builders outlook 2015 issue 11

7/23/2019 Builders Outlook 2015 Issue 11

1/16

New SmartMarket Report reveals that over

half of home builders expect to be doing 60%

or more of their new homes green by 2020

During the prolonged housing downturn, green homes providedsupport to the ailing residential market and now promise to be animportant element of the recovering market as well, according to a newstudy conducted by Dodge Data & Analytics, in partnership with theNational Association of Home Builders (NAHB) and with the support ofPly Gem Industries, (NYSE: PGEM), a leading manufacturer of exteriorbuilding products in North America.

uilders

Outlook

Despite the headwinds created bygrowing concerns about the cost ofbuilding green, a high percentage ofhome builders and remodelers arealready building green and expect to doso in the future. While home builders andremodelers report that consumers of allages are interested in green, the study

also finds that consumers age 55 andolder are the most important group drivingthe current green market. The findingsalso demonstrate that consumersassociation of green with healthier homesleads to even higher potential for growthin the future, as do increased use ofrenewable technologies by 2018.

The 2015 study, which surveyed 232builders and remodelers from across theU.S., demonstrates that they recognizethe benefits of green building:

Over half (54%) of home builders arecurrently constructing at least 16% of theirnew homes green, and 39% ofremodelers report that at least 16% oftheir remodeling projects are green.

By 2020, nearly all (81%) homebuilders will be constructing that level of

green, with over half (51%) building atleast 60% of their new homes green.

By 2020, remodelers report a similarlevel of growth, with nearly three quarters(74%) making at least 16% of theirprojects green, and over one third (36%)completing over 60% of their projectsgreen.

These expectations of higher greeninvolvement emerge despite growing

concerns about the cost of building green.77% of home builders and remodelersreport that building green has anincremental cost over traditionalconstruction of 5% or more, notablyhigher than the 60% in 2014 and 58% in2011 who noted that level of increasedcost. While higher cost is also the topobstacle to green reported, it does notappear to have dampened the drivetoward green in the market.

Builders and remodelers have longrecognized that green is the future ofhome building, said NAHB ChairmanTom Woods, a home builder from BlueSprings, MO. Since we first beganpartnering on this study with Dodge Data& Analytics in 2006, weve seen thatcommitment grow. The studys recent

findings reinforce this continued growth,with new homeowner feedback showing a

desire and expectation that new homesbe high-performing, particularly when itcomes to energy conservation. Mostbuilders recognize that they need to be atleast conversant in green to staycompetitive.

One key factor driving the growth ofgreen is the association of green homes

with healthier living. Home builders andremodelers certainly recognize thepotential: most (83%) believe thatconsumers will pay more for homes thatare healthier.

We have seen the commercial sectorof the construction industry focus on theimpact of buildings on the health of theiroccupants in the last few years, but thesefindings suggest that attention to healthierhomes may offer an even higher gain forgreen in the residential market, saidSteve Jones, Senior Director of IndustryInsights at Dodge Data & Analytics,especially as consumers become betterinformed about the features that makehomes more sustainable and healthier,and begin to demand them.

Another factor leading to growth in the

residential market is the increasing use ofrenewable energy. The study

demonstrates that the use of renewabletechnologies is expected to grow acrossthe board, revealing an interest in energyperformance that goes beyond green. By2018, nearly half of home builders andremodelers expect to be using solarphotovoltaic (48%) and ground sourceheat pump (52%) technologies. Net zero

homes are also emerging as an importanttrend, with nearly one quarter (21%) ofhome builders having built a net zerohome in the last two years.

One interesting finding of the new studyis that the greatest impetus for greenhomes comes, not from millennials asmany people might expect, but fromconsumers age 55 and older. Data fromthe study suggest that greater familiaritywith home features leads to an emphasison home performance. Therefore, as theenvironmentally-minded millennials gainmore experience with homeownership, itis quite possible that there could be evengreater demand for green in the future.

