builders outlook 2013 issue 3

Builders utlookwww.elpasobuilders.com www.epbuilders.org

2013issue 3

Editor’s note: The recent Rally Day in

Austin contained the same message

to Texas legislators as what is

occurring in much of the country. See

the Rally Day story to get more

information on the approach the El

Paso Association of Builders is asking

for from the Texas delegation.

NAHB, Washington, DC -

Growing labor shortages in all

facets of the residential

construction sector are impeding

the housing and economic

recovery, according to a new

survey conducted by the National

Association of Home Builders

(NAHB).

“The survey of our members

shows that since June of 2012,

residential construction firms are

reporting an increasing number of

shortages in all aspects of the

industry – from carpenters,

excavators, framers, roofers and

plumbers, to bricklayers, HVAC,

building maintenance managers

and weatherization workers. The

same holds true for

subcontractors,” said NAHB Chief

Economist David Crowe.

The survey also found that more

than half of the builders reported

that labor shortages over the past

six months have caused them to

pay higher wages or subcontractor

bids to secure projects, and

consequently, to raise home

prices. Moreover, 46 percent of

the builders surveyed experienced

delays in completing projects on

time, 15 percent had to turn down

some projects and 9 percent lost

or cancelled sales as a result of

recent labor shortages.

Part of the reason for the labor

shortages can be attributed to the

fact that many skilled residential

construction workers were forced

to seek employment elsewhere

during the recession and are no

longer currently available.

“What used to be high-paying,

skilled jobs vanished as builders

across the nation went out of

business or were forced to let

workers go,” said NAHB Chairman

Rick Judson, a home builder from

Charlotte, N.C.

The loss of tens of thousands of

housing jobs mushroomed to

more than 1.4 million during the

peak of the downturn. During this

period, many trades retrained

construction workers and they are

not returning to the residential

construction sector.

Meanwhile, a lack of buildable

lots and increased costs for

materials and labor are also

contributing to the problem, as the

infrastructure that supports home

building moves to re-establish

itself following the worst housing

downturn since the Great

Depression, Crowe said.

To help meet the growing

demand for skilled labor within the

housing sector, the Home Builders

Institute (HBI), in partnership with

NAHB, provides career training

and job placement in the building

industry. HBI offers an array of

portable pre-apprenticeship

training programs in a variety of

skilled trades that can be

customized to meet the workforce

needs of communities across the

nation. HBI regularly places

approximately 80 percent of its

student graduates in jobs in the

building sector.

“We are ramping up our efforts

to train diverse populations and

place them in jobs to meet the

growing demand of the building

sector,” said HBI President and

CEO John Courson.

“Even in a period of relatively

high unemployment, we still need

to complement our job training

efforts by bringing in foreign

workers to meet the needs of

home builders and home buyers,”

added Judson.

The worker shortages are not

only slowing the housing recovery,

but also hurting job and economic

growth.

Nationally, the construction of

1,000 single-family homes

generates more than 3,000 jobs,

approximately $145.4 million in

wages, and more than $89 million

in federal, state and local tax

revenues. That doesn’t even count

the increase in annual property

taxes that local municipalities rely

on to fund schools, police and

firefighters.

As the economy mends, pent-up

demand for housing will continue

to grow, as roughly 2 million

household formations were

delayed as a result of the Great

Recession. In normal economic

times, demand for new homes

should be about 1.7 million

annually.

NAHB is anticipating total

housing starts of 970,000 this year

and 1.18 million in 2014 as the

market continues its gradual

rebound.

“We need to look holistically at

the home building infrastructure to

meet growing and future demand,”

said Judson. “To avoid a run-up in

prices in hot markets due to labor

issues, we need to complement

our current training programs with

a market-based visa system that

would allow more immigrants to

legally enter the construction

workforce each year when there is

a dearth of workers to fill the jobs

that are needed.”

Growing Labor ShortagesImpede Housing andEconomic Recovery

2 Builders Outlook 2013 issue 3

The year is moving along at a brisk pace and our agenda’s keep us verybusy at the Association. It is a little startling to see that one third of my termas president has already gone by and that soon we will be making plans toinduct Frank Torres into the spot. But first we have a little bit more work to dothis year and get the Association in a better position. As the chairman for theExecutive Committee I have great partnerships with Frank Torres, EdgarMontiel, Sam Shallenberger, Frank Arroyos and Greg Bowling. It is amazinghow much work we are entrusted to do. As we come off the highly successfulRally Day event in Austin I can announce that we came away as the winner ofthe percentage over goal for Build PAC. A few of your members really workhard to get that done and I’d like to thank Greg Bowling, Randy Bowling andDoug Schwartz for leading the way. They understand that when you contributeto Build PAC at the Texas Association of Builders we get the ability to have ourpresence at the Capitol. Our lobby team there does a great job for all of themembers and a huge value is made with each contribution made. We get tohang another trophy on the wall for the effort and contributions made by a few,and I can only imagine what it would be like to get just half of our members onboard with a PAC contribution of $100 or more. As soon as the May cityelections are done we will set up a local Rally Day and remind the newly andremaining representatives how much you mean to El Paso’s economy and taxbase.

