April 2020
NAHB-Led Coalition Asks Housing Be Designated 'Essential'
In an effort spearheaded by NAHB, 90 companies and organizations are calling on the Department of Homeland Security (DHS) to designate construction of single-family and multifamily housing as an “Essential Infrastructure Business.” In a joint letter to Acting Secretary of Homeland Security Jack Wolf, the 90 organ- izations said this action is urgently needed to help stabilize the housing industry and its supply chain in the near term. “As cities and states issue declarations and public health orders as a result of the crisis, it is essential that communities have access to our professionals to build and maintain essential services including: building, plumbing, residential property management, rental housing operators, roofing, electrical, HVAC systems, waste/wastewater treatment plants and power generations,” the letter states. “Home construction, including those industries listed above, should be designated as ‘essential’ because they are necessary to maintain safety, sanitation, and economic security.” To keep the housing sector running during this economic crisis caused by the COVID-19 pandemic, DHS should take the following actions: Allow government functions related to the building and development process, such as inspections, permitting and plan review services, to be modified to protect the public health. Allow supply stores, distributors and manufacturers of building products to continue to operate. Let workers in the building trades continue to maintain the essential operation of residences and other operating businesses.
FHFA Announces Forebearance Measures The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac will offer multi- family property owners mortgage forbearance on the condition that they suspend evictions for renters unable to pay rent due to the impact of coronavirus. FHFA also announced Fannie Mae and Freddie Mac will suspend foreclosures and evictions for enterprise- backed single-family mortgages at least 60 days.
NAHB Staff Members Working Remotely NAHB staff is now working remotely after President Trump declared a national emergency in response to the coronavirus outbreak. The association is fully operational, and NAHB staff are working and accessible even though the physical offices are closed. NAHB has made available to members a wide range of resources on its website, including economic fore- casts, information on busi- ness continuity, consumer information, and materials to assist NAHB’s state and local partner associations. NAHB Analysis of New WOTUS Rule NAHB has provided analysis of the EPA and Army Corps’ new final “Waters of the U.S. (WOTUS) rule. The new rule addresses many of the concerns NAHB had with prior rules. The rule eliminates the “significant nexus” test; encompasses fewer adjacent wetlands; narrows federal jurisdiction over tributaries; and excludes more ditches.
Construction Site Coronavirus Safety Tips The Construction Industry Safety Coalition, of which NAHB is a leading member, has published guidance for construction employers, employees and contractors on coronavirus exposure prevention and preparedness. The guidance describes how to prevent exposure to coronavirus, protective measures to take on the job site, personal protective equipment, work practice controls, cleaning and disinfecting procedures, and what to do if a worker becomes sick. The documents are specifically tailored to construction job sites.
Congress Approves $2 Trillion Stimulus The Senate voted unanimously March 25 to approve a $2 trillion economic stimulus package in response to the coronavirus pandemic that has wreaked havoc on the U.S. economy. The House passed the measure on March 26, and President Trump was expected to sign it shortly thereafter. The CARES Act would make direct payments of $1,200 to most individuals earning up to $75,000, or $2,400 for couples earning up to $150,000. It also provides an additional $367 billion in loans for small businesses to help deal with payroll issues.
The U.S. Department of Labor announced guidance to employers and employees about how each can take advantage of the protections and relief offered by the Families First Coronavirus Response Act (FFCRA), which takes effect April 1. The guidance includes a fact sheet for employees, a fact sheet for employers and a question and answer document to address critical questions, such as: How an employer counts employees to determine coverage; How small businesses can obtain an exemption; How to count hours for part-time employees; and How to calculate the wages employ- ees are entitled to under this law. The FFCRA will give American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The measure is designed to ensure that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus, while at the same time reimbursing businesses.
CFPB Relaxes Rules During Crisis The Consumer Financial Protection Bureau is providing needed flexibility to enable financial companies to work with customers in need as they respond to the COVID-19 pandemic. The agency is post- poning some data collections from the industry on CFPB rules to allow companies to focus on responding to consumers in need and making changes to its super- visory activities to account for operational challenges at regulated entities. The CFPB will not expect quarterly information reporting by certain mortgage lenders as required under the Home Mortgage Disclosure Act. During this time, entities should continue collecting and recording HMDA data in anticipation of making annual submissions.
COVID-19 Affecting Buyer Traffic A new, weekly survey of single-family home builders and other NAHB members con- firmed the coronavirus is having a signifi- cantly adverse effect on business. A drop in prospective buyer traffic was, by far, the most widespread concern. Issues respondents noted as a problem include: Drop in prospective buyer traffic; Supply of N95 respirator face masks; Time to obtain a plan review; Supply of building products/materials; Amount buyers are willing to pay for a new home; Time it takes building department to respond to an inspection request; Willingness of workers and subs to report to a jobsite. For further details about the survey and its results, go to the Eye On Housing blog post.
