Key findings
- New housing development will create both short- and long-term impacts on the economy.
- Short term impact: Initial construction phase generates substantial immediate economic activity, these effects are temporary.
- Long-term impact: Spending in the community driven by the new households from people moving to the area.
- Direct impact of construction depends on the value of the housing being developed.
- As construction costs increase, there is a corresponding rise in total employment, labor income, value added, and total economic output.
- For example, building a single family home generates 3.20 jobs and over $518,000 in total economic output, while an apartment unit generates 1.61 jobs and nearly $297,000 in output.
- While the impact per unit may be smaller for apartments, their density can allow them to rival or exceed the impact of single-family homes on a square-foot basis.
- Total economic impact of workforce housing habitation is influenced not just by income, but by the specific industry of the occupant.
- For instance, a gas station manager household with a $100,000 income has a higher "Impact Multiplier" (5.15) than a nurse and teacher household (2.65) with a $150,000 income.
- Quantifies the concept of "public costs to private inaction."
- Redefines housing as a public economic infrastructure rather than just a private good.
- For example, a single vacant home can represent a loss of at least $95,000 in annual regional economic output.
- Gives community leaders a concrete framework to justify spending public resources by showing the direct return on investment through local retail spending and supply chain activity.
About the report
This report addresses a critical knowledge gap in how small towns and rural communities quantify the long-term value of housing development. While the immediate economic boost of construction is well-understood, this document highlights the often-overlooked ongoing economic contributions of housing habitation.
Otter Tail County, Minnesota, has dedicated significant public resources to expanding its housing stock through an initiative called “The Big Build.” This program began in 2020 and set an explicit goal to build or rehabilitate 5,000 homes across the county by 2025. To better document the impact of this work, this Economic Impact Analysis (EIA) study will detail the economic contributions of rural housing units during construction and occupation. As more small towns and rural communities focus on expanding housing options, the Extension Department of Community Development wanted to show how the EIA model can be utilized to show the construction and habitation of different rural housing types. This report presents a summary of the findings.
Reviewed in 2026