Speaking of elections remember to carefully look at each candidate that isrunning, and in the case of the city district representatives make sure that theyunderstand the value of home building in El Paso. I am proud to say that oneof our own members, Gus Haddad of Haddad Mortgage, is running for Mayor.Our history of involvement in city, county and state government is long andstoried. So learn the facts about the candidates and then go vote and takefamily, friends, workers, and associates out to vote. This election is trulyimportant to the City and to our industry.

Let’s have some fun at the upcoming Golf by the Rio. I’d like to thank Rayand Margaret for the work they’ve done selling the event out, and to Sam forhis belief and work with them. Now, go out and do well.

President’s Message |

El Paso Disposal

772-7495

32013 issue 3 Builders Outlook

Edmundo

Dena

President,El Paso Association of Builders

Showroom: 2131 Missouri

915 • 533 • 6045 fax • 533• 6096

Thomas R. Brown, Owner

Mundo Dena says it best: Just when

you think you got it down something else

pops up. Normally you’d think this

would be a bad deal but not here. No

actually the opposite is true. For the

past few years we as a business and an

association have had to trim, trim and

trim just to remain in business. It’s been

no different than what any business that

is around today went through if you were

in business in 2008. I’m not as sure as

some that we’re out of the woods quite

yet, and frankly I think that there’s an

undertone of worry still fresh in the air.

Having gone through a “fiscal” cliff that

was sure to sink the country now we are

in sequestration, the dooms day of all

dooms day for anything that is touched

by or is a government agency. The

politicians and the Administration of

President Obama have said over the

last few months that sequestration

would be the death of the country. Yet

no one in a position to correct it has

done so, instead they have left it pretty

much untouched to run its course and

take us down some alleys we’d rather

not explore. You see no one really

knows how all this will turn out because

not since the great depression of the

1920’s has government been so

disjointed and partisan, and then

unwilling to even talk to each other. I

can’t imagine running this association

like that, much less the United States

government. So that’s why until this

goes a little further down the alley I think

we need to keep our eyes wide open as

well as our options. Home builders and

their supply chain are resilient,

something that many businesses and

few governments are. Perhaps the

lessons on how to do business should

be the Administration and Capitol Hill

members’ priority. Teach them the

lessons you have had, and show them

how to get it done.

As far as the Association we have

survived with the great support of our

members, who through thick and thin

support the goals and direction of it. We

have suffered as members dropped out,

yet they have benefitted from those who

remained. Is it fair? No it isn’t. Yet there

are shining examples of our members

going above and beyond in support of

the association. The sold out Speed

Networking, the sold out Golf by the Rio

are just two recent examples. Then we

are given another round of support by

our building lien holder WestStar Bank.

While I won’t go into specifics here let

me just thank the WestStar leadership

team that includes Larry Patton, Burt

Blacksher, and Henry Tinajero. They

along with the WestStar Board of

Directors are to be commended for

working with us during these tough

times. Like many of our members these

business people understand what it

takes to survive and help you. We have

people who understand that moving

forward requires taking a step in that

direction. So to paraphrase Mundo, you

think you got it down, and surprise,

someone steps up. We are living proof

that the saying is true.

Finally I’d like to thank Joe Bernal of

Employee Benefits of El Paso for his

hard work in researching and creating a

Member Only Retirement Benefit Plan

for the El Paso Association of Builders.

He teamed up with some great folks

who are experts in the field and have

brought a real umbrella product to our

members for individualized retirement

situations. This is the first of its kind in

Texas and will be the template for other

HBA’s to look and offer. As you will see

this tax season nothing is as it was and

your retirement could be at risk. Thanks

Joe for your hard work. Now, to all our

members: give the plan a look with no

obligation. Thanks to our Board for their

willingness to invest in the long term

health of our members.

Perspective |

Ray Adauto,

Executive

Vice President

EPAB


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Nationwide housing

production edges up in

FebruaryNationwide housing production edged

up 0.8 percent to a seasonally adjusted

annual rate of 917,000 units in February,

according to newly released figures from

HUD and the U.S. Census Bureau. This

slight upward movement represented

gains in both the single-family and

multifamily sectors, with single-family

housing starts reaching their fastest pace

since June of 2008.

“Demand for new homes and

apartments is definitely rising as the

spring buying season approaches and

more young people move out on their

own,” said Rick Judson, chairman of the

National Association of Home Builders

(NAHB) and a home builder from

Charlotte, N.C. “Builders are responding

to this improved demand by putting more

crews back to work and pulling more

permits for future construction, though this

positive activity is being constrained by

continuing issues with appraisals and

credit availability for both builders and

buyers, and also by newly arising

challenges such as lot shortages and

increased costs for labor and materials.”

“Today’s report indicates that, despite

some bumps in the road, overall housing

production continues on the solid upward

trend that we saw throughout 2012,”

noted NAHB Chief Economist David

Crowe. “Moreover, further gains in permit

issuance are a positive sign that home

construction will continue to drive

economic and job growth in the coming

months, albeit at a slower pace than

would be possible without certain limiting

factors.”

Single-family housing starts eked out a

0.5 percent gain to a seasonally adjusted

annual rate of 618,000 units in February,

bringing them to their highest level since

June of 2008, while multifamily starts rose

1.4 percent to 299,000 units.

