Report Shows Real Estate is Critical to Alabama’s Economy
June 20, 2023
Alabama’s real estate industry accounted for $42.4 billion, or 15.3 percent, of Alabama’s gross product in 2022 underscoring real estate’s vital role in the state’s economic health. Since June is National Homeownership Month, the National Association of REALTORS® (NAR) annual economic impact report paints a clear picture of the importance of home ownership and the real estate industry in Alabama. According to the NAR study, in 2022, the total economic impact of a home sale in Alabama was $86,200. That’s up from $79,400 in 2021.
A closer look shows how that $86,200 flows from a typical home sale to the state’s economy.
- New home construction accounts for half of the economic impact. One new home is constructed for every six existing home sales. As a result, for every existing home sale one-sixth of a new construction home’s value is added to Alabama’s economy.
- Income generated from real estate industries includes items directly related to buying a home (commissions, fees, and moving expenses) makes up 27 percent of total impact.
- The multiplier effect is 6 percent of the economic impact and takes into account income earned in other sectors of the economy as a result of a home sale that is re-circulated into the economy.
- New furniture, appliances, and remodeling are examples of expenditures related to a home purchase that contribute 6.1 percent of the economic impact of a home sale.
More than a list of numbers and percentages, economic impact reports help lawmakers and community leaders understand the importance of the real estate industry to the well-being of Alabama’s economy as they make financial and policy decisions. The numbers translate to:
- Home ownership that contributes to personal wealth and stability.
- Jobs that enable Alabamians to provide for their families.
- Taxes that support schools, infrastructure, and communities.
- Businesses that provide goods and services for construction, to homeowners, and for real estate transactions.
So, the next time you pass a new home construction site or see a “sold” sign in a yard, pause to think about the value of that one transaction to Alabama’s economy. Clearly, it’s significant and essential.