Weekly Update: May 25, 2017

Mike Rowe a Go for September 28!

Watch the video above – good stuff!  Mike Rowe has been secured for our event September 28 at the .  Much more info will be heading your way in the near future.  We’re planning for 1,500 people to attend.  Super exciting!

Mike Farr to Contribute $25k to HBAI Educational Corporation

Legacy giving to our scholarship fund is going to be a push as we try to build enough reserves to provide students entering the building trades with financial support.  Past HBAI President and volunteer extraordinaire Mike Farr (Cascade Manufacturing) has planned to provide $25k out of his estate to the HBAI Educational Corporation.  If you’d like to make arrangements to do the same, please contact HBAI Executive Officer Jay Iverson.

Quarterly Rebate Deadline Extended Until Tomorrow

Can’t get your claims in by May 19th? Not to worry! We have extended the deadline to Friday, May 26th! Claim for any single family home, remodeling project or multi-family units completed from January – March 2017. CLAIM TODAY and be rewarded for your loyalty to our 50+ manufacturer brands!  Clickhere for the claim form.

Want to Judge Iowa City Parade of Homes?

The Iowa City HBA needs a few more judges next Thursday (June1) morning.  It’s a great time, expertly put together and you’re chauffeured around like royalty, have a good breakfast and lunch, and on your way home after lunch.  Plus you get to see some really cool builds.  Email ICHBA Executive Officer Karyl Bohnsack asap.

Governor Kim Reynolds Sworn In Yesterday

It was a big day for the state yesterday as Kim Reynolds was sworn in as Iowa’s governor.  The ceremony at the Capitol was fun to be a part of.  So you’re probably aware of that bit of news by now, but it’s been interesting to see the transition occur:

  • Adam Gregg is the new lieutenant governor,  He’s 34, from Hawarden, IA, and a graduate of Central College.
  • Jake Ketzner is the new chief of staff.  He’s 31, from Clive, and a graduate of the U of Iowa.
  • Tim Alcrecht is the deputy chief of staff and senior advisor.  He’s 39, from Ida Grove, and a UNI grad.
  • Ryan Koopmans is the chief policy advisor and senior legal counsel.  He’s 35, from Ireton, and a graduate of the U of Iowa College of Law and also has an economics degree from UNI.
  • Catherine Huggins is the chief advisor.  She’s 54, lived in Iowa for 30 years, and has degrees from the U of Iowa and Drake.
  • Brenna Smith is the press secretary.  She’s 28, from Eagle Grove, and a degree from Bob Jones University.


  We had a fabulous time at the Ames HBA golf outing last Monday – no rain!  There were 144 golfers and everyone seemed to enjoy themselves very much.  It’s always followed up with a cook-your-own steak fry with all of the trimmings.

Trump Proposes $6.2 Billion Cut to HUD

Earlier this week, President Trump proposed a $4.09 trillion budget request for fiscal 2018, which begins on Oct. 1. The plan would slash HUD funding by $6.2 billion, or 13%, to $40.7 billion, and includes billions of dollars of cuts to other Cabinet agencies to help offset a proposed $54 billion increase in defense spending.

It’s important to note that no White House budget is ever approved “as is” by the Congress. Given the scores of key housing and other domestic programs that Trump proposes to cut or eliminate, the ensuing appropriations process is expected to be drawn out and contentious as lawmakers on both sides of the aisle debate the budget’s merits on an array of fronts – from taxes, to energy policy to social spending.

Final spending allocations approved by Congress later this year are likely to be much different that the White House blueprint. Throughout the process, NAHB will remain engaged and work with lawmakers to fund vital housing programs at the highest possible level.

Of note to the residential construction community, the White House budget would eliminate theHOME Investment Partnership (HOME), Community Development Block Grant (CDBG) and Choice Neighborhood programs. It also discontinued funding for the Housing Trust Fund, an affordable housing production program funded by Fannie Mae and Freddie Mac profits.

HOME received $948 million in funding for 2017. The program is the largest federal block grant to state and local governments designed exclusively to create affordable housing for low-income households. Many multifamily builders often use the HOME program to fund developments in conjunction with the Low Income Housing Tax Credit.

The CDBG program, which provides communities with resources to address a wide range of urban renewal projects, received $3.2 billion in funding for 2017.

Moreover, the administration is proposing cuts to the Housing Choice Voucher and Project Based Rental Assistance Renewal accounts, and calling for increased tenant contributions toward their rent.