Regionally in February, combined

single- and multifamily housing production

rose strongly in the Northeast and

Midwest with gains of 18.4 percent and

37.5 percent, respectively, but fell 5.7

percent and 7.2 percent in the South and

West, respectively.

Overall permit issuance rose 4.6

percent to 946,000 units in February, the

strongest pace since June of 2008. That

gain included a 2.7 percent increase to

600,000 units on the single-family side

and an 8.1 percent increase to 346,000

units on the multifamily side.

The Midwest, South and West posted

respective gains of 1.4 percent, 9.9

percent and 6.4 percent in permitting

activity for February, while the Northeast

posted an 18.2 percent decline.

List of Improving Housing

Markets Rises to 274The list of improving U.S. housing

markets expanded for a seventh

consecutive month in March to include

274 metros on the National Association

of Home Builders/First American

Improving Markets Index (IMI), released

today. This total amounts to a net gain of

15 markets since February and includes

entrants from all 50 states and the

District of Columbia.

The IMI identifies metropolitan areas

that have shown improvement from their

respective troughs in housing permits,

employment and house prices for at least

six consecutive months. Thirty-four new

markets were added to the list and 19

were dropped from it this month. Notable

additions include such diverse locations

as Birmingham, Ala.; Santa Barbara,

Calif.; Colorado Springs, Colo.; and

Bloomington, Ind.

“This is the second consecutive month

in which every state is represented by at

least one metro on the improving list,”

observed NAHB Chairman Rick Judson, a

home builder from Charlotte, N.C. “The

expanding housing recovery is energizing

communities nationwide by generating

jobs and local tax revenues -- and it could

be an even more potent force for

economic growth if credit for building and

buying homes was more readily

available.”

“With just over 75 percent of the 361

metros covered by the IMI now seen as

improving, the housing market is on

considerably more solid footing than it

was at this time last year,” said NAHB

Chief Economist David Crowe. “While we

expect this positive momentum to

continue, it’s important to understand that

many markets are just beginning the

recovery process, and that numerous

issues – from credit availability to the

rising cost of building materials and

emerging lot shortages – are slowing the

pace of that advancement.”

“With the understanding that there are

still a lot of uncertainties in the regulatory

arena, it looks like we are finally seeing

the beginning of what could be a broad

and deep recovery of the nation’s housing

market,” added Kurt Pfotenhauer, vice

chairman of First American Title Insurance

Company.

The IMI is designed to track housing

markets throughout the country that are

showing signs of improving economic

health. The index measures three sets of

independent monthly data to get a mark

on the top improving Metropolitan

Statistical Areas. The three indicators that

are analyzed are employment growth

from the Bureau of Labor Statistics, house

price appreciation from Freddie Mac and

single-family housing permit growth from

the U.S. Census Bureau. NAHB uses the

latest available data from these sources to

generate a list of improving markets. A

metro area must see improvement in all

three measures for at least six

consecutive months following those

measures’ respective troughs before

being included on the improving markets

list.

A complete list of all 274 metropolitan

areas currently on the IMI, and separate

breakouts of metros newly

NEWS

it’s time to getserious aboutyour retirement.The El Paso Association of Builders is proud to now offer an

individualized retirement plan created for you.

ThE EPAB MEMBEr rETirEMEnT PlAn

As an EPAB member, you have the unique opportunity to take control of

your retirement investing.

We understand the challenges of retirement planning. That’s why we have

partnered with Employee Benefits of El Paso to offer you the opportunity

to create an individualized retirement plan under the umbrella of the El

Paso Association of Builders.

• investments

• irA’s

• 401K

now is the time to start planning for the next phase of your life. let your

membership with EPAB help you get there.

Call (915) 542-0900

for more information today.

Prior to selecting investment options for your plan you should consider the investment objectives, risks, fees and expenses carefully. For this and other important information, you obtain

prospectuses for mutual funds, any applicable annuity contract and the annuity's underlying funds, and/or additional disclosure documents from the appropriate retirement plan representative. Read

them carefully.There is no guarantee that participation in any retirement plan will result in a profit or that your account will outperform a self-managed portfolio. Please consult with your financial

planner, attorney and/or tax adviser as needed.


The Economy

Four Reasons to Be OptimisticWhile economic growth has been lackluster

since the end of the recession in summer2009, this is likely to change, despite thesequester. Here are my top four reasonswhy, in rank order of their importance to theeconomy going forward.

The painful process ofdeleveraging is over.Deleveraging is, in part,what caused thisrecession to be so painfulcompared with all otherpost-WWII recessions.Non-financial corporationshave outstanding balancesheets, and have actuallybegun to releverage.Commercial and industrial

loans are once again on the rise and thebanking sector is healthier than it has everbeen since record keeping began. To givejust one indicator, the core capital ratio ofbanks is 9.2%; the post WWII average is7.5%. Households are pretty good shape too.There are now only about nine millionhouseholds seriously behind on some sort ofpayment. At the peak of the recession, thenumber was 20 million, while now credit cardand auto loans and personal loan defaults areall profoundly low. The surprisingly rapid rateof deleveraging is partly why the housingsector is now recovering much faster thanexpected.

