Donjek Project: Identifying the Economic Impact of Housing

An economic impact analysis produced by Donjek for the Minnesota Housing Partnership and Greater Minnesota Housing Fund was released at a news conference held at the State Office Building in St. Paul on February 18; the Finance and Commerce coverage of the release is available here.

The key findings of the report, titled "Housing as a Lever for Economic Recovery," include:
  • Public investments in housing leverage private capital; a 2008 analysis by the Minnesota Housing Finance Agency (MHFA) indicates a commitment of $1,310 in private funding for every $1,000 investment by the agency. Financial leverage broadens the impact that state housing investments bring to bear as a stimulus measure. 
  • Housing investments are an effective vehicle to stimulate spending and revenue creation; analyses show that $1 million invested in housing generates $1.75 million to $2.1 million in economic activity, resulting in income, sales, property and other tax revenues.
  • Studies reviewed in this report indicate the job creation potential in housing as well; an investment of $1 million (in public funding leveraged with private capital) in housing generates 14 jobs according to the MHFA analysis, and up to 21 jobs in other studies.
An application of the findings to a Minnesota setting is included in the final report and is also available here. An effective stimulus ought to have a broad range of approaches. Substantial leveraging of private equity and lending, as well as the funding of federal and other public partners, make housing finance a powerful approach for the state to consider in its plans to support economic recovery.

Photo: Courtesy of Flickr.