December 2021
Builder Confidence in Market Rises in November
Low existing inventories and strong buyer demand helped push builder confidence higher for the third consecutive month even as supply-side challenges — including building material bottlenecks and lot and labor shortages — remain stubbornly persistent. Builder sentiment in the market for newly built single-family homes moved three points higher to 83 in November, according to the NAHB/Wells Fargo Housing Market Index (HMI) released Nov. 16. Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. The HMI index gauging current sales conditions rose three points to 89 and the gauge charting traffic of prospective buyers also posted a three-point gain to 68. The component measuring sales expectations in the next six months held steady at 84.
Fed Begins to Taper MBS Purchases The Federal Reserve has supported the housing market during the pandemic with asset-backed purchases (among other tools), including $40 billion a month of mortgage-backed security purchases. These purchases have helped keep interest rates low. Beginning in November, the Fed began reducing the monthly volume of such purchases by $5 billion. The Fed is also reducing its purchases of Treasuries by $10 billion a month. These actions will put upward pressure on interest rates.
Two Great Reasons To Attend 2022 IBS Tours of the 2022 New American Home and New American Remodel are two great reasons to attend the NAHB International Builders’ Show® (IBS), Feb. 8-10, 2022, in Orlando. The two show homes offer a look at innovative construction methods, design trends and exciting new products. Make plans now to attend the Builders’ Show IN PERSON. Visit buildersshow.com to register and to get more information. Commerce to Double Tariffs on Lumber In a blow to housing affordability and a move strongly opposed by NAHB, the Commerce Depart- ment in November moved forward with its next adminis- trative review to double the tariffs on Canadian lumber shipments into the U.S. from 9% to 17.9%. “With the nation in the midst of a housing affordability crisis, the Biden administration has moved to slap a huge, unwanted tax hike on American home buyers and renters by doubling the tariffs on Canadian lumber shipments into the U.S.,” NAHB Chairman Chuck Fowke said in a statement.
NAHB Challenges OSHA Vaccine Rule NAHB in November filed a petition for review in the U.S. Court of Appeals for the D.C. Circuit asking the court to examine OSHA’s emergency temporary standard (ETS) requiring companies with more than 100 employees to mandate COVID-19 vaccinations or weekly testing. There are also many other legal challenges across the United States. NAHB believes that OSHA does not have the authority to issue an ETS on this matter. But barring a long-lasting injunction, employers will have to comply with many parts of the rule by Dec. 6
President Signs Infrastructure Bill President Biden on Nov. 15 signed into law a bipartisan, $1.2 trillion infrastructure package. The bill includes a key measure championed by NAHB that will restore an exemption for water and sewer contributions in aid of construction. NAHB supported the bill, which will fund much-need improvements to the nation’s roads, bridges and public transportation. The measure advances efforts to increase energy efficiency and reduce greenhouse gas emissions without excessive energy code mandates.
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Materials Prices Climbing The price of all goods inputs to residential construction (including energy) has risen 14.5% thus far in 2021, eight times more than it did over the first 10 months of last year. The year-to-date increase is twice that of the previous record year-to-date October increase (+7.1% in 2008). The PPI for softwood lumber increased 9.1% in October. Gypsum product prices are up 19.0% YTD, by far the largest October YTD increase since seasonally adjusted data became available in 2012. And over the 80-year period ending in 2020, the monthly change in the steel mill products PPI increased by more than 10% only three times (in 1947, 1948, and 2008). Monthly increases have exceeded that mark four times in 2021.
Get up to speed on the latest industry trends and professional development skills with the NAHB Ideas app. Recent articles have touched on everything from handling disruptions in the housing market to en- hancing your leadership and management skills to understanding the impact of land use regulations on housing inequities. New content this month includes: Adapting to Change in the Remodeling Industry The Future of Aging-in-Place Design Looking for more insights? Articles are categorized into issue areas such as building techniques and strategies, project management, research and trends, and more, to make them easy to find. Users also can now share helpful articles through email, text message and more using the sharing tool at the top of the app screen. The app is available on the Apple App Store and Google Play Store for Android. Search the keyword “NAHB,” then select “GET.”