To download the new study, Green andHealthier Homes: Engaging Consumersof All Ages in Sustainable Living

SmartMarket Report, visithttp://analyticsstore.construction.com

National, State & Local Building Industry News2015: Issue 11

www.elpasobuilders.com

New Study

Suggests Strong

Outlook for Green

Homes

Solar Power CEO UrgesLawmakers Let Tax

Credit ExpireMax Willens, International Business Times

A tax break thats propping up thebottom half of the U.S. solar energy is setto expire in 2016 -- and one of themarkets biggest fish says thats totallyfine. John Berger, the chief executive atSunnova, wrote in a letter sent to U.S.lawmakers that Congress should allowthe federal Investment Tax Credit, also

called the ITC, to expire in 2016 asplanned. The ITC has served itspurpose, Berger wrote.

Currently, the ITC pays 30 percent ofthe fees associated with installing aresidential solar power system. It isscheduled to pay just 10 percent thiscoming year before expiring altogether atthe end of 2016. That expiration coulddrastically reduce the number of solarpower installations ordered by U.S.consumers in the coming years.

According to research from BloombergNew Energy Finance, the U.S. market forsolar panels installed could drop from11.3 gigawatts installed in 2016 to just 3.4gigawatts installed in 2017.

That decline would put a dauntingamount of pressure on Sunnovas smallercompetitors. Can the big guys weatherit? Yes, they probably can, Rhone Resch,the president of the Solar EnergyIndustries Association, told the FinancialTimes. Its the small guys who wontsurvive.

Money For A Rainy DayWhile Sunnova is not the market leader

-- Elon Musks SolarCity dominates, witha 34 percent market share -- it has plentyof cash on hand to weather any stormthat might be caused by the ITCs lapse.In addition to its 30,000 U.S. clients,Sunnova announced a $250 millionfunding round last year, calling it thelargest private funding round eversecured by a residential solar energycompany. It brought total investments inthe privately held company to $500million.

"We don't need the 30 percent," Bergertold Green Tech Media last year, when itannounced the funding round. "We strucka deal -- we should keep the deal."

Clearing SkiesIn recent years, the market for

residential solar power has begun to risein a meaningful way, springing from anestimated $3 billion in 2009 to more than$13 billion in 2014. That mark alsoexcludes the energy generated by stand-alone solar energy power plants.

It has also been carving out larger andlarger shares of the U.S.s new energycapacity. Research published earlier thisyear by the Solar Energy IndustriesAssociation found that solar accounted for32 percent of the U.S.s new energygenerating capacity, beating out

renewable energy sources like wind andstandbys like coal.

But those gains dont change the factthat solar, along with all other sources ofrenewable energy, remain a roundingerror when viewed alongside the giants ofthe U.S. energy market. Coal, forexample, accounted for 1.6 milliongigawatt hours of power in 2013,according to the U.S. Energy InformationAdministration. During that same period,solar energy accounted for just over9,000 gigawatt hours.

Silver LiningBut even though it's small, and even

though the ITC's expiration will be ashock to the system for U.S. solar,industry analysts appear to shareBerger's conviction that the market maynow be big enough to survive on its own.If the investment tax credit is notextended, we see it as a disruption, not adeath for the industry, Maddy Yozwiak,an analyst at Bloomberg New EnergyFinance, told Utility Dive. It will be adisruption that will take years to recoverfrom, but the recovery is there.


2/16

2 Builders Outlook 2015 issue 11

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3/16

I hope that everyone had an

awesome Thanksgiving Holiday, and

didnt gobble up too much turkey. I

partook in my share of overeating, but

then again anyone that knows me,

knows I love food. It is so hard to

believe that the end of the year is

already here. It seems like just

yesterday that I was working on my first

Presidents Column for the Builders

Outlook.

I would like to start by congratulating

and welcoming our new 2016 Board of

Directors Antonio Cervantes (BIC

Homes), Leti Navarrete (Custom

Dream Homes), Robert Najera

(Joseph Custom Homes), Bud Foster

(Southwest Land Development

Services), Walter Lujan (DAWCO

Homes Builders), Fernando Torres

(CTU Metro Homes), Leslie Driggers-

Hoard (Homes by Design), Edgar

Garcia (Bella Vista Homes), Mark

Winton (Mark Winton Homes), Jason

Cullers (Cullers Homes), Sal Masoud

(DRE Development), Samira Gonzalez

(Icon Custom Homes), Joe Bernal

(Employee Benefits of El Paso), Linda

Troncoso (TRE & Associates), Bret

Thompson (Foxworth Galbraith

Lumber), Ted Escobedo (SnappyPublishing), Patrick Tuttle (Legacy

Real Estate), Sam Trimble (Lone Start

Title), Luis Rosas (HUB International),

Gilbert Pedregon (GECU), and Greg

Davis (First Light Federal Credit

Union). Our new board was

unanimously approved by the current

executive board and board of directors

during our November Board Meeting.