The housing market has turned the cornerand the next few years should be excellent.At their weakest, housing starts were 550,000units/year. They are now at 900,000 andshould grow by 200,000 units/year for thenext three to four years, topping out at about1.7 million units in 2016. This is being drivenby a rise in household formations that weredelayed due to the anemic job market. Notethat each new home creates about 5 new jobs

nationwide, so 200,000 new homes means amillion new jobs. And while there are stillabout three million first mortgages inforeclosure, that number is way down fromwhere it was and is on its way to the 750,000mark, which is the historic norm.

The next reason I am optimistic is becauseUS corporations are profoundly competitiveand have drastically lowered their costs. As aresult, they are now able to compete withfirms anywhere and win. Unit labor costs areway down. In the manufacturing sector, theyare back to where they were 20 years ago,and as a result corporate profits have beensetting records quarterly. Productivity is sohigh firms that would not have previouslyconsidered manufacturing here (like Apple)are now taking a second look.

Lastly, despite severe dysfunction onCapitol Hill, substantial progress has beenmade on the fiscal front. The cumulativeimpact of the tax increases and spending cutsenacted in spring 2011, during the debt-ceiling fiasco of late summer 2011, therecently completed New Year’s Day fiscal-cliffnegotiations, along with the most recentsequester have come close to stabilizing ourpublic debt-to-GDP ratio somewhere in the75% to 78% range. With another $500 billionin spending cuts and or tax increases over thenext decade, we will be done.

Our economy has come a long way. Theworst is over and by the end of the year theeconomy will hopefully look a lot different thanit does now. And housing will be leading theway.

Elliot Eisenberg, Ph.D. is President ofGraphsandLaughs, LLC and can be reachedat [email protected]. His daily 70word economics and policy blog can be seenat www.econ70.com.

Elliot Eisenberg

is your retirementplan making everydollar count?The El Paso Association of Builders is proud to now offer an

individualized retirement plan created for you.

ThE EPAB MEMBEr rETirEMEnT PlAn

Even if you already have a retirement plan in place, it is well worth your

time to talk to us about the new options designed for members of the El

Paso Association of Builders.

We understand that when it comes to retirement planning, saving every

dollar can add up. That’s why we have partnered with Employee Benefits

of El Paso to offer you the opportunity to create an individualized

retirement plan under the umbrella of the El Paso Association of Builders

that can help reduce set up fees and other associated expenses.

• investments

• irA’s

• 401K

now is the time to start maximizing your plan for the next phase of your

life. let your membership with EPAB help you get there.

Call (915) 542-0900

for more information today.

Prior to selecting investment options for your plan you should consider the investment objectives, risks, fees and expenses carefully. For this and other important information, you obtainprospectuses for mutual funds, any applicable annuity contract and the annuity's underlying funds, and/or additional disclosure documents from the appropriate retirement plan representative. Readthem carefully.There is no guarantee that participation in any retirement plan will result in a profit or that your account will outperform a self-managed portfolio. Please consult with your financialplanner, attorney and/or tax adviser as needed.

Home Builders Call on

Congress to Move

Forward on Housing

Finance Reform The nation’s home builders today

called on Congress to move forward on

bipartisan housing finance reform to

ensure that affordable housing credit

can be delivered through a competitive,

efficient, sound and stable system that

maintains the crucial element of a

federal backstop for the mortgage

market.

Citing recent white papers produced

by the Bipartisan Policy Center

Housing Commission, National

Association of Home Builders (NAHB),

Mortgage Bankers Association and

others, NAHB Chairman Rick Judson

said, “Multiple stakeholders have now

weighed in with their proposed

approaches to this important task.

While the details of those approaches

may differ, one thing they all have in

common is the need to maintain some

form of federal support to the

conventional mortgage market. That’s

the point from which we believe

Congress should start as it charts a path

for the

eventual wind-down of Fannie Mae and

Freddie Mac.”

NAHB’s proposed framework for

housing finance system reform

envisions transitioning Fannie Mae and

Freddie Mac to a new securitization

system for conventional mortgages

backed by private capital and a

privately funded federal mortgage-

backed securities fund. Such a plan

would need to be phased in over a

period of time, with Fannie Mae and

Freddie Mac remaining operational

until the alternative system is fully

functioning.

“As the housing market recovers and

begins to add crucial strength and jobs

to the national economy, it is essential

that Congress ensure a stable and

affordable flow of credit for home

mortgages and housing construction,”

said Judson. “We encourage lawmakers

to pursue the path that NAHB has

recommended. Most importantly, a

federal backstop should be a

fundamental element of bipartisan

legislation moving forward.”

New-Home Sales

Decline in February

from Strong January

Sales of newly built, single-family

homes declined 4.6 percent to a

seasonally adjusted annual rate of

411,000 units in February from a strong

pace of 431,000 units in the previous

month, according to newly released

figures from HUD and the U.S. Census

Department. Despite the slight decline,

this is the second highest monthly total

since April 2010 when the federal home

buyer tax credit expired.

