Weekly Update: June 15, 2017

Iowa D.C. Legislative Visits a Tremendous Success

Despite the shootings yesterday, we had an awesome day with all of our Iowa senators and representatives.  We were part of 800 builders and remodelers from across the nation for the annual NAHB Legislative Conference in Washington D.C.

We had a really full of meetings with elected officials and their staff, to call on Congress to make housing and homeownership a national priority and to support policies that will keep the housing recovery moving forward.

“Today, builders from coast-to-coast are sending a loud and clear message to members of Congress that a strong housing market is critical to spur job growth and create a vibrant, dynamic economy,” said NAHB Chairman Granger MacDonald.  Among the topics that were covered:

  • Regulatory reform
  • Labor shortage
  • A predictable, affordable national flood insurance program
  • Housing finance
  • Tax reform, including protecting incentives for homeownership
  • Promoting cost-effective energy codes
  • Securing a supply of softwood lumber
  • Improving the Low-Income Housing Tax credit to help meet the nation’s acute need for affordable rental homes.

The day began with a briefing where V.P. Pence was slated to speak, but at the last minute cancelled out because of the shootings.  Rep. Peter Roskam (R-Ill.), who sits on the House Ways and Means Committee, spoke to builders before they met with their lawmakers and said that this year there is “a real opportunity to do something about tax reform.”

House Republicans are working on a tax reform blueprint that would generate economic growth, simplify the tax code, stop erosion of the U.S. tax base so that it is no longer more attractive for U.S. corporations to go overseas, and provide permanency to the tax code to deliver certainty to the business community, Roskam said.

It’s the first year since 2013 that NAHB has held its annual Legislative Conference in Washington, D.C. During the past three years, as part of a nationwide effort to “bring housing home,” builders across the country met with their federal lawmakers in their home districts.

Mike Rowe Sponsorships

We’re really excited about bringing Mike Rowe to Central Iowa on September 28 and we’re seeking sponsors for the event.  It’s an expensive project.  Check out the sponsorship packages and contracts:

Sponsorship Packages

Sponsorship Contract

For more information contact Dan Knoup or Melisa Cox at 515-270-8500 or email Jay Iverson.

Interest Rate Hikes

The Federal Reserve’s monetary policy committee announced two moves yesterday with implications for housing. Neither represented a surprise for markets.

First, the Federal Open Market Committee (FOMC) announced the second rate increase for the short-term federal funds rate for 2017, raising the target rate to a 1% to 1.25% range. While the Fed continues to raise short-term rates, the current stance of monetary policy is accommodative given ongoing low rates of inflation. The FOMC has stated that in the medium-term, the committee’s objective for inflation is 2%.

The second policy announcement with housing market implications was the Fed’s plan for balance sheet reduction. As part of monetary actions enacted after the Great Recession, quantitative easing involved the Fed purchasing Treasuries and agency debt and mortgage-backed securities (MBS) as a means to hold down long-term interest rates. These holdings include approximately $1.8 trillion in MBS. Reducing holdings of MBS are expected to increase mortgage interest rates slightly, but the Fed’s announced plan will make these effects minor.

The announced policy sticks to the Fed’s plan to make this process “gradual and predictable.”  The Fed will begin balance sheet reduction by decreasing reinvestment of principal payments. This will occur by only making future reinvestments in excess of defined caps. For MBS, this monthly cap will start at $4 billion. The monthly cap will then increase in $4 billion steps in three-month intervals until rising to a $20 billion cap. The FOMC anticipates an incomplete reduction of the balance sheet, this leaving some share of current holdings in place. No specific date was announced for the beginning of this proposed policy, although a reasonable guess would be the end of 2017.

The Fed also stated its preference for the federal funds rate as its primary tool of monetary policy. However, the FOMC stated that it would utilize balance sheet expansion if economic conditions warranted additional stimulus and if reductions in the federal funds rate were insufficient for a future economic downturn.

Overall, the Fed’s announcement offered no surprises and represent a commitment to monetary policy normalization. The wild card concerning future Fed actions is the degree to which a low unemployment rate will spur growth in inflation.

Straight out of the 1934 Montgomery Ward Catalog – just a little change financially since then.

Weekly Update: June 8, 2017

NAHB Legislative Conference Next Week

We will have at least 21 Iowans represented at the NAHB Midyear and Legislative Conference meetings next week in Washington D.C.  On June 14, we’ll ask federal policymakers to move forward on several key issues, including reducing regulations that harm small business, reforming the nation’s housing finance system, protecting tax incentives, promoting sensible energy codes and more.  Here is our schedule for June 14 – 100% connectivity with our legislators!

  • Congressman Young – 10:30 a.m.
  • Congressman King – Noon
  • Congressman Blum – 1:00 p.m.
  • Senator Ernst 2:00 p.m.
  • Senator Grassley – 3:30 p.m.
  • Congressman Loebsack – 5:00 p.m.

NAHB has developed videos and a brochure detailing these issues and they are of vital interest for home builders and the housing industry. Thank you for all of your efforts to make sure the home building industry – a key driver of the nation’s economy – thrives.

Watch the videos

Read the brochure

For more information about NAHB’s 2017 Legislative Conference, visit nahb.org/legcon.

The Aging Workforce Does not Help our Labor Scarcity

A scarcity of labor remains an important headwind for home builders and the entire construction industry. NAHB analysis of the most recent 2015 American Community Survey (ACS) data reveals that the median age of construction workers is 41, which is the same as the median age of the overall labor force.

As home building continues its recovery, there are significant labor market developments. Unfilled jobs in the construction sector have been on a generally rising trend. Moreover, while the residential construction sector has been adding net jobs, nearly 714,600 more positions since the low point of employment after the Great Recession, home builders continue to cite labor shortage as a top business challenge. The median age of construction labor shows regional patterns. States with older construction workers are in the Northeast and parts of the Midwest. For example, the median age of construction workers is 47 in the state of Vermont, followed by 46 in Rhode Island, and 44 in Connecticut, New Hampshire, New Jersey, and Pennsylvania. Construction workers are younger on average in the central part of the nation. Half of all construction workers in Nebraska, and Idaho, North Dakota, South Dakota, Utah, and Wyoming are under 38 years of age.

The ACS data also permit an examination of median age by occupations. The medians are presented by occupations below. Construction occupations with younger workers include helpers, roofers, and equipment operators. Older workers are concentrated in managerial positions such as inspectors, construction supervisors and construction managers.

  The Ames Parade of Homes kick off party Tuesday night at First National Bank was a great time.  Over 80 members were signed up.  Near perfect weather, great food, drink, and networking – how can you beat that?

HBA of Greater Siouxland Classes

The HBA of Greater Siouxland is offering the following upcoming training classes at the HBA/Sioux City Construction League Office.  Click here for complete class details.

  • 4-hour Lead-Safe Renovator Training – Tuesday, June 20th  1pm – 5 pm
  • Initial 8 Hour Lead-Safe Renovator Training – Friday, June 23rd  8 am – 5 pm
  • First Aid & CPR Training – Monday, June 26th  10 am – Noon
  • Hydronics & Plumbing Safety – Friday, June 30th  (4 CEU’s available) (Hydronics – 8 am – 10 am) (Plumbing 10 am – Noon)

Pre-Registration is required for all classes by calling 712-255-3852.