NC State Ag Economist Dr. Mike Walden – “Does Home buying Jump Starts Spending?”

 

Mary:  I’m Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program asks if home buying jump starts spending.   Mike, I remember that each time we have bought a different home, we had to spend a significant amount of money on other items like curtains, fixtures, and even some furniture.  Is this typical, and if so, is it important for the economy?

Mike:  Summary Answer

  1. It is typical, and it is important
  2. Whenever someone changes residences – whether they are a renter or an owner-occupant – they usually find everything from their previous residence doesn’t fit – so they buy more
  3. New research shows this additional spending is significant – $3700 on average for a renter moving to a different unit, and $5900 for an owner-occupant moving to a new home
  4. Means that the economic impact of homebuilding and home-buying extends beyond the cost of the dwelling
  5. For example, when home sales plunged 50% during the Great Recession, spending on home related products also dropped by double-digits
  6. Hence, the relatively slow pace of homebuilding and home sales in recent years may be one of the reasons for the overall slow rate of economic growth
  7. I’m MW

Mary:  And I’m Mary Walden for N C State Extension