March 2020
Housing Affordability Explained in One Graph
Applying conventional underwriting standards that the cost of a mortgage, property taxes and property insurance should not exceed 28% of household income, NAHB economists have calculated how many households have enough income to afford a home at various price thresholds. The housing affordability pyramid reveals that 63 million households out of a total of 120 million are unable to afford a $250,000 home. The affordability problem is explained in NAHB’s new priced-out estimates for 2020.
FEBRUARY 2020 NEW MEMBERS
ASSOCIATES A3nergy Solutions Atlantic Pest & Termite Mgmt. Centricty Cosentino Malibu Shower Enclosures of SC
Mercant Pro Express Rooter Now BUILDERS Cypress Homes & Design New Haven Construction
The cost and availability of labor continues to stand out as the most significant challenge that builders will face in 2020, according to a recent survey of members as part of the monthly NAHB/Wells Fargo Housing Market Index (HMI). Roughly 85% of builders expect to face serious challenges regarding the cost and availability of labor this year. Building material prices and the cost and availability of lots were tied as the No. 2 problem builders expect to face in 2020, with these issues cited by 66% of the survey respondents. All three of these supply-side issues have been a growing concern for builders over the past several years. To put it into perspective, in 2011, just 13% of builders cited labor issues as an important concern, with the rate steadily rising over the ensuing years before peaking at 87% last year. Rounding out the top five concerns for builders in 2020 are impact/hook-up/ inspection or other fees (60%) and gridlock/uncertainty in the nation's capital making buyers more cautious (56%).
Labor Shortage Remains Top Concern for Home Builders
SPACE IS LIMITED (1) BREAKFAST SPONSOR $375, includes up to 10 minutes to speak and logo on all materials (12) SEAT SPONSORS $95 each, includes up to 5 five minutes to speak (the CHBA will try its best to allow only one company per trade per BwtB) Be sure to bring materials and business cards for the builders to take back with them! Sign up online. For questions, contact Ashley or Paige.
ATTENTION ASSOCIATE MEMBERS Become better acquainted with the CHBA home builders! March 17th, 2020 I 8:30AM I CHBA Office Breakfast with the Builder provides an in-depth look at their company’s past, present and future. We schedule two builders at each breakfast, one small volume/custom builder and one high production builder. The CHBA holds these informative business development forums geared toward Associate members to assist in the professional relationships between our members. Sponsoring this event is an excellent way to gain more exposure for your company.
IRS Clarifies LIHTC Income Limits The IRS has released revenue ruling 2020-4 instructing taxpayers how to calculate Low-Income Housing Tax Credit (LIHTC) income limits should they choose to use the income averaging minimum set-aside test to meet LIHTC eligibility and compliance requirements. This test was created by the Consolidated Appropriations Act of 2018 to complement the existing tests established by the Tax Reform Act of 1986 and allows LIHTC projects to serve households earning as much as 80% of Area Median Gross Income in some circumstances.
Leadership List
Upcoming Events
Check out our calendar on the CHBA website or Facebook page for up-to-date events. BREAKFAST WITH THE BUILDER CHBA Office 8:30 a.m., Mar 17 BUILDER/INSPECTOR MEETING N. Chs. City Hall, 3rd floor 8:30 a.m., Mar 18 CLAY SHOOT TOURNAMENT Kiawah Island Shooting Club 9:00 a.m., Mar 24 MEMBERSHIP 101 CHBA Office 8:45 a.m., Apr 7 GOLF TOURNAMENT Patriots Point 9:00 a.m., Apr 21 *** **if you have any questions or need an extension contact Ashley at ashley@charlestonhomebuilders.org
Chrs Klick President Ward Mungo Vice President Brett Miller Treasurer Adam Copenhaver Secretary Lane Baker Past President Board Members Ted Terry Chris Brace Jesse Bray Jay Piner Wade Green Jamey Nelson Tricia Haggerty Jamie Doyle Robby Arnold Mick Jewel Tom Lauderdale Gus Brabham For a full list of life board members, visit our website hbacharleston.com
BUILD-PAC Focused on Election Success As the 2020 BUILD-PAC chairman, Justin MacDonald has his eyes on the November prize of electing more pro-housing candidates. He knows the best way to get there is to increase the number of members involved in BUILD-PAC, NAHB’s political action committee. With the 2020 elections approaching, MacDonald wants a continued push for pro-housing legislation, including efforts to reduce excessive regulations that stifle growth.
