Weekly Update: January 26, 2017

HF3 – Statute-of-Repose Moves Forward, But Battle Looms Ahead

A big thanks goes out to HBAI President Tim Ruth, HBAI Legislative Chair Glenn Siders, DM Construction Law Attorney Brad Beaman, Seth Molton of Classic Builders (Ankeny), McAninch VP Edward Origer, and DM HBA Executive Officer Dan Knoup for joining HBAI Executive Officer and Lobbyist Jay Iverson at a Judicial Committee sub-committee meeting Tuesday at the Capitol.

We have an uphill battle to fight – many legislators would like to remove residential from the language.  Our contingency, along with Master Builders of Iowa, ABC, and other like-minded groups presented ourselves very well.  The Iowa Bar Association and other consumer protection groups spoke against it completely.  When the dust settled, they moved it forward.  We will be reaching out to a few of you in key problem district areas.  Please pay attention to any future calls to action or beneficial information.  This is our number one priority.

A special shout out to the bill’s sponsor, Representative Kevin Koester of Ankeny.  He is dedicated to not only retaining the residential portion, but keeping the eight year time frame as well.  There have been hints at a potential reduction down to 12 years, which isn’t much different for insurance companies who do not want to service our state.  If reduced to eight years, we estimate that your insurance premiums could be reduced 20% due to the reduced risk and the competitive marketplace.

Single Family Starts

In 2015, single-family starts totaled 713,000 and in 2016, 783,000, up 9.8%. Remaining housing starts fell from 395,000 to 385,000. Overall, starts rose from 1.108 million to 1.168 million. Multifamily has recovered, but single-family starts remain at recessionary lows 7.5 years into a recovery! Worse, labor and lots are in short supply and home prices and rates continue rising. Given these headwinds, single-family activity rises at most 8% in 2017. Elliot F. Eisenberg, Ph.D.

Quad Cities Builders & Remodelers Gathering

HBAI President Tim Ruth (speaking in top photo), NAHB Field Representative Alex Martindale, and HBAI Executive Officer Jay Iverson had a great time last Friday at the Quad Cities Builders and Remodelers Holiday party.  HBAI First Vice President Scott Webster (far right in center photo) was named the Builder of the Year, dual member (QCBR and Iowa City HBA) Dan Marine was sworn in as president, and member extraordinaire Frank Ehrecke received the “Lifetime Achievement Award for Meritorious Achievements & Contributions to the Homebuilding Industry.”  There were many more accolades too – overall it was an excellent event.

A Giant Concrete Printer

You may have seen this before, but check out this video.  The designer and builder was recently in the news for building children’s castles in backyards with this concrete printer.  He’s been building hotel cabanas in the Philippines too.  It’s hard to tell what this technology will be like in the near future for our industry – it’s already exploded in the automotive and manufacturing arenas.

Top Challenge for Builders is Labor Cost/Availability

The monthly NAHB/Wells Fargo Housing Market Index includes a set of “special” questions on a topic of current interest to the housing industry. In December 2016, the special questions asked builders about the problems they faced in 2016 and expect to face in 2017.

Topping the list of problems builders faced in 2016 and expect to face in 2017 is the Cost/Availability of Labor, a significant issue for 78% of builders in 2016 and one that has significantly grown in importance since 2011. That year, 13% of builders rated labor as a significant problem, followed by 30% in 2012, 53% in 2013, 61% in 2014 and 71% in 2015.

The second most significant problem in 2016 was Cost/Availability of Developed Lots-cited by 60% of builders. In 2011, the Cost/Availability of Lots was rated significant by 21% of builders who responded to the survey. That share increased to 34% in 2012, 46% in 2013, 55% in 2014 and again to 58% in 2015. Both the availability of labor and lots highlight the expected constraints of a recovering housing market.

Impact/Hook-up/Inspection or other Fees was a significant problem for 60% of builders in 2016. In 2013, it was a problem for 46% of builders, 52% in 2014, and 53% in 2015 and is expected to be an issue by 61% in 2017. Federal Environmental Regulations and Policies was a significant problem for 58% of builders in 2016. In 2013, this was rated a significant problem by 46% of builders, 53% in 2014 and then 55% in 2015.

Regulation of Banking/financial institutions was a significant problem for 55% of builders in 2016. In 2011, it was rated a significant problem by 77% of builders. The Local/state environmental regulations and policies continue to be a problem for 52% of reporting builders in 2016 compared to 41% in 2011.

Building material prices was a significant problem for 48% of builders in 2016 and expected to increase to 60% in 2017. In fact, this issue experienced the largest difference between builders noting it was an issue in 2016 and builder expectations of it as a challenge in 2017. Other issues builders expect to become more significant problems in 2017: labor, lots, and rising interest rates.

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