“New-home sales have been running

at a fairly steady pace the last few

months, with February adjusting for the

strong sales we saw in January,” said

Rick Judson, chairman of the National

Association of Home Builders (NAHB)

and a home builder from Charlotte,

N.C. “While the February pace is

encouraging, housing’s recovery is

being significantly constrained by

overly tight mortgage lending

conditions, and policymaker discussions

about changes to the mortgage interest

deduction could cast a shadow on

future housing demand.”

“The February decline is a

readjustment to the unusually high

numbers that we saw in January, and

we are still in line with our forecast for

2013,” said NAHB Chief Economist

David Crowe. “This is the kind of

modest but steady growth we are

expecting to see throughout the year as

the economy and job market continue

to improve, but constraints on borrower

credit, higher building material prices

and a limited supply of labor and

buildable lots hold back a more robust

recovery.”

Regionally, new-home sales activity

was mixed in February, with the

Midwest posting a gain of 13.7 percent,

while the Northeast, South and West

showed declines of 13.3 percent, 9.7

percent and 2.1, respectively.

The inventory of new homes

increased to 152,000 units in February,

which is a 4.4-month supply at the

current sales pace. Although this is an

increase over the previous month, it is

still well below normal inventory

trends.

72013 ISSUE 3 Builders Outlook

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Builders utlook on the scene |

The 2013 Rally Day in Austin was the setting for dialogue

between the visiting members of the El Paso Association of

Builders and our state Senator and Representatives. The

message was that of concern for the education opportunities

afforded high school students and our needs for job ready

graduates and our need to ensure that the State of Texas put

in place a workable water plan. While these two concerns

may appear to be at opposite ends of the spectrum one fits

well with the other as our leadership so plainly pointed out.

“We cannot afford to have the single track of getting kids ready

for college and using a system of testing to a test any more in

Texas,” said President Edmundo Dena. “We need to have a

waiting pool of workers trained to take on the future of El Paso

and the rest of the state” he continued. “Water is something

we can’t do without and while we’ve had conservation in El

Paso and a plan for the future, thanks to the PSB, we cannot

say the same for other parts of Texas,” Dena continued.

What he was talking about is the need to have sustainable

infrastructure in order to have jobs in construction. Water is

the key to growth in the industry and so are trained blue collar

professionals. The path to continued growth counts on both

of these. In an era of school board scandals, especially in El

Paso, the curriculum of having every student having to go into

a college bound system hasn’t help fill employment ready

tradesmen. The Texas Association of Builders and the EPAB

have long supported the concept of choice in curriculum and

in graduating either college bound students or job ready

tradesmen. “We have to be clear that what we are saying is

that in today’s work environment being a successful trades-

person is equal to being a professional in fields that require a

college degree,” said Ray Adauto. “Teaching to a test puts the

educator in a tough position, often not teaching in the tradi-

tional sense, but making sure the test scores were good

enough to meet state standards, not real world experiences,”

he continued.

At the state level the Texas Association of Builders (TAB)

was represented by over 800 delegates from all parts of

Texas. During the course of the day every Senator and

Representative was visited by the Rally Day attendees and

TAB representatives. Leading the conversation with our own

elected officials was Bobby Bowling IV, Greg Bowling, Randy

Bowling and Edmundo Dena. “I am so gratified that we had a

great turnout from El Paso,” said Bobby Bowling IV. “This is

where the rubber meets the road in Texas politics and having

26 from the EPAB come down really shows the

Representative and Senator that we mean business,” he con-

tinued. Randy Bowling has been involved in the TAB

HomePAC for a number of years and was equally pleased

with the response. “Everything went super well for us as we

met with each legislator on a timely basis and in a really well

coordinated effort thanks in large part to Ray and his setting

up of the meetings,” Randy said.

Joining the group for the trip were the following: Edmundo

and Claudia Dena; Frank and Isela Torres; Mike Santamaria

and Pati Santamaria; Kelly Sorenson and Ryan Harding; Greg

Bowling; Randy Bowling; Bobby Bowling IV; Rudy Guel; John

Chaney; Kathy Carrillo; Ruben Orquiz; Sal Masoud; Edgar

Montiel; and Chuck and Virginia Gabriel. Ray and Margaret

rounded out the delegation.

Rally Day drives message to State Capitol

2013 issue 3

Home Buyer Age

Impacts Home

Size Preference

According to

NAHB Survey

A recent study from the National

Association of Home Builders

(NAHB) shows variations in home

buyer preferences with regards to

home size when it comes to age,

race and ethnicity.

NAHB’s “What Home Buyers

Really Want,” surveyed more than

3,600 home buyers across the

country on various characteristics of

new homes. Based on the results,

the median desired home size is

2,226 square feet. However, a

closer look at the data broken down

by buyer characteristics shows

significant differences in how large a

home different types of buyers want.

Age plays an important role in a

buyer’s preferences, with the

amount of space requirements

dropping steadily as the age of the

buyer increases. Among those

younger than 35, the desired home

size is 2,494 square feet, compared

to 2,065 square feet among those

65 and older.

“The building industry wants to

know how much space buyers want

in their homes” said Rose Quint,

NAHB’s assistant vice president for

survey research, and one of the

study’s authors. “This study

provides us with new insight into the

home size preference of home

buyers as a whole, but also across

different demographic groups.”