Mortgage Delinquency Rates Hit Record Low The delinquency rate for mortgage loans on single- family homes decreased to 3.8% of all loans outstanding in the fourth quarter of 2019, according to the Mortgage Bankers Association’s National Delinquency Survey. This is the lowest it has been since the series began in 1979. Codes Vote Could Affect Affordability Preliminary results indicate that a number of aggressive energy efficiency proposals were approved during the online vote on the 2021 cycle of the International Codes Council (ICC). These proposals, known as "zombie proposals," had been defeated at ICC Committee Action Hearings and during the Public Comment Hearings and therefore required a two-thirds vote to pass. No previous proposal had ever met the threshold. But during the ICC's Online Governmental Consensus Vote, held late last year, 20 aggressive International Energy Conservation Codes passed that hurdle.
Costs Up in Recent Builder Survey The cost of constructing a typical single-family home has gone up, but builder profits have fallen slightly, according to a recent survey of home builders. On average, 61.1% of the sales price, goes to construction costs. Add to that finished lot costs (18.5%), overhead (4.9%), sales commissions (3.7%), financing (1.7%), and marketing (1%), and the average builder profit is 9.1%, before taxes. In separate studies, NAHB economists have found that 24.3% of the cost of a typical, new single-family home comes from regulatory compliance. and impact fees. Those costs were rolled into the various categories – finished lot, construction, financing, etc. – in this survey.
LA Now Least Affordable San Francisco, which has been the nation’s least affordable major housing market for the past two years, was supplanted by Los Angeles in the fourth quarter of 2019, according to the most recent NAHB/Wells Fargo Housing Opportunity Index (HOI). Indianapolis-Carmel-Anderson, Ind. was rated the nation’s most affordable major housing market, defined as a metro with a population of at least 500,000. Cumberland-Md.-W.Va. was rated the nation’s most affordable smaller market. In all, 63.2% of new and existing homes sold from October through December were affordable to families earning the U.S. median income of $75,500.
Suicides in Construction Climb Public health experts are increasingly concerned at the high level of suicides among construction workers, according to Scott Earnest, acting director of NIOSH's Office of Construction Safety and Health. Speaking during the 2020 International Builders' Show, Earnest told the NAHB Construction Safety and Health Committee about the nationwide trend of rising suicide rates among construction workers. A study showed that the profession with the highest rate of suicides was Construction and Extraction, at 52.1 suicides per 100,000 people. NAHB has joined the Construction Industry Alliance for Suicide Prevention in an effort to raise awareness of the problem.
New App Offers Accessibility Guidance NAHB unveiled the "Pocket Guide to the Fair Housing Act," a free app to help home builders, contractors and designers meet the accessibility requirements of the act, during the Builders' Show in Las Vegas. “HUD welcomes the efforts of this important housing industry partner in working to meet the needs of persons with disabilities,” HUD Secretary Ben Carson told NAHB's Leadership Council.
NAHB Unveils All-New Website To better serve the needs of its members, industry partners and other key stakeholders, NAHB recently unveiled an all-new nahb.org website. The site not only features a much more modern look, but also greatly improved search performance, enhanced content functionality and improved navigation for a better user experience. DOL Announces Joint Employer Rule In a win for NAHB, the Labor Department in January announced a final rule to provide a clearer method for determining joint employer status. The rule will provide clarity and certainty regarding employers' responsibility to pay federal minimum wage and overtime for all hours worked over 40 in a week. The new rule will take effect March 16. It includes a set of joint employment examples to further assist in clarifying joint employer status.
President Trump Signs USMCA Trade Pact In a positive development for the housing industry, President Trump on Jan. 29 signed the U.S.-Mexico- Canada Agreement (USMCA). The U.S. residential construction and remodeling industries rely on tens of billions of dollars in building materials sourced from Mexico and Canada each year. By modernizing and strengthening free trade with our largest trade partners, the USMCA will boost U.S. economic growth and help keep the price of homes and home improvements low.
EPA Announces Water Rule at IBS EPA Administrator Andrew Wheeler announced a final “waters of the United States” (WOTUS) rule during the International Builders’ Show in Las Vegas. “The Navigable Waters Protection Rule is a big win for states, municipalities, builders and developers, landowners and the American public,” Wheeler said in remarks to NAHB’s Leadership Council. “It will make it easier to understand where the Clean Water Act applies and, as importantly, where it does not.” The EPA administrator noted the new water rule is good for the economy and the environment.