Multifamily Confidence Improves Confidence in the market for new multi- family housing improved in the third quarter, according to results from the Multifamily Market Survey (MMS) released Nov. 18 by NAHB. The MMS produces two separate indices. The Multifamily Production Index (MPI) increased five points to 53 compared to the previous quarter. The Multifamily Occupancy Index also increased by five points, up to 75 – the highest reading since the inception of the index in 2003. The MPI measures builder and developer sentiment about current conditions in the apartment and condo market on a scale of 0 to 100. The index is scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
January 20 GCBA Installation & Awards Dinner January 24 – 26 FHBA Spring Leadership & Legislative Conference January 27 PWB Lunch & Learn / New Year New You February 4 – 7 NAHB Meetings Orlando February 7 – 11 NAHB – IBS Orlando February 17 PWB Breakfast February 24 Hard Hat Happy Hour March 16 GCBA Quarterly Board Meeting April 28 Hard Hat Happy Hour May 26 GCBA Golf Outing June 14 – 18 NAHB Spring leadership & Legislative Conference June 22 GCBA Board Meeting & Hard Hat Happy Hour August 3 – 4 SEBC Orlando August 25 Hard Hat Happy Hour September 21 GCBA Board Meeting September 29 PRISM October 20 GCBA Annual Meeting & Hard Hat Happy Hour October 24 – 27 NAHB Fall Boards November 18 Annual Chili Cook Off December 13 9 Wine & Dine & Hard Hat Happy Hour
If you are interested in serving on the Board and/or Becoming an Office please contact KT at 561-228-6137 or KT@GCBAFlorida.com
Leadership List 2021 GCBA Officers and Directors OFFICERS PRESIDENT Fred Pfister, Toll Brothers 1ST VP Rafael Roca, DR Horton 2ND VP Michael Nunziata, 13th Floor Homes ASSOCIATE VP Tony Macaluso, Universal Engineering Sciences VP FINANCE Steve Karp, Melamed & Karp PA IMMEDIATE PAST PRESIDENT Jay Huebner, HSQ Group DIRECTORS Steven Dassa, Mattamy Homes Frank Coppola, Coppola Brothers Herb Tremble, Master Contractor and Subcontractor Association of Florida Karl Albertson, DR Horton David Donvito, Minto Peggy West, GRS Community Management Josh Hedden, Hydroshield Ken Lebersfeld, Capitol Lighting Lisbeth Linert, Clive Daniel Home Rick Baxter, Palm Beach Post Mark Richards, Stock Custom Homes Executive Officer: KT Catlin Design: Gregory J. Del Deo
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A lack of skilled construction labor is a key limiting factor for improving housing inventory and affordability, according to the Home Builders Institute’s (HBI’s) Fall 2021 Construction Labor Market Report released in November. The construction industry needs more than 61,000 new hires every month to keep up with both industry growth and the loss of workers either through retirement or to other opportunities. Roughly 740,000 new construction workers need to be added per year for the next three years to keep pace with demand, based on NAHB analysis of Bureau of Labor Statistics data. Key findings include: • The number of open construction sector jobs currently averages between 300,000 to 400,000 each month. • Half of the payroll workers in construction earn more than $50,460 annually and the top 25% make at least $71,000. In comparison, the U.S. median wage is $49,150 while the top 25% make at least $67,410. • Construction employment currently totals 7.42 million. Residential construction represents 3.1 million of this total. • Self-employment in construction is currently 22% of the labor force, down from 26% in 2010. • The share of immigrants in construction trades is 30%. • The share of Women in construction is 10.9%. • The median age of construction workers is 41. However, due to aging trends, the share of construction workers aged 25 to 54 decreased from 72.2% in 2015 to 69.0% in 2019.
New HBI Report Highlights Depth of Labor Shortage
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GCBA 2021 TOP RECRUITERS HV Tremble - 28 Fred Pfister - 14 KT Catlin - 14 Rafael Roca - 10 Michele Mockenhaupt - 6 Alexander Akel - 3 Mark Anderson - 3 David Kanarek - 2 Deborah Giarratana - 2 Jason Roberts - 2 Lisbeth Linert - 2 Michael Nunziata - 2 Teresa Hugo-Tigert - 2 Amy Wieland-Carlson - 1 Devin Perry - 1 Eduardo Aleman - 1 Ethan Nelson - 1 Frank Coppola III - 1 Frank Williams - 1 Lisbert Linert - 1 Maddie Williams - 1 Marc Julien Homes - 1 Marcia Wegman - 1 Matthew Blum - 1 Maya Chocron - 1 Melissa Jewell - 1 Peggy West - 1 Rick Baxter - 1 Ron Ellish - 1 Steven Dassa - 1 Suzanne Donohue - 1 Tamra Ksiazek - 1 GCBA SPIKE CLUB Members reach the GCBA Spike Club once you recruit 5 or more members in the current year. GCBA Spike Club Members will be recognized at Board Meetings & more!