Race and ethnicity also impacted

home size preferences, with

minority buyers desiring more space

than White, non-Hispanic buyers.

White, non-Hispanic buyers report

wanting about 2,197 square feet,

while Asian buyers desire 2,280

square feet, Hispanic buyers want

2,347 square feet, and African-

American buyers prefer 2,664

square feet.

According to the U.S. Census

Bureau, after peaking in 2006,

median home size fell in 2007, 2008

and 2009, but reversed course and

has risen for the past three years.

Estimates indicate that the median

size of all single-family homes

started in 2012 was 2,309 square

feet, and the average was 2,521

square feet.

The primary reason for the

reversal in home size actually built

has to do with buyers’ ability to

access credit. Due to overly

stringent mortgage lending

requirements in recent years, the

less financially-solid buyers have

been shut out of the market. As a

result, homes built in the last few

years, largely reflect the

preferences of those who are still

able to obtain credit and put down

larger down payments—typically

wealthier buyers who can afford

larger homes.



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Builder Confidence Slips Two Notches

Builder confidence in the market for

newly built, single-family homes paused

for a third consecutive month in March,

with a two-point reduction to 44 on the

National Association of Home

Builders/Wells Fargo Housing Market

Index (HMI), released today.

“Following eight consecutive months

of improvement, builder confidence

leveled off in January and has since

edged down several points,” noted

NAHB Chairman Rick Judson, a home

builder from Charlotte, N.C. “Although

many of our members are reporting

increased demand for new homes in

their markets, their enthusiasm is being

tempered by frustrating bottlenecks in

the supply chain for developed lots

along with rising costs for building

materials and labor. At the same time,

problems with appraisals and credit

availability remain considerable

obstacles to completing deals.”

“In addition to tight credit and below-

price appraisals, home building is

beginning to suffer growth pains as the

infrastructure that supports it tries to re-

establish itself,” explained NAHB Chief

Economist David Crowe. “During the

Great Recession, the industry lost

home building firms, building material

production capacity, workers who

retreated to other sectors and the

pipeline of developed lots. The road to

a housing recovery will be a bumpy one

until these issues are addressed, but in

the meantime, builders are much more

optimistic today than they were at this

time last year.”

Derived from a monthly survey that

NAHB has been conducting for 25

years, the NAHB/Wells Fargo Housing

Market Index gauges builder

perceptions of current single-family

home sales and sales expectations for

the next six months as “good,” “fair” or

“poor.” The survey also asks builders to

rate traffic of prospective buyers as

“”high to very high,” “average” or “low to

very low.” Scores from each component

are then used to calculate a seasonally

adjusted index where any number over

50 indicates that more builders view

conditions as good than poor.

While the HMI component gauging

current sales conditions declined four

points to 47, the component gauging

sales expectations in the next six

months and the component gauging

traffic of prospective buyers both

posted gains, of one point to 51 and

three points to 35, respectively, in

March.

Three-month moving averages for

each region’s HMI score were also

mixed, with the Northeast holding

unchanged at 39, the Midwest and

South posting one-point declines to 47

and 46, respectively, and the West

registering a four-point increase to 58.

Editor’s Note: The NAHB/Wells Fargo Housing

Market Index is strictly the product of NAHB

Economics, and is not seen or influenced by any

outside party prior to being released to the public.

HMI tables can be found at nahb.org/hmi. More

information on housing statistics is also available at

housingeconomics.com.


Expert Advice

Do you know about Safe Harbor

401(k)s? The EPAB Retirement Plan

may be in your future.

In 2012, American’s confidence in

their ability to retire comfortably

dropped to its lowest level in more

than 20 years, according to the

Employee Benefit Research Institute.

Despite the fact that workers are

getting more serious about saving for

retirement, retirement benefits were

available to only 50 percent of workers

in small establishments (<100

employees).

Although small employers (and their

employees) like the idea of a 401(k)

plan, many hesitate to implement a

plan. When asked why, smaller

employers would likely cite the cost,

regulatory burdens, fiduciary

responsibilities, and a general lack of

employer education about the

requirements and processes of setting

up and sponsoring a plan. A safe

harbor 401(k) can mitigate some of

these concerns.

Like all 401(k)s, a safe harbor

401(k) plan allows eligible employees

to contribute a portion of their own

salary to a retirement plan. Employers

contribute either matching or non-

elective amounts to the plan on behalf

of eligible employees. Employer

contributions are tax-deductible and

employee contributions are excluded

from income for federal income tax

purposes.

A safe harbor 401(k) also allows

highly compensated employees

(HCEs) to maximize their 401(k)

contributions while automatically

satisfying actual deferral percentage

(ADP) and actual contribution

percentage (ACP) nondiscrimination

testing rules, as long as the plan

meets certain requirements.

Safe harbors help satisfy

nondiscrimination rules

To satisfy the ADP and ACP testing

requirements with a safe harbor

401(k), your organization must: 1)

make contributions for your employees

and 2) eliminate all vesting

requirements placed on those

contributions. The employer

contribution requirement allows two

options. Under the first, you must

make a matching contribution for each

non-highly compensated employee

(NHCE) who elects to contribute to the

plan. The basic matching formula is

100 percent for at least the first three

percent of employee compensation

and 50 percent on the employee’s own

contributions above three percent, but

not to exceed five percent of

compensation. Such matching

contributions automatically satisfy the

ACP test.

