2017 February Newsletter

New Home Sales Reach  Highest Yearly Total Since 2007 New Home Sales Streamlined Wetland Permits Property Tax Rates across Regions Building Success Calendar of Events BANN News Update Newsletter Overview Sales of newly built, single- family homes rose 12.2% in 2016 to 563,000 units, the highest annual rate since 2007, according to newly released data by the U.S. Department of Housing and Urban Develop- ment and the U.S. Census Bureau. New home sales fell 10.4% in December 2016 to a seasonally adjusted annual rate of 536,000 units. “We are encouraged by the growth in the housing sector last year, and by the fact that builders increased inventory by 10% in anticipation of future business,” said Robert Dietz, chief economist of the National Association of Home Builders (NAHB). “NAHB’s forecast calls for continued upward momentum this year, with housing starts expected to rise 10% over the course of 2017.” “To ensure sales continue to move forward in 2017, builders need to price their homes competitively, especially given that mortgage interest rates are expected to rise this year,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. The inventory of new homes for sale was 259,000 in December, which is a 5.8-month supply at the current sales pace. The median sales price of new houses sold was $322,500. Regionally, new home sales increased 48.4% in the Northeast. Sales fell 1.3% in the West, 12.6% in the South and 41% in the Midwest. More analysis is available on NAHB's Eye on Housing blog. February 2017 NAHB commends President Trump on his announcement to reform regulations in the Dodd- Frank Act that have hampered our nation’s housing recovery and slowed economic growth. NAHB supports common-sense regulations to protect American consumers and preserve our nation’s banking system. However, the tight lending conditions created by Dodd-Frank are preventing too many home builders from receiving loans and restricting mortgage financing to credit-worthy borrowers. Regulatory relief for mortgage lenders and small and mid-sized banks that serve their communities is critical for the nation’s housing recovery. NAHB has been calling for reduced regulatory burden on real estate lending since Dodd- Frank’s passage in 2010. During the Builders’ Show, NAHB’s Board of Directors approved a new mission statement: “NAHB strives to protect the American Dream of housing opportunities for all, while working to achieve professional success for its members who build communities, create jobs and strengthen our economy.” The Board also approved a new vision statement: “Building Homes, Enriching Communities, Changing Lives.” Board Approves New Mission Statement More than 68,000 home builders, remodelers, designers and their trade partners saw amazing products, talked with suppliers, took in leading- edge education sessions, and enjoyed a great concert by Little Big Town during the NAHB International Builders’ Show® (IBS) that took place Jan. 10-12 in Orlando. IBS is the largest component of the annual Design & Construction Week®, which also includes the Kitchen & Bath Industry Show (KBIS). Design & Construction Week this year saw more than 1,500 exhibitors using 569,000 square feet of exhibit space. While the U.S. Army Corps of Engineers re-issued Clean Water Act streamlined nationwide wetland permits (NWPs) as a final rule on Jan. 6, White House Chief of Staff Reince Priebus on Jan. 20 issued a memo directing federal agencies to withdraw or postpone recently finalized regulations for at least 60 days. The NWP program is set to expire on March 19. If the NWPs get caught up in this regulatory freeze, then builders and developers face the potential burden of costly and time-consuming “individual” wetland permits for even the smallest of impacts to wetlands, ponds and streams. Activities that do not qualify for authorization under an NWP must seek an individual permit, granted by the Corps on a case-by-case basis through a rigorous review process, including public notice and additional permit conditions. Builders and developers rely on NWPs for a much faster and cheaper authorization process: For example, a 2002 study found that it takes an average of 313 days and $28,915 to obtain an NWP, while the average time and cost to secure an individual permit were 788 days and $271,596. NAHB has asked the White House Office of Management and Budget to either exclude the NWPs from regulatory review or to fast-track the NWP review process. Streamlined Wetland Permits at Risk Softwood lumber, oriented strand board (OSB), ready-mix concrete and gypsum products all posted price changes in 2016 well above the 1.3% average for the Consumer Price Index, according to the latest Producer Price index released by the Bureau of Labor Statistics. Builders’ Show  A Great Success NAHB Supports Trump Dodd-Frank Order Materials Prices Surpass Inflation Median Age of Housing Stock by State Effective Property Tax Rates Vary Greatly Across Regions The 2015 American Community Survey data shows that New Jersey still leads the nation with the highest average annual real estate tax (RET) bill of $8,180—$7,528 more than RETs paid by Alabama’s homeowners ($652). The overall distribution remained roughly unchanged since 2014, as the composition of the top and bottom 10 remained the same. As property values vary widely by state, controlling for this variable produces a more instructive state-by-state comparison. NAHB calculates this—the effective property tax rate as measured by taxes paid per $1,000 of home value—by dividing aggregate real estate taxes paid by the aggregate value of owner-occupied housing units within a state. As shown in the map above, New Jersey has the dubious distinction of