Stormwater On-Demand Training Programs Available

The first is the Iowa Green Stormwater Infrastructure Certificate, which is a series of eight webinars addressing basic design standards related to seven Infiltration Best Management Practices:  Bioretention Cells, Bioswales, Green Roofs, Native Landscaping / Turf, Permeable Pavement Systems, Rain Gardens, Soil Management and Quality Restoration, plus a short introductory webinar.  In all, there is eleven hours of content, which can be covered at your own pace.  At the end of the series, you’ll receive a Certificate of Attendance as there is no exam associated with this training.  A continuing education component is required every three years as new technologies emerge and current standards and specifications are updated as we learn more about these practices.

The second is the Iowa Certified Municipal Stormwater Professional series of webinars.  The Certification program was developed for those directly responsible for implementing a municipal MS4 permit.  However, all staff could benefit from the information included.  There are nine webinars in this Certification program, spanning close to five hours, which can be covered at your own pace.  For those interested in Certification, there is an exam.  This training is FREE for ISWEP members.

Patent Troll Update

We’ve been involved with the patent troll issue for quite some time and there was a victory this wee – the Supreme Court issued its ruling in TC Heartland that will have a significant impact on the way patent cases are heard and tried in the US. The court ruled unanimously (with Neil Gorsuch recusing himself, as he wasn’t present for the oral arguments) that a domestic corporation only “resides” in its state of incorporation for purposes of the patent venue statute.  This means that a company can only be sued in the state where it is incorporated or where it has an established place of business. Today’s ruling does not address at all what this last phrase means, and some companies who have places of business in the Eastern District of Texas can likely still be sued there. Nonetheless, the ruling is a victory for small businesses and patent reform advocates in the short-term, and will make it far more challenging for patent trolls to bring suit in plaintiff-friendly locales.

That said, there have been rumors that if the court rules as it just did, those on the other side could push for venue legislation to weaken protections for businesses trying not to be dragged to the Eastern District. Looking ahead, UFPR will need to stay on the lookout for any potentially harmful legislation and be ready to push back against it to protect this recent legal victory.

Non-Canadian Softwood Lumber Imports at 10 Year High

In a positive development for home builders, lumber consumers and housing affordability, U.S. softwood lumber imports (excluding shipments from Canada) hit a decade high in the first quarter. European suppliers – including Austria, Germany, Sweden, Finland, the Czech Republic, Russia, Lithuania, Estonia, Latvia and Romania – accounted for nearly all the increase.

This is significant, given the ongoing lumber trade dispute between the U.S. and Canada and the fact that U.S. has recently imposed countervailing duties averaging 20% on Canadian lumber shipments into the U.S.  NAHB is leading the fight against these duties, which will raise the cost of housing for millions of American households.

Last year, 33% of the softwood lumber used in the U.S. was imported, and more than 95% of those imports came from Canada.  Since the U.S. must import lumber to meet the nation’s needs, NAHB is working to boost domestic production by urging policymakers to increase timber sales from publicly owned lands and making more federal forest lands available for logging in an environmentally sustainable way.

We also continue to seek out new suppliers to reduce reliance on Canadian lumber imports and ensure home builders can access a reliable, steady supply at affordable prices.  This increase in non-Canadian lumber imports can help to mitigate the artificial price hikes resulting from tariffs on Canadian lumber.

While lumber prices remain volatile, prices have broadly declined recently, led by a 4% drop in Southern Yellow Pine prices last week. Further, the past three weeks have seen some SPF (spruce, pine and fir) and Southern Yellow Pine products registering price declines of more than 10%.

Weekly Update: May 18, 2017

Mike Rowe Go Build Master A Trade

Mike Rowe Coming to Help Us with Building Trades

Yesterday, your HBAI Executive Committee approved a deposit ($90k) to help bring Mike Rowe to Central Iowa on September 28.  Stay tuned in for this awesome opportunity – we’re going to need your help attending or convincing your local school superintendents that we need to have every counselor and anyone involved in guiding students into our industry to attend.  More details soon!

HBAI Educational Corporation Scholarships – $14k Awarded!

We are excited to report that the following students were awarded scholarships from our HBAI Educational Corporation.  The fund is designed to help students entering the building trades.  As you plan your estate giving – legacy gifts are a great way to help with this endeavor.  Email HBAI Executive Officer Jay Iverson if you’d like to discuss how to make that happen.  Congratulations to the following:

 

$1,000 David Ealy Scholarship

Alec Brundell (Marion) – Hawkeye Community College

 

$1,000 Ken Selzer Scholarship

Kevin Buell (Iowa City) – Iowa State University

 

$1,000 Jeff Tegeler Scholarship

Tanner Iverson (Ankeny) – Des Moines Area Community College

 

$1,000 Charlie Wasker Scholarship

Drew Madden (Waukee) – University of Iowa

 

$1,000 Doug Mayo Scholarship

Michael Madden (Van Meter) – UNI

 