Alternatively, you can design an

enhanced matching formula as long as

the rate is non-increasing and the

aggregate amount of the match at

least equals the basic matching

formula (e.g., 100 percent match on

deferrals up to four percent of

compensation). If you choose the

second option, you must make a flat,

non-elective contribution for each

NHCE who is eligible to participate in

the plan, even if the employee opts

not to contribute. The non-elective

contribution must equal three percent

of the employee’s compensation for

the year. In either employer

contribution option, you can make

similar contributions for highly

compensated employees, as long as

the match percent for any HCE is no

greater than the match percent for any

NHCE at the same rate of deferral.

A safe harbor 401(k) plan also

requires that any employer

contribution, either matching or non-

elective, is fully vested to the

employee. For many employers, this

equals a major drawback of the safe

harbor; your plan loses its power as

an employee retention incentive.

We can help you evaluate safe

harbor and other retirement plan types

for your organization. For more

information, please contact us.

Employee Benefits of El Paso has an

available member only umbrella plan

available to be looked at. The EPAB

does not offer to sell, or make any

recommendations on what plan to use

and only provides an optional

opportunity to our members. This is

not a solicitation to buy. As with all

investments you are the sole

responsible party for any that you

involve yourself in. This article is for

informational purposes only and the

content is provided by Employee

Benefits of El Paso. You may contact

Joe Bernal at 915-542-0900 for

information.

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years

E L P A S O

BUILDERSA S S O C I A T I O N O F

B U I L D I N G E L PA S O ’ S F U T U R E S I N C E 194 6

www.elpasobuilders.com

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Reserve your advertising space in

the 2013 edition of

DREAM HOMEThe El Paso Association of Builders

exclusive magazine featuring the absolute

very best in custom home building and

luxury living.

Call Margaret today at 778-5387

Joe Bernal

Employee Benefits of El

Paso

Adams Moulding & Lumber

Bank of Texas

BiC Homes

C.D. Lee/Britton ins.

Display Services

El Paso Disposal

E.H. Baeza, inc.

First American Bank

First Choice Realty

First Community Mortgage

Frank X. Spencer & Associates

GECu

Masco Contractor Services Dba Gale

insulation

Mini Concrete Materials

Oeste Homes

Palo Verde Homes

R.C. Baeza & Associates

Rassette Homes

Roberts Construction

Southwest Alarm Service

Southwest Chimney & Stoves

Wright & Dalbin

Zacour & Associates

Su Casa MagazineContact: Bob Skolnick

550 S. Mesa Hills Dr., Ste. D-1El Paso, Tx 79912

915-581-2300

BluelinxContact: David Gobble

6990 Market St.El Paso, Tx 79915

915-778-6356

Morrow Water Recovery, LLCContact: Paul Morrow

P. O. Box 61447 Midland, Tx 79711

432-570-4200

Morales Tile InstallationContact: Reynaldo Morales

1481 Paseo De FlorEl Paso, Tx 79928

915-820-3039

Cano HR Group, LLCContact: Tommy Cano

608 Elm St.Anthony, Tx 79821

915-241-3218

Membership News

Thanks to our

MARCH

SODA SPONSOR:

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132013 Issue 3 Builders Outlook

www.elpasobuilders.com www.epbuilders.org

UPCOMING EVENTS |APRIL 3

WOMAN’S COUNCIL

4:00

EPAB OFFICE

APRIL 11

BOARD MEETING

11:00

GENERAL MEETING

12:00 NOON

EL PASO CLUB

CHASE BUILDING DOWNTOWN

APRIL 17

GOLF BY THE RIO TOURNAMENT

ASCARATE GOLF COURSE

1:00 SHOTGUN

MAY 9

BOARD MEETING

12 NOON

EPAB OFFICE

For the latest updates &

event information, visit:elpasobuilders.com

RENEWALS |

NEW MEMBERS | SODA SPONSOR

Gosh, it is already March and thefirst two months are a blur. It looks likeit is going to be a big year for theassociates council. Speed networkingscheduled for March 20th is close tobeing sold out as of this writing therewere just five builder and associatesneeded for a sellout. What a way tostart the year!

Our Spring Golf Pachanga Fiestaby the Rio is SOLD OUT. I think wecan use a few more hole sponsors fora $100.00 each. Our other sponsorshave been sold out for over a coupleof weeks. This event will be differentthan what we have done before and ismore about having fun than the golf.

A special thanks to the Women’sCouncil that will help with theregistration and sell mulligans. Themulligan money will go towards ascholarship that the council will offerto members or immediate family,something brand new. I encourageeach and every one of you to supportthe Women’s Council and their fundraising efforts at the course. Whilethere is still a lot of work to do we havedone some really good things in thefirst quarter. I would like to thank theassociate members who took time togo to Austin for Rally Day. It is anexperience that you don’t forget,especially when you see the inner

works of the Capitol and all that goeson. I’m sorry to have missed this onebut look forward to our local Rally Dayonce the new mayor and council iselected.

