Real estate essential to Alabama’s economic health – Yellowhammer News

Real estate is more than an industry, a profession or a service. Alabama’s real estate industry is critical to the state’s economic well-being and growth, and the numbers prove it. The real estate industry accounted for $ 33.8 billion – or 15% – of the state of Alabama’s gross proceeds in 2020, according to a study by the National Association of Realtors® (NAR).

“The housing market is a driving force in our economy,” says the Federal Home Loan Mortgage Corporation (Freddie Mac). “It’s the common thread running through all aspects of our local and national economies, from construction to manufacturing. Homeowners also tend to buy more goods and use more services in their communities, which benefits the economy more. “

The economic impact is clearly visible in the industry’s direct contributions to the state economy in key areas:

• Construction of houses
• Real estate brokerage fees and commissions
• Mortgages
• Title insurance
• Rental and leasing
• Home evaluation
• Home inspection
• Moving services

Consumer spending on real estate transactions generates a related economic impact through:

• Renovation costs
• Furniture purchases
• Purchases of household appliances

Home sales also lead to the construction of new homes. “Typically, a new home is built for six sales of existing homes. So for every sale of an existing home, 1/6 of the value of a new home is added to the economy, ”according to NAR.

Less visible, but vitally important, is the impact of the “multiplier effect” – income earned in other sectors of the economy as a result of a home sale that is then put back into circulation in the economy. the economy. Restaurants, retailers, and service providers all benefit from real estate sales because more income allows customers to spend more.

Real estate sales also create a ripple effect for local communities, according to personal finance website The Balance. Higher selling prices increase the value of all homes, even those that are not on the market. In turn, more home equity is available to homeowners, allowing consumer spending to rise. Consumer spending contributes to economic growth, employment and income.

The bottom line: A healthy real estate industry in Alabama contributes significantly to the overall health of the state and local economies where businesses thrive and neighbors appreciate and contribute to their communities.

Here’s a look at the economic impact of a typical home sale in Alabama:

Total economic impact: $ 72,900

Income generated by real estate industries: $ 19,800 (27.1%)

Expenses related to the purchase of a house: $ 4,700 (6.4%)

Housing expenditure multiplier: $ 11,800 (16.1%)

Construction of new houses: $ 36,700 (50.2%)

Downloadable resources:

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