DOL Offers Guidance on Families First Coronavirus Response Act Builders' Show
Leadership List
Calendar of Events PRISM EARLY BIRD ENTRY DEADLINE Extended to April 15th April: 2nd - Panthers Game - POSTPONED 17th -Remodelers Council Lunch & Learn - Contracts & Construction Lien Law POSTPONED 22nd - PRISM ENTRY DEADLINE May: Hard Hat Happy Hour - Date TBD 15th Golf Outing - Madison Green - Save the Date - Registration to open soon. June: 17th -Board of Directors Meeting & Awards with Guest Speaker Date TBD -Builder Only Workshop - How to enroll in Rebate Programs, HousingPortal and more. Date TBD - New Member Orientation and Networking July: Hard Hat Happy Hour Lunch & Learn August: 29th -PRISM AWARDS September: 16th -Board of Directors Meeting & Awards with Guest Speaker
Calendar of Events
NAHB Working to Serve Members During the COVID-19 Crisis
The nation’s unprecedented response to COVID-19, the novel coronavirus, has affected the economy in profound ways. The social distancing urged by public health officials has shuttered businesses, and led to extensive job losses across the country. Amid this challenging time, the National Association of Home Builders has contin- ued operations, with staff working overtime to assist members during the crisis. NAHB’s efforts include legislative advocacy during Congressional deliberations on a series of legislative efforts to address the crisis. NAHB has also made available to members a wide range of resources on its website, including economic forecasts, information on business continuity, consumer information, and materials to assist NAHB’s state and local partner associations. The web resources can be found at NAHB.org/coronavirus. NAHB CEO Jerry Howard and Chief Lobbyist Jim Tobin are leading advocacy efforts, including regular outreach to officials in the Trump Administration and Congress. As an example, NAHB participated in a call with White House officials to discuss strategies for aid to the housing sector amid the COVID-19 threat that is wreaking short-term havoc on the national economy. Just two days later, President Trump put into effect NAHB’s recommendation to provide mortgage relief to homeowners when he announced that HUD is suspend- ing foreclosures and evictions for mort- gages insured by the FHA through the end of April. Fannie Mae and Freddie Mac will follow suit. NAHB also pushed for key provisions in the $2 trillion stimulus recently approved by the Senate. The CARES Act will make direct payments of $1,200 to individuals earning up to $75,000, or $2,400 for couples earning up to $150,000. It will also provide an additional $367 billion in loans for small businesses to help deal with payroll issues. NAHB Chief Economist Robert Dietz and his team forecast that second quarter GDP growth will be markedly negative, likely the worst since the third quarter of 2008. Approximately 40% of the economy is on a full or partial pause due to the coronavirus. Assuming containment efforts are success- ful within an eight-week period (consistent with South Korea's experience), NAHB’s economists forecast a weak third quarter followed by a rebound at the end of 2020. While the short-term outlook is negative, policy help is underway. The Federal Reserve reduced the federal funds rate to effectively zero, restarted quantitative easing (including for mortgage-backed securities), and made other policy moves to help ensure the continued operation of the financial system. These measures, in concert with the $2 trillion stimulus package, will help the economy bridge the gap from now through August. History suggests a robust rebound will follow this significant but temporary shock to the economy. As America takes on this tremendous challenge, NAHB is committed to helping members through determined advocacy, focused member services, effective communication and thoughtful economic analysis.
HELPFUL LINKS FHBA COVID-19 Resource : https://fhba.com/resources/covid19resources/ NAHB Coronavirus Preparedness and Response: https://fhba.com/resources/covid19resources/ Palm Beach County Coronavirus (COVID-19): http://discover.pbcgov.org/coronavirus/Pages/Orders.aspx Center for Disease Control and Prevention: https://www.cdc.gov/coronavirus/2019-ncov/index.html Families First Coronavirus Response Act:https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave Guide to Coronavirus Aid, Relieg & Economic Security Act: https://www.uschamber.com/co/small-business-coronavirus
Check the GCBA website often for Webinars developed specifically to assit you and your business during this crisis. See inportant document on following pages including; Reguests for Masks and other donations, Notices/Flyers to use on construction sites, Company Commitment to fighting COVID-19 (please sign and return to show your support).