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Five Housing Trends to Watch For in 2022 By Brad Hunter There is no “national housing market.” By that I mean there are as many trends as there are markets in this country, each one distinct. That goes for geographies (metro areas) and types of housing product (rental, for-sale, detached, attached, condo, etc.). Here is a quick roundup of what changes we expect in 2022 in some of the broader categories of housing. Prediction 1: Home prices will rise much more slowly. This is definitely the least controversial prediction I could make, as everyone agrees that home prices cannot rise next year at the same rate they did this year. That said, Goldman Sachs is betting on a continued high rate of increase. I serve on the economist panels for Reuters, Bloomberg, and Zillow, who poll economists on a periodic basis to get the consensus prediction for home prices. My latest forecast for home prices is for prices to rise 7.9% in 2022, 4.0% in 2023, and 3.5% in 2024. Much of the slowdown is related to the expected increase in mortgage rates, which will decrease the number of households who will be able to buy. And, take note of the difference between a prediction of slower rates of increase and outright declines in home prices. That will probably be seen in a few areas, but in the aggregate home prices will not fall in this cycle. Although the rate of home price increase (and the “FOMO” factor) is reminiscent of 2005, we don’t have a bubble, because we now have sane lending criteria, and no interest-only or negative-amortization loans this time around. More importantly, it is important to remember that in 2005, we had too many homes, and today we have too few (and, homeowners today have significant positive equity, and not negative equity, so we won’t see walk-aways). Prediction 2: Single-family home construction will the about the same next year as it was this year (starting work on 1.130 million detached homes), but the composition of what is built will continue to shift. I expect an uptick in mortgage rates this year, which will ratchet the monthly payment higher for any given home purchase. Builders are putting more effort these days into the slightly-more-affordable-but-still-high price range, and that will turn out to be an important move as monthly-payment pressure increases. Prediction 3: Built-for-rent (“BFR”) single-family development will accelerate in 2022. I’m predicting roughly a 20% increase in the volume of construction of homes within all-rental communities during a year when the volume of total housing starts stays flat. This will amount to approximately 120,000 starts, up from just under 100,000 this year, across the various types of built-for-rent (i.e., including detached and attached, and horizontal multifamily “cottages”). This will take the BFR share of all housing starts in the country from 8.7% this year to 10.6% next year. That is, if enough land can be found; a big “if.” The built-for-rent trend has started to boom suddenly in Florida, where apartment rents (according to RealPage, Inc.) rose 22.1% versus a year ago (October to October). Naples saw rents rise a staggering 32%, and rents are up 26% to 29% across North Port (including Sarasota and Bradenton), West Palm Beach, and Tampa. Rents on single-family homes are being pulled along with the rise in apartment rents. Prediction 4: The land rush will intensify. Builders are pushing to increase their lot supplies and boost their community counts. On top of the land demand from the for-sale homebuilders, land brokers tell me they are fielding 50 calls from groups just now entering the built-for-rent arena for every one “veteran” buyer, and the demand for land far outstrips the supply of suitable land for sale. A site that is well-suited for built-for-rent will typically get between 10 and 25 offers. Even with this land rush, there will be very few markets that will reach the saturation point of BFR supply, or even catch up with the pent-up demand. Prediction 5: We will continue to see particularly strong demand in the states that are attracting people out of expensive high-tax states (most notably New York and California). Although the Covid migration has waned, the long-standing trend of people moving out of the expensive, high-tax states to lower price, lower-tax states is still going on. As a result, we are watching for continued strong demand in Florida, Montana, Utah, Colorado, Texas, Georgia, and the Carolinas. The expensive high-tax areas are going to remain that way, and, renewed pandemic or not, the population flows are happening. Those are the top 5 for 2022. If we look further into the future, we can talk about the mortgage “lock-in effect,” which will make people less prone to want to sell/move, because they don’t want to lose their (by then) irreplaceable 3% mortgage rate. That reduced propensity to move will have a negative effect on home sales in 2023 or 2024.
Brad Hunter runs Hunter Housing Economics, a national consulting firm, based in West Palm Beach, that performs site-specific market studies for residential developers and investors.
