Forget the Ford truck, buy a house for America

Atlanta native John Adams is a real estate broker, investor, and author. He answers real estate questions every Sunday at 3 p.m. on WGKA-am(920). He welcomes your comments at Money99.com, where you will find an expanded version of this column.

I was recently watching one of the many business news channels, I forget which one. The talking heads were prognosticating on Ford Motor Company’s profit prospects. Finally, the issue was settled when one of the Wall Street crowd said “Never forget: for every 100 new houses sold, Ford sells a new truck.”

That pretty much wrapped up the discussion. I turned off the television. My immediate out-loud response was "So what?"

I reflected on the homes I have sold over the years and the remarkable economic impact each had on lives of the men and women who harvested the trees, milled the lumber, wove the carpet, installed the plumbing, wiring and HVAC systems, and hung the sheetrock at each house.

Then I remembered: The dollars spent on all those goods and services were taxed to support local schools and law enforcement. The remaining dollars were mostly spent on the next layer of goods and services, further enhancing their impact on the local economy.

Then I thought about all that economic activity multiplied 100 times over, and concluded that the sale of one Ford truck amounted to nothing compared to all the economic benefits from the purchase of that many homes.

Don’t get me wrong. I happen to like Ford trucks. In fact, I happen to drive a Ford truck. But it’s just a truck.

Several years ago, the National Association of Home Builders studied the economic impact of the construction and sale of 100 single-family homes. And even though the dollars may be off a little due to the passage of time, they are helpful as a reference.

The estimated first-year local impacts of building 100 single-family homes in a typical metro area include:

- $21.1 million in local income;

- $2.2 million in taxes and other revenue for local governments; and

- 324 local jobs.

These are local impacts, representing income and jobs for local residents, and taxes (and other revenue, including permit fees) for all local jurisdictions within the metro area. They are also one-year impacts that include the direct and indirect impact of the construction itself and the impact of local residents who earn money from the construction spending part of it in the local area.

The additional, annually recurring impacts of building 100 single-family homes in a typical metro area include:

- $3.1 million in local income;

- $743,000 in taxes and other revenue for local governments; and

- 53 local jobs.

These are ongoing, annual local impacts of the new homes being occupied and the occupants paying taxes and otherwise participating in the local economy. Ongoing impacts also include the effect of increased property taxes, based on the difference between the value of raw land and the value of a completed housing unit on a finished lot, assuming that raw land would be taxed at the same rate as the completed housing unit.

Of course, we must remember that there are ongoing costs to a local government for providing all those services to the home. But the costs are only a fraction of the income derived from the same source; the overall benefit is enormous.

In the United States, the housing sector directly accounted for approximately 15 percent of total economic activity in 2011. And all this is on top of the long-term social and financial benefits to individual homeowners.

All these big numbers made me feel much better about my chosen profession as a real estate broker. Truly, those of us in the real estate business are making a significant contribution to the health of our nation’s economy.

And just so you’ll know, my New Year’s resolution is to sell 100 houses in 2014, so I can afford to go out and buy a new Ford truck.