$1,000 John Small Scholarship

Michael Salazar (Alta) – NW Missouri State University

 

$1,000 Bob Friendrich Sr. Scholarship

Caleb Statler (Wellman) – University of Iowa

 

$1,000 Scholarships

Adam Byrne (Cedar Falls) – UNI

Audrey Hefel (Dubuque) – University of Michigan

Ben Lorenz (Johnston) – UNI

Abby Tornow (Washington) – Iowa State University

 

$750 Scholarships

Nicholas Herron (Rock Port, MO) – Iowa Western Community College

Cameron Madson (Ames) – University of Kansas

 

$500 Scholarships

Ross Hingst (Waukee) – Luther College

Brianne Messer (Solon) – Drake

Scott Sievert (St. Ansgar) – Central College

Aging-in-Place Modifications a Growing Trend

Remodelers are making more aging-in-place modifications to their projects and growing home owner awareness is contributing to the trend, according to a survey by NAHB Remodelers. The survey found that 80% of remodeling companies are doing aging-in-place projects, up from 68% in 2013.

Free Webinar on the 2018 IRC

States and jurisdictions across the country are making plans to adopt the 2018 International Residential Code (IRC) next year – and that means home builders in those markets need to be ready.  The webinar Significant Changes to the 2018 International Residential Code takes place from 2-3 p.m. ET on Thursday, May 25, and highlights the differences between the upcoming code and the 2015 version, including significant updates to energy-efficiency requirements.  Key issues covered during the presentation include:

  • Changes in seismic design categories
  • Provisions for king studs and “tall” studs
  • Attic insulation and “buried ducts”

Join speakers Gary Ehrlich and Dan Buuck, both members of the NAHB Construction, Codes and Standards staff, as they walk you through these changes.  Although this is a free webinar (thanks to the sponsorship of the International Code Council), you’ll still need to register to attend.

Gypsum at Top of Building Cost Increases

For the third straight month, prices of softwood lumber, gypsum, ready-mix concrete, and OSB all increased, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics.  Unlike March, when softwood lumber and OSB led price increases, gypsum topped the list in April with prices increasing 5.1%.

As expected, the price of softwood lumber increased again in April.  The 3.0% increase pushed the softwood lumber price index to its highest level in over a decade.  Prices have not been this high since September 2004-three years into the last lumber trade dispute between Canada and the United States.  The price of softwood lumber has increased 10.4% during the first four months of 2017 and is 13.4% higher than one year prior.

These increases have been largely, if not completely, due to the ongoing softwood lumber trade dispute between the U.S. and Canada. Although upward pressure has abated in recent weeks, the Random Lengths Framing Lumber Composite Index (below) has still risen more than 20% since January.

Exchange rates will gain attention should the dollar substantially falter.  A weaker dollar would exacerbate the price effect of tariffs by making Canadian lumber more expensive for U.S. buyers.  While the dollar is not quite as strong as it was at the beginning of the last trade dispute in 2001, it is historically strong nevertheless.

OSB prices posted a 4.4% increase in April and have increased more than 25% since April 2016. The price index for OSB-10.4% higher than it stood in January-stands at its highest level since June 2013.

The 5.1% increase in prices paid for gypsum products (seasonally adjusted) represents the largest monthly increase since April 2016 and the second-largest increase since January 2013.  Gypsum prices have risen 7% over the past year in contrast to the April, year-over-year increases of 2% in 2016 and 3% in 2015.  Ready-mix concrete prices rose by 0.9% on a seasonally adjusted basis in April, the largest monthly increase since June 2014.

The economy-wide PPI advanced 0.5% in April.  Nearly two-thirds of the increase is attributable to prices paid for services, which rose 0.4%. Prices for final demand goods also moved up 0.5%.  Final demand prices for core goods (i.e. goods excluding food and energy) continued the upward trend that began in November 2016, climbing 0.3%.  Prices for core goods less trade services climbed 0.7%.

Roughly 40% of the increase in prices paid for final demand goods was due to core goods, though final demand prices paid for food and energy rose 0.9% and 0.8%, respectively.  Over a quarter of the April advance in the index for final demand services was due a 6.6% increase in prices paid for securities brokerage, dealing, investment advice, and related services.

Historic Housing  

April housing starts were OK. Single family starts were up 8.8% Y-o-Y, 7.4% YTD, and, somewhat surprisingly, have been flat since 10/16. Importantly, trends have emerged. Comparing 15Q1 – peak house size – to today, median and average house sizes are down 130 and 108 square feet respectively. Starts in the South have returned to 1997 levels, in the West to 1992 levels. In the Northeast and Midwest, don’t ask.  Elliot F. Eisenberg, Ph.D.