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Single-family housing construction

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huberthensen

Hi,

I know that there are questions about housing construction from before, but they all seem to be several years old and from before the 536 sector scheme was created. Now that there is a sector for "Construction of new single-family residential structures" (Sector 59), how would someone use it for estimating economic impacts?

For example, let's say that there's a new subdivision to be built of 10 homes at a price of $200,000 per home. That would be $2,000,000 in total price. Let's also say that of the $2 million, $300,000 covers the cost of the land. In addition, let's say that the total cost to the home builder is $1.8 million including the land, so there's a 10% margin on the final price. What is the input for Sector 59 industry sales? Is it $2 million to cover the full price, $1.8 million to cover the costs to the home builder, $1.7 million to cover the price minus the land or $1.5 million to cover the costs to the home builder minus the land?

Thanks for the help!

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    Meg Philipp

    Hello Hubert,

    Regarding Sector 59- Construction of new single-family residential structures. If you’re looking at a 2M Total price you would then deduct the $300,000 land cost and any cost to purchase heavy equipment. In most cases, purchases of heavy equipment are made to distributors and manufacture outside of your region so the money you spend on these items will not affect your economy.  If you know that the machinery is manufactured in your region, you can run that as a separate event. Per your example once you subtract the land you’d be looking at a 1.7M output. IMPLAN uses backward linkages to capture the other build costs so deducting them is not necessary.

    Construction includes the following:

    1. New buildings and structures.

    2. Additions, alterations, conversions, expansions, reconstruction, renovations, rehabilitations, and major replacements (such as the complete replacement of a roof or heating system).

    3. Mechanical and electrical installations such as plumbing, heating, electrical work, elevators, escalators, central air-conditioning, and other similar building services.

    4. Site preparation and outside construction of fixed structures or facilities such as sidewalks, highways and streets, parking lots, utility connections, outdoor lighting, railroad tracks, airfields, piers, wharves and docks, telephone lines, radio and television towers, water supply lines, sewers, water and signal towers, electric light and power distribution and transmission lines, petroleum and gas pipelines, and similar facilities that are built into or fixed to the land.

    5. Installation of the following types of equipment: boilers, overhead hoists and cranes, and blast furnaces.

    6. Fixed, largely site-fabricated equipment not housed in a building, primarily for petroleum refineries and chemical plants, but also including storage tanks, refrigeration systems, etc.

    7. Cost and installation of construction materials placed inside a building and used to support production machinery; for example, concrete platforms, overhead steel girders, and pipes to carry paint, etc. from storage tanks.
     

    The following are excluded from construction:

    1. Maintenance and repairs to existing structures or service facilities.

    2. Cost and installation of production machinery and equipment items not specifically covered above, such as heavy industrial machinery, printing presses, stamping machines, bottling machines, and packaging machines; special purpose equipment designed to prepare the structure for a specific use, such as steam tables in restaurants, pews in churches, lockers in school buildings, beds or X-ray machines in hospitals, and display cases and shelving in stores.

    3. Drilling of gas and oil wells, including construction of offshore drilling platforms; digging and shoring of mines (construction of buildings at mine sites is included); work that is an integral part of farming operations such as plowing and planting of crops.

    4. Land acquisition.

     

    For more information please take a look at:

    https://implanhelp.zendesk.com/hc/en-us/articles/360004858794-Modeling-Capital-Expenditures

    https://implanhelp.zendesk.com/hc/en-us/articles/115009510907-Construction-FAQ

    https://implanhelp.zendesk.com/hc/en-us/articles/360001084773-536-Definitions-of-Construction-Sectors

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    huberthensen

    Thanks for the clear explanation, Meg.

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