Committee Weeks Come to Close as Legislators Prepare for 2022 Last week was the final interim committee week before the 2022 Legislative Session begins January 11. As you may have heard in The Bennette Minute (https://www.youtube.com/watch?v=ir-Nzfog0QY) last week, FHBA had two big wins with bills moving successfully through their first committee stops on Tuesday, November 30. SB 736 “Construction Defect Claims” by Senator Travis Hutson (R- Palm Coast) passed the Senate Judiciary Committee chaired by Senator Danny Burgess. Senator Burgess, as you may recall, was joined FHBA leaders in Sarasota for FHBA’s Fall Conference and Senate Majority Luncheon. SB 736 includes the provision that would decrease the statute of repose for latent defects from ten to four years. SB 736 is presented at the 1:59:38 mark. You will notice that the questions overwhelmingly focused on the reduction of the statute of repose for latent defects, and to no surprise; the conversation quickly turned to the Champlain Towers South collapse. The Committee amended out the “Notice to Mortgagee” provision. The bill retains the “Duty to Repair Construction Defects” provision and the language that requires the claimant to provide more details for rejecting an offer and allow 15 days for a builder to provide a supplemental offer. The bill passed the Senate Judiciary Committee by a 6-4 (partisan) vote. Due to time, the Chair did not allow the “local” proponents to speak in support of the bill and switched their “speaking” cards to “waiving in support.” The bill’s second committee stop will be Senate Community Affairs, chaired by another Senator that joined FHBA at the Fall Conference, Jennifer Bradley of Orange Park. 2) SB 856 “Private Provider Inspections of OSTDS’” by Senator Jason Brodeur (R- Lake Mary) passed the Senate Environmental and Natural Resources Committee, a committee that Sen. Brodeur chairs. Modeling after the current third-party provider statute for building inspections, SB 856 will allow qualified third-party providers to fill the shortfalls felt by County Health Departments. SB 856’s next stop will be the Senate Appropriations Subcommittee on Agriculture, Environment, and General Government, Chaired by Senator Ben Albritton of Bartow, Florida (who was also an FHBA Fall Conference attendee). The momentum behind Construction Defects reform is real. It is critical that we continue to speak with our legislators from a grassroots level. Now more than ever it’s important that you mark your calendars to be in Tallahassee for the Spring Conference January 24 – 26, 2022.
NAHBNow: Delegate Nominations Now Open for the 2022 Leadership Council NAHB members who would like to offer their talents, skills and experience to national initiatives and industry policy are encouraged to serve as the delegate to NAHB’s 2022 Leadership Council. Nominations for the Leadership Council are submitted by local and state home builders’ associations (HBAs) and interested members should contact their local association. HBAs can nominate National Delegate(s) and Alternate Delegate(s) to serve on the NAHB Leadership council for the 2022 term. Leadership Council delegates serve for one NAHB leadership term and need to be nominated each year, even if they served on the Leadership Council in the previous year. The deadline for HBAs to nominate delegates to the 2022 Leadership Council is Jan. 14, 2022. If you have questions about submitting nominations, please contact Hannah Trudeau at SecretarysOffice@nahb.org.
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Biden's New Tariffs on Canadian Lumber Double: Act Now, Contact Congress On November 24, the US Commerce Department doubled the tariffs on imports of softwood lumber from Canada, from 9% to 17.9%. This move is a huge setback to housing affordability and strongly opposed by National Association of Home Builders (NAHB). This is an unfortunate time to add unnecessary housing costs because this setback also comes at a time when lumber prices are still well-above pre-pandemic prices, meaning this decision to double tariffs on Canadian softwood lumber will only make matters worse. NAHB is requesting your help to get Congress involved. Insist that they pressure President Biden to negotiate an updated softwood lumber agreement with Canada and increase US lumber production by harvesting more timber from US forest lands. These doubled tariffs will make already-high inflation worse, send lumber prices soaring, add tens of thousands of dollars to the price of a new single-family home and thousands of dollars to the price of a multifamily home. Contact your Member of Congress and insist that they put an end this trade war with Canada and bring lumber prices down. On December 3, NAHB CEO Jerry Howard and Chief Lobbyist Jim Tobin held productive talks with Canadian Trade Minister Mary Ng, Ambassador Kirsten Hillman and members of the Canadian parliament regarding the Commerce Department’s recent action to double tariffs on Canadian lumber imports from 9% to 18% and on the need to restart negotiations on a new softwood lumber trade agreement.