One local economy metric that often gets overlooked amid the jobs and sales tax numbers is the real estate contribution. It accounts for almost 16% of the total economy and the numbers turned upward for the first quarter. 

The total addition was $191.4 million. It’s up from previous quarters because total sales in the first quarter mid-month update increased to 1,615. That’s up 3.3% from the first quarter of last year. 

The easy way to get a handle on the volitive real estate contribution is to break it down on by the impact from a typical home sale. Most of the work is done for by the folks at the Research Department of the National Association of Realtors®. They use data from the Bureau of Economic Analysis, the Census, The National Association of Home Builders (NAHB), macroeconomic advisor and their own data.  

The base working number in the NAR breakdown is a typical home sale has an $118,500 impact on the local economy. During the first quarter there were 1,615 home sales. 

There are four prime considerations. 

INCOME FROM REAL ESTATE INDUSTRIES 

Based on the number of sales and the base number, it accounts for a $33,150 economic impact. That’s 28% of the total impact. Here’s what goes into that total: commissions, fees and moving expense, or income to real estate industries associated directly with the purchase. They account for about 9% of the median home price. 

HOME PURCHASE RELATED EXPENSES 

Furniture and remodeling expenses are estimated to be about $5,460 based on the NAHB research. It’s a 4.6% of the total impact. 

MULTIPLIER EFFECT 

The multiplier effect accounts for the fact that income earned in other economic sectors as a result of an existing home sale is re-circulated into the economy. The effect share is $18,530 – 15.6% of the total impact. 

NEW CONSTRUCTION 

Additional home sales induce added home production. Typically, one new home is constructed for every six existing home sales. This component accounts for 61,390 (51.8%) of the total impact. If the typical motivator is working as it should, the first quarter home sales will result if 269 new home across the region. 

According to the Northeast Tennessee Association of Realtors®, the total sales volume for home listed on the local Multiple Listing Service (MLS) was $368.3 million dollars. 

The bottom-line story to this exercise in number crunching illustrates just how big a part the real estate industry is to the local economy.