GCBA Commitment: Pledge to Reduce the Spread of Novel Coronavirus on Palm Beach County’s Construction Sites Whereas,the Construction Industry has been acknowledged to be an essential business to the State of Florida and United States of America, supporting infrastructure, government, medical and residential needs; and Whereas,the Construction Industry is a unique industry in that workspaces are closed to the public, often with easily accessible fresh air and or outdoor jobsites; and Whereas,the Construction Industry cares for the health and safety of their workers and for the families and loved ones they go home to; and Whereas,the Construction Industry is heavily regulated by Federal, State and Local Governments as to what can and cannot take place on a job site,we the undersigned hereby commit, to instituting the following practices at a minimum, in an effort to eliminate the spread of the Coronavirus: Personal Responsibilities ·Workers withCDC designated symptomssuch as fever, cough, shortness of breath, etc. are to stay home and not report to work. Workers exhibiting these symptoms are to be sent home immediatelyand follow CDC Guidelines relating to isolation, quarantine as determined by a medical professional. Workers should not return to work without proper medical clearance. Social Distancing ·All workers are to maintain 6’ of separation ·No gatherings of more than 10 people when required to meet even when conducted outside. ·For stand-down meetings, disseminate information electronically and have each trade conduct the training on their own in groups not to exceed 10 ·Common water coolers are to be discouraged ·Prop doors open when safe to do so ·Do not stack trades in the same space Handwashing ·Wash stations with soap are to be installed/maintained at building entrances and food truck areas as well other strategic areas near offices, trailers, and jobsite egress areas with hot water when possible ·Encourage and direct employees to wash hands at breaks and as frequently as possible. ·Gloves are required for all trash removal Hoists and Elevators ·Take steps to limit employees on buck-hoists and on elevators to maintain maximum distance ·Anyone operating an elevator or hoist are to be provided and wear gloves ·Hoists/Elevators are to be sanitized daily Lunch Trucks ·Encourage employees to bring their own lunch and consider eliminating truck where possible ·Ensure all lunch trucks are utilizing servers for bulk food trays;no self-servefrom food trays ·Food items are to be individually wrapped when possible ·Physical distancing protocol shall be in use during lunch and breaks Communication •Signage barring employees with COVID-19 symptoms , CDC recommendations, and posters that encouragestaying home when sick,cough and sneeze etiquette,andhandhygieneare to be placed at the entrance to of the workplace and in other prominent areas.
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Dear Fellow Members, I hope you and your families are and remain safe during this difficult time. I imagine you are aware that the LBA has tasked the nations’ largest homebuilders (including but not limited to, Lennar, DR Horton, Pulte, Richmond America, Ryan, etc.) with collecting donations of N95 Face masks, Face Splatter Shields, Safety Glasses, and disposable gowns, to donate to the Nurses and Physicians on the front line of stopping the spread of Covid-19. Lennar Homes has been designated as the collector of these items in SE Florida and we have partnered with Rosen Building Materials to assist us in collection and distribution. Attached are letters that have recently been sent out by our company to our trade partners along with additional safety measures. Will you please distribute this to the GCBA members along with the additional information I have provided within this message. In addition, to make the collection efforts easier, donated PPE Items may be delivered to my attention in our Palm Beach Gardens Office (Address below in my signature) as well as the Rosen location in Fort Lauderdale. Those that are donating are advised to contact Rosen (number provided in the “Response team” document”) ahead of delivery. I can be contacted via phone, text, or email at anytime as well to arrange for delivery or pickup. Thank you for your quick response and we wish everyone health and safety! Regards, Steven Dassa Vice President of Purchasing – PalmAtlantic Div steven.dassa@lennar.com www.lennar.com Direct: 561-345-6729 Mobile:561-722-8507 8895 N. Military Trail, Suite101-B Palm Beach Gardens, FL 33410
Coronavirus: Florida Real Estate Impacts By:BradHunter(follow @bradleyhunter for constant updates and posts on housing trends) The Florida real estate industry is being severely impacted by the coronavirus, and it will get worse before it gets better. It is clear that the sectors of real estate that have been hit hardest so far are hotels, restaurants, bars and other entertainment retail (particularly in tourist-driven areas) followed closely by retail and housing (particularly second-home and luxury homes). Supplies that the builders and developers need are being interrupted more and more as workers stay home, and due to business shutdowns, quarantines and curfews. Layoffs, only now starting, will lead to further contraction in consumer spending, starting a downward spiral of economic activity. Together, these forces are expected to push the economy into recession, which is probably under way already. The good news is that China’s factories and businesses are now re-starting, which could be cause for optimism regarding a fairly rapid return to normal economic activity and strong real estate markets. There are a lot of moving parts, so let’s dig deeper. Many Impacts on Florida Florida as a state is exposed across a number of important industries, including: Hotels Theme Parks Conference Centers Casinos Sports Venues Restaurants and Bars Cruise Ships (having a major impact on the Ft. Lauderdale economy) Additionally, it remains to be seen how Florida’s congregate senior housing industry will be impacted. The tourism industry will be hit in two different ways: (1) adirectimpact from contagion