2011 Residential Economic Report
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Transcript of 2011 Residential Economic Report
The Tri-County Housing Market 2002-2011
Economic Update: Residential Report
Boone, Kenton and Campbell Counties in the
Commonwealth of Kentucky
Data Compiled by:
Brian A. Miller
Executive Vice President
Home Builders Association of Northern Kentucky
Thursday, March 01, 2012
The Tri-County Housing Market 2002-2011
Summary:
2011 was a mix of optimism and gloom in the residential construction and remodeling market. As we
enter into 2012 there are signs of life. The foundation of a full housing recovery has been established in
2011. Residential remodeling is experiencing a renaissance in activity and values not seen in the last five
years. There has been a seventy one percent increase in activity in the last six months of 2011 alone,
with a fifty percent increase for the whole of 2011 over 2010. Values of residential remodeling work
have increased twenty seven percent in 2011 over 2010. Multifamily and condominium activity has
increased three hundred percent in 2011 over 2010; bringing activity in this sector back to a somewhat
normal pace.
However, 2011 was the worst year in recent history for single family residential construction in Northern
Kentucky. There was a twenty percent reduction in the number of single family detached homes in 2011
over 2010. This figure represents a seventy five percent reduction in the number of single family homes
built at the peak of activity in the Tri-County area (Boone, Kenton and Campbell Counties). As this
report is released, there is new optimism in the single family home market. January 2012 permits are up
twenty percent over that same month in 2011. Publicly traded homebuilding corporations are
experiencing a flock of investors in a bullish mode entering the sector. Nationally, the pace of
absorption of short sales and other distressed properties is dramatically increasing. High profile
investors from Warren Buffet to many featured analysts are bullish on housing. The Greater Cincinnati
MSA has been on the National Association of Home Builders (NAHB) Improving Market Index
(http://eyeonhousing.wordpress.com/2012/02/16/improving-markets-index-cincinnati-oh-ky-in-msa/)
for three months. This index has seen sizeable growth in the number of markets experiencing a
turnaround for the last four months. NAHB’s home building index, a measure of home builder
confidence has increased from the low of fourteen to a level of twenty-nine, a level not seen since the
beginning of 2007. Nationally, new home sales in January of 2012 are the highest they have been since
April of 2010; the end of the first time homebuyer’s tax credit. Housing affordability is at an all time
high.
The Home Builders Association of Northern Kentucky (HBA) expects modest growth in the first half of
2012 for detached single family homes. By the middle of 2012 the HBA predicts a 15% increase in this
activity over that period in 2011. The HBA remains extremely optimistic about residential remodeling
and string sustained growth in the multifamily and condominium sector of the construction industry.
The Tri-County Housing Market 2002-2011
Employment
At its height the housing market contributed over 8,613 jobs to the Tri-County area of Boone, Kenton
and Campbell Counties as a direct result of construction activities. 2010 saw the trough for jobs directly
created from residential construction activity at 2,374. Due to an increase in multifamily and
condominium construction the amount of jobs that were created as a direct result of residential activity
rose to 2,658. Although welcomed news, this number still represents the second worse year on record
for this statistic. At its height, housing created over 2,300 jobs in the Tri-County area that would support
new communities and their homeowners as employment in commercial activity follows as a result of
residential growth. The amount of jobs created by the offshoots of residential construction were 700 in
2011, an increase of only 9 jobs over 2010 and the second worse year on record.
As a direct result of multifamily and condominium construction the industry added 418 jobs. Jobs that
result from the offshoots of single family construction decreased by 154. As a result of the offshoot of
multifamily and condominium development jobs in the Tri-County area grew by 162 jobs.
Overall the employment figure resulting from the impacts of the industry grew by 450 jobs in 2011 over
2010. While this shows that 2010 was the trough for all construction activity, the single family home
market still experienced its worst year on record.
Data can be created for individual counties by request.
The Tri-County Housing Market 2002-2011
Personal Income
Housing and its related industries and offshoots provide a large portion of the region’s personal income.
During the height of activity the Tri-County area personal income derived directly from construction
activity went from $421,696,768 down to $111,684,894 in 2010. 2011 saw an increase in the incomes
directly tied to residential construction by $1,418,941. This remains the second worse year on record
for this statistic. The growth in direct construction activity income was entirely born by the multifamily
and condominium activity as single family construction experienced its worst year on record. Personal
income derived directly from single family construction fell $1,267,345. Multifamily and condominium
construction activity resulted in more construction trades people and contractors earning greater
incomes in 2011. This increase of $19,634,991 is noteworthy and finds this level of activity to be 75% of
what can be considered historically normal.
Personal income is also affected by growth that follows new residential construction. In 2010 there was
roughly $25 million in people’s personal income that was created as commercial and financial activity
benefited from residential construction. 2011 saw and increase of roughly $8.9 million to a level of $34
million. While this is moderate growth it still falls far short of the highest period’s $93 million in 2005.
Data can be created for individual counties by request.
The Tri-County Housing Market 2002-2011
Taxes and fees paid to government
Possibly one of the largest impacts upon Northern Kentucky has been the trough seen in taxes and fees
paid to government as a result of residential construction. Government’s fiscal health is directly tied to
this industry as cities and counties benefit from the direct activity of permitting, licensing and inspection
fees as well as occupational and insurance taxes as a result of actual construction. These entities also
benefit greatly from a growing tax base that is spurred by additional real estate and personal property
taxes for both the new residents and commercial operations that are born as a result of residential
growth. The majority of government’s decline or growth in revenues can be directly tied to the health
or ill of the residential construction industry.
In 2010 taxes and fees paid to government as a direct result of construction activity was $7.5 million. In
2011 that figure grew to $8.9 million. While this growth is good, this figure is a far cry from 2002’s $28.4
million. The second line of fiscal revenues in 2010 was $4.2 million and in 2011 grew to $5.4 million, off
the peak of $17.1 million in 2002. This revenue is created from the growth that follows and is related to
residential construction.
Overall government’s fiscal revenue saw a growth of $2.5 million across the Tri-County area, but it is
notable that this figure is down from its high in 2002 of a total of $45 million in fiscal revenue in 2002.
Data can be created for individual counties by request.
The Tri-County Housing Market 2002-2011
Asumptions: This report covers the Counties of Boone, Kenton and Campbell in Northern Kentucky. This
report is an update based upon conclusions found in an extensive report that was generated by the
National Associaiton of Home Builders in 2007. That study used data collected from the Boone County
Property Valuation Administrator, the Campbell County Property Valuation Administrator, the Kenton
County Property Valuation Administrator, the Boone County Fiscal Courts, the Campbell County Fiscal
Courts, the Kenton County Fiscal Courts, the Kentucky Department of Revenue Office of Property
Valuation, the Greater Cincinnati/Northern Kentucky Apartment Association, the Northern Kentucky
Area Planning Commission, Buildex online building permit tracking service, Sanitation District #1, the
Boone County Building Department, the Boone County Water District, the Campbell County Planning
Commission, the Home Builders Association of Northern Kentucky, and the Northern Kentucky Water
District.
Abilities and Scope: Further analysis is available to be performed which can show housing’s impact over
the last 10 years in specific industries including construction, manufacturing, transportation,
communications, utilities, wholesale and retail trade, finance and insurance, real estate, personal and
repair services, services to dwelling and buildings, business and professional services, eating and
drinking places, automobile repair and service, entertainment services, health, educational and social
services, and local government.
Contact: For a detailed analysis please make your request by call the Home Builders Association of
Northern Kentucky at 859.331.9500. Ask for Brian Miller.