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.
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.
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.
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%).
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.
Labor Shortage Remains Top Concern for Home Builders
Calendar of Events March: 18th - Board of Directors Meeting & Awards. Special Guest Speaker from NAHB 31st - PRISM EARLY BIRD ENTRY DEADLINE April: 2nd - Panthers Game 17th -Remodelers Council Lunch & Learn - Contracts & Construction Lien Law 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
mEMBERSHIP NEWS
MEMBERS SAVINGS & REBATE PROGRAMS
GCBA 2020 TOP RECRUITERS 2019 #1 Recruiter Steven Dassa - 28 Deb Giarratana - 6 KT Catlin - 1 Michael Weiner - 1 GCBA SPIKE CLUB iMembers reach the GCBA Spike Club once you recruite 5 or more members in the current year. GCBA Spike Club Members will be recgonized at Board Meetings & more!
GCBA Membership is a TEAM Sport! GCBA's Membership grew by 32% in 2019. The number of members seeing value and renewing also more than doubled! If you brought in a new member please make sure to reach out and personally invite them to attend an event. The Hard Hat Happy HOurs and Lunch & Learns are inexpensive ways to get new members started . Share about the resources and benefits NAHB provides to members and help grown GCBA! Extend the invitation to JOIN NOW. Most people are just waiting to be invited!
Associates TLOA Mortgage, LLC David McDonald Meir Alarms, Inc. Moti Meir Affiliates Sachs Sax Caplan, PL Steven Rappaport REMODELERS COUNCIL John Peters Steve Hoffacker Stuart MacGregor If you sponsored one of these individuals please let KT or Robin know! We will be having year long contests and recognition for Recruiting & Retention !
Welcome to our Newest Members!
Legislative Session Reaches Home Stretch With Budget Conferencing taking place over the weekend, it looks like Sine Die for the 2020 Legislative Session is sure to be later than expected- even if just by a few days. Among agreements settled on by Lawmakers, it appears there is an end in sight for the sweeping of the Sadowski Trust Fund. With a stark contrast to its original $144 million offer, the House of Representatives agreed to a $370 million top-line budget item;restoring the Sadowski Trust funds to normal operationsand ensuring the monies dedicated to affordable housing are in fact appropriated for affordable housing. As we enter the final stretch of session, FHBA’s legislative team remains hard at work finalizing deep revisions to the Impact Fee bill and overseeing thefinal passage of SB 1066 in the Senate Chamber just this morning, with a 40-0 affirmative vote. We are also maintaining support of the water bill containing both the rights of nature preemption and the septic inspection transfer language. With a 72-hour cooling-off period following receipt of the budget, the Legislature looks unlikely to finish the Session by Friday. Senate Budget Chief, Rob Bradley and House Appropriations Committee Chairman, Travis Cummings expect the Legislature to wrap its budget talks by March 16 or 17