imposing the highest effective property tax rate—2.13% or $21.25 per $1,000 of home value. Hawaii levies the lowest effective rate in the nation—0.28%, or $2.84 per $1,000 of value. Interstate differences among home values explain some, but not all, of the variance in real estate tax bills across the country. Texas is an example of a state in which home values hardly, if at all, explain real estate tax bills faced by home owners. While Texas ranks only 32nd in the country for average home values, it is 12th in average real estate taxes paid. Other factors are clearly at play, and state and local government financing turns out to be a major one. Property taxes account for 35% of state and local tax receipts, on average, but some state and local governments rely more heavily on property taxes as a source of revenue than others. Texas serves as an excellent example once again. Unlike most states, Texas does not impose a state income tax on its residents. Even though per capita government spending is tame compared with other states—seventh lowest in the country—Texas and its localities must still find a way to fund government obligations. Local governments in Texas accomplish this by levying the 7th highest effective property tax rate (1.63%) in the country, on average. The state government partly makes up for foregone individual income tax revenue by imposing a tax on corporate revenue rather than income. Neither home values nor a state’s reliance on property tax revenue is fully responsible for the geographic variance of property tax rates and revenues. State spending per resident, the nature of this spending, the prevalence of homeownership within a state, and demographics all affect tax policy and, thus, the type and magnitude of tax collections. These variables combine to explain the variance that the two factors discussed here do not fully capture. For analysis of other economic factors that affect the housing industry, visit NAHB Economic's eyeonhousing blog. March 9, 2017 Thirsty Thursday Mixer Happy home owners are the No. 1 referral source for home builders and remodelers. Companies that forget to keep that top of mind are in for a bumpy ride, presenter Ed Earl of Priority One Projects told attendees at an educational session during the 2017 NAHB International Builders’ Show. “Quality construction does not guarantee a happy home owner, because your home owner is going to focus on the construction process rather than the final product,” Earl said. “The home owner is part of the project, and [he or she] is the best source of your new business.” We need to communicate effectively and make sure to manage expectations, Earl said. Expectations It does not matter how many DIY cable shows the average home owner watches, or maybe because of them, the average home owner “doesn’t understand construction on a fundamental level. They don’t understand it’s a process. You can’t go and buy a kitchen in a box from Amazon,” he said. Continually managing customers’ expectations and ensuring they understand the meaning and impact of change orders will save them a lot of heartache and bad feelings, he said. Communication Learn each customer’s communication preferences, including which channels and how often. Sometimes it’s one long email at the end of the day, or a series of texts throughout the day, and for others it’s speaking by phone. Make sure you find a method that works for the customer. No matter what the form of communication, document everything. “A group text is great for a lot of conversations and a way to get husbands and wives on the same page, but make sure you get a screenshot of the conversation and put it in your records,” He said. Investing in a cloud-based construction management system is a great customer service tool because your home owner can log in and see the progress, view photos and see what’s on the schedule. Audio recordings of IBS education sessions, like Building Happy Home Owners, can be purchased on nahb.org. Committee Calendar Infrastructure & Planning Thursday, Feb 16 at Noon Special Guest: Danyale Howard, NV Energy Lunch Sponsor: Construction Materials Engineers, Inc Health Department Land Development User Group Thursday, Feb 16 at 3:30pm BANN Legislative Committee Tuesday, February 21 at 8am Remodelers Committee Thursday February 23, at Noon New Location: Osborne & Dermody 605 Glendale Ave #105 Sales & Marketing Committee Wednesday, February 15, at Noon  Guest Speaker: Amanda Rammel: The Back Doctors Lunch Sponsor: Bridget Evans, Country Financial Calendar of Events Building Success with Happy Home Owners ReImagine Reno- Planning for Our Future City of Reno's- ReImagine Reno Committee has been holding community wide workshops continuing the planning and integration of new ideas for our Reno community. The new Reno Master Plan is now available for viewing. Click here to preview the draft design principles that will be used for our community's future construction needs or visit http://www.reno.gov/Home/ShowDocument?id=66634 For more information, please contact Jess Traver at jesst@thebuilders.com BANN NEWS UPDATE Reno Wind Symphony performs Sunday, February 18, 2017 The Reno Wind Symphony presents a fund-raising concert with the Nevada Military Alliance (NMSA) featuring a soloist from the US Marine Band. Come support our music community as well as the NMSA. The concert will be Sunday, February 19th at 3:00pm @ Nightingale Concert Hall at University of Nevada, Reno campus. Concert tickets are free for BANN members but any and all cash donations would be appreciated to help the Nevada Military Support Alliance. Donation boxes will be at the door before, during and after the concert. Come enjoy the gift of music and this wonderful cause!