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.