Make sure you vote in the cityelections. We have to remindourselves that this election has hugeconsequences to us directly. Look foryour chance to meet the candidates atupcoming Build PAC events.

Thanks and we look forward to yourcontinued participation in theassociates council.


Sam ShallenbergerWestern Wholesale Supply

Associates Council

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February 2013

NOW is the best timeto buy your newhome in El Paso!

Ahora es eltiempo paracomprar una casa nuevaen El Paso!


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Call 778-5387 for more information today!

� execuTive oFFicerS

edmundo Dena – President

Accent Homes

Frank Torres – vice President

GMF Custom Homes

edgar montiel – Secretary/Treasurer

Palo Verde Homes

Sam Shallenberger – Associates chair

Western Wholesale

Frank Arroyos- immediate Past President

Cisco Homes

ray Adauto – executive vice President

El Paso Association of Builders

� couNciL/commiTTee cHAirS

Associates council

Sam Shallenberger

Build PAc

Randy Bowling

Desert Green Building council

Javier Ruiz

Land use council

Sal Masoud

Young Designer Award

John Chaney

remodelers council

Rudy Guel

membership retention

Mike Santamaria, Greg Bowling

Finance committee

Edgar Montiel

Women’s council

Lorraine Huit

� ADviSorY To THe BoArD

J. Crawford Kerr, Attorney, Firth, Johnston

& Martinez

� BoArD oF DirecTorS

Juanita Garcia, Icon Custom Builders

Samira Gonzalez, Edwards Homes

Walter Lujan, Dawco Construction

Carlos Villalobos, Pointe Homes

Don Rassette, Rassette Homes

Beverly Clevenger, Automated Division 6 Builders

Frank Spencer, Aztec Contractors

Kathy Parry, Hunt Communities

Sal Masoud, Del Rio Engineering

Robert L. Foster,

Southwest Land Development Services

Leti Navarette, Custom Dream Homes

Linda Troncoso, TR-Engineering

Lance VanDeman, Hub International

John Chaney, Passage Supply

Joe Bernal, El Paso Employee Benefits

Ken Wade, El Paso Building Materials

Ruben Orquiz, MTI Ready Mix

Kathy Carrillo, Pioneer Bank

Henry Tinajero, West Star Bank

Paul Zacour, Zacour & Associates

Chuck Gabriel, Carpets West

Ted Escobedo, Snappy Publishing

Lorraine Huit, Cardel Design

Javier Ruiz, Border Solar & Senercon

2012 Builder member of The Year

Frank Arroyos

Cisco Homes

2012 Pat cox Award

Mike Santamaria

Mountain Vista Homes

2012 Associate of The Year

Sam Shallenberger

Western Wholesale Supply

John Schatzman Award

Hunt Companies

Honorary Life members

Rudy Guel

Brad Roe

Cliff Anthes

Wayne Grinnell

Chester Lovelady

Don Henderson

Anna Gil

Past Presidents

committed to Serve

ePAB mission Statement:

The El Paso Association of Builders is a

federated professional organization representing

the home building industry, committed to

enhancing the quality of life in our community by

providing affordable homes of excellence and

value.

The El Paso Association of Builders is a

501C(6) trade organization.

© 2013 Builder’s Outlook

is published and distributed for the

El Paso Association of Builders

by Snappy Publishing

240 Thunderbird • Suite C

El Paso • Texas • 79912 915-820-2800

6046 Surety Dr. El Paso, TX 79905

915-778-5387 • Fax: 915-772-3038

Greg Bowling

Kelly Sorenson

Mark Dyer

Mike Santamaria

John Cullers

Randy Bowling

Doug Schwartz

Robert Baeza

Bobby Bowling, IV

Rudy Guel

Anna Gil

Bradley Roe

Bob Bowling, III

E. H. Baeza

Hershel Stringfield

� TAB STATe DirecTorS

Doug Borrett, Karam Co., Life Director

Randy Bowling, Tropicana Homes

� NATioNAL DirecTorS

Bobby Bowling IV.

Demetrio Jimenez

NATioNAL ASSociATioN oF

Home BuiLDerS

(800) 368-5242

TexAS ASSociATioN oF

BuiLDerS

(800)252-3625

www.elpasobuilders.com www.epbuilders.org

Builders utlook

Hunt is developing family focused neighborhoodsin both east and west El Paso.

Our communities feature amenities such as neighborhood parks, walking trails, bike paths,and landscaped roadways.

Only in a community by Hunt will you find home options for everyone – from the first-time buyerto those searching for their ultimate dream home.

www.huntcompanies.com

DEVELOPING DREAMS.IN EAST AND WESTEL PASO.

EAST Horizon MesaEastlake Boulevard to Horizon Mesa Boulevard

Emerald EstatesEastlake Boulevard to Emerald Park Drive

Emerald PassEastlake Boulevard to Emerald Sands Drive

Mission Ridgewww.liveatmissionridge.comI-10 and Eastlake Boulevard

WEST Cimarronwww.liveatcimarron.comHelen of Troy at Redd Road

builders outlook 2013 issue 3

Documents

skilled labor

skilled jobs

residentialconstruction

percent ofthe builders

home buildersinstitute

dc growing labor shortages

home buyers

worker shortages