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  • Damon Sabatini

The Economic Benefits of Home Construction in New York


According to the most recent projections, the residential construction industry in New York State will generate approximately 349000 new jobs in 2016. The construction industry supports more than 208,000 design, engineering, and construction jobs. Additionally, construction industry jobs contribute to local household incomes, increasing them by more than $71,000. This report is a helpful guide to the construction industry in the state. It will provide the information you need to decide whether home construction suits you.


The City of New York is investing in the construction industry to combat the housing shortage in the state. In addition, the city is utilizing its purchasing power to assist low-income neighborhoods, where labor shortages are especially severe. It also collaborates with building trade unions to bring quality construction jobs and apprenticeships to these communities. The plan is a step in the right direction, as it will create jobs and help communities escape poverty.


Non-residential construction projects, such as office buildings, sports facilities, and hotels, contribute significantly to the local economy. In 2016, these buildings generated $12.1 billion in direct spending and $3.4 billion in induced economic output. The total economic impact of these projects is over $15 billion, significantly contributing to New York's economy. While the building boom has caused local jobs and increased local economic activity, it also created jobs in the construction industry.


The recession also hurt the home construction industry, which pushed out many smaller builders and left the larger firms shaky and cautious. As a result, housing starts fell to 554,000 in 2009 from more than 2 million in 2005. However, this number recovered somewhat when the housing market recovered. Despite this, developers are only now building at pre-bubble levels. But as interest rates continue to rise, this activity decreases as demand slackens.


The construction industry is still one of the best sectors in the economy. In addition to creating jobs, it helps create households. While higher wages and household creation are suitable for the short-term, the stall in population growth could prove problematic down the road. This sector is vital to NY's economy.


Although construction costs are rising in New York, new housing costs are not rising much. In 1980, actual home construction costs in the state were $83 per square foot. In the 1990s and early 2000s, construction costs decreased to the low-sixties and thirties. However, in 2015, construction costs rose to $85 per square foot. This trend does not explain the recent increase in accurate house prices.


The housing wealth in NY is different from wealth in other forms. For example, as housing prices increase, living costs also rise. Thus, infinitely living homeowners would not be better or worse off because the rising cost of living is offset by the increasing financial value of their assets. Similarly, home-rich New Yorkers or Parisians might feel less privileged than other homeowners.


While New York City has a high population density, the housing market has strong supply constraints. Because of this, the city has difficulty meeting the housing demand. As a result, it is crucial to develop affordable housing. This is an essential step towards the revitalization of the economy.

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