments to provide police, firefighters, schools, and infrastructure. In fact, accord  ing to the Orange County Business Council’s Workforce Housing Scorecard, for each unit of housing created in OC, 2.17 new jobs are created. That shows how strong the current job market is and how incentivized we should be to build new housing to further spur economic activity. All these things are needed to run a successful business, big or small. Housing development also stimulates economic activity and consumer spending, generating additional ecOrange County Housing and Jobsonomic activity. To put it in monetary terms, for every $1 spent on residential housing construction $3.08 is generated in economic activity in the local community, according to the Leading Builders of America. This is the equivalent of a 300%+ return on investment. That’s like buying Tesla stock before it became mainstream!

While the development of affordable housing can help to reduce poverty and homelessness and create jobs and increase consumer spending, it can also improve traffic congestion along the county’s most used transportation corridors. According to the Orange County Business Council’s 2020 Orange County Workforce Indicator’s Report, more workers commute into the county than compared to all neighboring counties. In total, net commuters into the county from LA, San Diego, San Bernardino, and Riverside counties total 145,275.

Orange County Rent

To put that into context, that is more than the population of Fullerton. Two factors contribute greatly to this trend: Orange County’s strong job market and its high housing costs. This led to workers, especially moderate to low-income workers, being priced out of the county. As an example, according to The Orange County Business Council’s 2019-2020 Workforce Housing

 Scorecard, the average hourly wage needed to afford to rent a 2-bedroom apartment in Orange County is $36.08. Since no one wants to see another minimum wage hike, especially not one to $36, we need to tackle the supply side of the problem by increasing the amount of housing stock available, thereby lowering the cost of living significantly. This will allow those workers to live in Orange County too. Currently, those workers spend the money they made in Orange County outside of the 

county; taking their paychecks back to the neighboring counties and spurring the economic activity of their local community while inadvertently siphoning money out of local Orange County communities and businesses therein such as in Brea. By building affordable housing, we can start to attract some of these workers back to living in Orange County and not just working here. If commuters live here, they will be more likely to spend their money at our businesses boosting the local economy, while also decreasing traffic congestion on our freeways making the flow of commerce smoother. This means less late shipments to your local business, lower transportation costs, less infrastructure maintenance cost, and more competitive businesses, not to mention the added benefit of making everyone’s life a little less stressful and healthier.

Moreover, housing development can actually increase existing property values while simultaneously creating new affordable housing for lower income residents. The increase in property values due to new housing developments can generate additional revenue for governments, which can be used to increase funding for schools. This is crucial, as a more educated workforce is a vital component in a successful economy. As housing development leads to increased consumer spending, it will further boost the local economy because when people move into new homes, they often spend money on furniture, appliances, and home improvements. This will lead to increased demand for goods and services, which will benefit local businesses.

In conclusion, housing development plays a critical role in driving economic growth and development, contributing to job creation, increased consumer spending, and generating tax revenue for governments which they can use to create the conditions for further economic development. If done correctly, this can be a self-perpetuating cycle which can benefit everyone just as it benefits businesses. The development of affordable housing can also help to reduce poverty and homelessness, which reduces crime and economic dilapidation thereby creating a more equitable city, state, and overall society.



National Association of Home Builders:

Leading Builders of America:


National Housing Coalition:,support%20additional%20jobs%20in%20other%20sectors%20going%20forward.


2020 OCBC Workforce Indicators Report


2019-20 OCBC Workforce Housing Scorecard

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