Homeownership-focused Community Development Financial Institution PT 2



  • Official comment
    Candi Clouse, PhD

    Hey again Sarah!

    The construction of all these new homes is a great thing to analyze in IMPLAN. This is where the majority of the impact with your program seems to occur.

    Looking at the individuals moving from a rental property to a home they own gets a lot trickier. We have an industry for owner-occupied dwellings which is for home ownership and two industries for rentals. The problem with throwing all of their new mortgage payments into the owner occupied dwellings industry is that you are just moving that payment from one of the rental industries. The true wealth that comes from homeownership isn't realized in the short term, but instead if they are able to rent out their home for a portion of time (or rent out a portion of it), but more so when the home is sold or after the mortgage is paid off when they have additional disposable income to spend.

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    Sarah Giffin

    Thank you for your prompt reply! This is a tricky task, indeed!

    A few follow up questions:

    1. Our organization hires general contractors to build these new homes. Will it make a difference whether we model the production of new homes as an industry event vs a commodity event? Or, is it best to model it as an industry event by the "Construction of Single-family homes" industry because that's who we are paying to do the work?  

    2. Also, in what situation would somebody model an event type for Owner-Occupied Dwellings? Would this only make sense in a situation where we know that there is a change in the rate of owner occupants in a region? Or, that residents from outside the region are moving into the region? 

    3. And finally, if some of our new construction is rental, do we use the "imputed rent" commodity event to express the new income? 

    Many thanks. 

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    Hi Sarah,

    1. Since you know the industry these contractors work in, an Industry Output event is appropriate for analyzing the total cost of construction. 

    2. Owner-Occupied Dwellings is an Industry in IMPLAN to capture Household Spending for the maintenance and repair of the home and the overall value of home ownership. Therefore, if you can estimate an increase in home-ownership costs, this can be analyzed in the Owner-Occupied Dwellings industry as an Industry Output Event, but this Output value would need to be the imputed rental value of the home; including the cost of maintenance and repair, property taxes, plus the additional imputed rental mark-up. To capture the true impact, you'd want to only include new homeowners in the region that moved from outside of the region, or include a second event for the decrease in spending on rentals in the region using a negative Output value in Industry 448 - Tenant-occupied housing. 

    3. In addition to analyzing the construction of new rental properties, the rental costs can be analyzed separately as Output in Industry 448 - Tenant-occupied housing. 



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