concerns and (2) anindirectimpact from declines in stock values and reduced income which will translate into people feeling less wealthy and put a damper on travel. The Impact on Housing and Homebuilding Homebuilders are feeling not only the demand pullback from home shoppers staying home in droves, but also the supply impact of materials that they normally import from China (supplying more than 30% of the materials). In a recent survey by NAHB, 81% of respondents said the coronavirus has have an adverse effect on traffic of prospective home buyers, and it’s probably closer to 100% now with the escalating lockdowns. Another 54% reported issues getting the building materials they need to finish homes. Builders are seeing a large drop in sales now. There is also growing concern about tighter lending conditions for non-conforming mortgage loans. Buyers who have a debt-to-income ratios higher than 43%-45% or those who are self-employed are now having a lot of difficulty getting mortgages. With all of this going on, builders are saying that their land acquisition and development spending will slow in the near term. Even more worrisome is the impact that the stock market crash will have on consumer spending. People who have lost a lot of their “paper” wealth will spend less on discretionary items, and those who are retired, or close to retirement, may be drastically changing their spending plans. Continued on page 10
Those who had been planning to buy a home in an active adult community may have to shift their plans, and that could impact absorption rates at those developments. Needless to say, there could be a serious impact on nursing homes and assisted-living facilities as well, at least in the near term. Therental apartmentindustry is now preparing to deal with tenants who have lost their income and are unable to make the current month’s rent. A large number of tenants will ask for forbearance in April, and even more will in May. Landlords will seek to emphasize retention, which will mean giving tenants some leniency in the near term. There will be downward pressure on effective rents in the next few months, and property owners will be asking their lenders for forbearance as well. The long-term outlook for rentals is still bright, however, in light of demographic shifts that are still unfolding. Lease renewal rates were strong before the crisis, and apartment construction was running at more than 500,000 units annually right before the crisis, so it has some ground to give. Class “B” properties will likely fare better than expensive “A” properties or Class “C” developments that may be more susceptible to job losses and lost income among tenants. Some renters will “double up” and we may see some “boomerang kids” moving back in with parents in the near term. Underlying positive long-term rental trends will re-assert themselves after the crisis passes. Thesingle-family-built-for-rentbusiness might be a long-term beneficiary as we may see a shift toward larger units that better accommodate working from home (allowing more space for a home office or office nook). What Lies Ahead? One thing that makes this economic disruption especially problematic is that it is affecting both demand and supply. On the demand side, the answer depends on how quickly the outbreak will be contained, meaning when the rate of growth in new cases flattens out and begins to fall off. At that time consumers will start spending again, and the economic engine will start humming once more. The disruption to the supply side this time may take longer to restore the supply chain, particularly if the outbreak is not contained evenly across the globe, and thus may lag the bounce back in demand, which may in itself have some negative consequences, such as creating inflationary pressures in some cases. A recession is coming, or is already here. That seems clear. The optimistic case is that unlike in the Great Recession, once the virus is contained, and immunity starts to take hold in the population, even though supply chains will take some time to re-engage, it won’t be like the cold-start that followed the housing and mortgage crash. The cycle could look like a “V,” or possibly more of a narrow “U,” with a sharp drop but also a strong upswing, coming at some time in the second half of this year. Continued on page 11
The number of confirmed virus cases flattened out in China, and is about to flatten out in Italy and other countries, and China is starting to see a resumption of normal business activity. Data from Federal Express in China indicate that 65%-70% of small businesses are open again, and 90%-95% of large manufacturers are operating again. This implies that the economic ‘restart’ could be much quicker than after the housing and financial collapse. The first quarter GDP growth number for China is expected to be zero or negative, but the second or third quarter may show improvement. In the U.S., it is clear that the second quarter will be negative, but growth could, with a lot of luck, resume some time in the second half of the year. BradHunter Managing Director RCLCO 964 Lake Baldwin Lane Ste. 100 Orlando, FL 32814 P: (561) 573-8351 W:RCLCO.COM RCLCO’s mission is to help clients make strategic, effective, and enduring decisions about real estate. Since our formation in 1967, we have been proudly serving the best minds in real estate with cutting-edge analytics and actionable advice. Our work includes market, economic, financial and impact analyses, investment portfolio strategy and implementation, and management consulting. The information contained in this e-mail message is confidential and may be legally privileged. It is intended only for the use of the individual or entity named above. If you receive this in error, please contact the sender immediately and delete any material from your computer. Thank you for your cooperation and consideration.
Read Brad's article in Forbes: Coronavirus’ Impacts On Real Estate: Why You Need To Think Short-Term And Longer-Term Brad HunterContributor Real Estate I am managing director at RCLCO, consulting for developers, builders, and financiers in the real estate space.