The future looks bright for our

association with our executive board

and board of directors. I am confident

that each board member brings a

unique skillset that will allow our

association to flourish. I invite

everyone to attend our installation

dinner on December 11th to

congratulate our future leaders.

The City of El Paso and El Paso

Builders Association recently hosted a

new building code review for the 2015

IRC that our industry will be adopting in

September 2016. The IRC review wasfollowed up with the new 2015 Energy

Code review. Both review sessions

were at capacity and very informative.

Keep in mind that we will be

transitioning from the 2009 IRC code to

the 2015 IRC Code, but that means

that we will also be adopting the 2012

IRC that occurred between both. The

new IRC codes seem pretty

reasonable as most of the items are

minor or they have already been

adopted. The energy code changes

are a little more involved, but there

seem to be options available for

compliance. There are many textbooks

that cover the changes on the NAHB

website.

New home closings are up around

twelve percent year to year and

everything that I have heard points to a

small increase next year. For anyone

looking to purchase a new home, the

best time to buy is now as interestrates will be increasing without a doubt.

With that said, we all have a little less

than a month to sell and close as many

homes so that we can all finish out the

year strong. Happy holidays!

32015 issue 11 Builders Outlook

Edgar MontielPresident,El Paso Associationof Builders

Stuffed

inspiration ideas r

El Paso & S

cesesour

uthern New Mexico

Su Casa,

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you new

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Presidents

Message


4/16

While many think of November asa month for Thanksgiving and Black

Friday, for me this is the month thathas more than just a couple of

important things in it. First I havetwo siblings and various cousins,

nephews and nieces that havebirthdays in the month. So do I.

This is the month when the TexasBuilders Association meets for the

final time in the month, so a trip toAustin is involved. But theres also

some very important items going onfor the EPAB as well, such as

electing a new board and planningthe installation awards banquet.

This year we also added the work ofsending out renewals for the coming

year (more on that later in thiscolumn).

Our association has had the greatfortune to have members ready to

serve on the Board and in theLeadership. This year again theres

no exception. First the search

committee looked for someone totake on the four year/ life

commitment of the ladder to thepresidency. Once again we are so

lucky to have a great member stepup, Kathy Parry from HUNT. Kathy

is the second longest tenuredmember at the association even

though we think she joined at theage of 10. Cant verify that part but

she and Mark Dyer are holding thelongevity record. We had asked

Kathy before but work and life justdidnt leave the time needed to

commit to the ladder.Our board of directors nominees

are pretty new to the leadershiproles yet theres a few seasoned

members as well as chairmen thatwill help guide the young Jedis as

they move into the world ofassociation board membership. (Ok,

some would call it the dark-side, butits not all bad). The election went

smoothly and now the time is close

for the installation. President electCarlos Villalobos will take the reins

from Edgar Montiel and otherchanges will be announced as well.

Our event is December 11 at theMarriott Hotel on Airway at Montana.

Were taking reservations now andyou can visit online at

www.elpasobuilders.com to see whoour partners are. We hope that you

will join us. Well have boardorientation soon, and then get to

work for the year as we have ourfirst board meeting on January 13.

Please wish all our incoming andoutgoing board and leadership well.

Say a prayer for them and supportthem as they give time and treasure

to the association for the benefit ofthe membership and the community.

Members be aware that we havechanged our renewal date to once a

year, due January each year. Billingfor 2016 is going out in November

and early December. Please look

for it in your email underINTUIT/Quick Books, our billing

system service. It wont come fromRay or Margarets email. All of the

members will now be synced up to arenewal due in January, allowing you

to plan for it and us to be betterbookkeepers of it. Its going to be as

pain free as we can make it, but wewill need all of you to cooperate to

make it work.Our TAB meeting went well and

well have some news for you on afew new programs for you as a

member to take advantage of. Staytuned to some news coming in your

email box.Please make your RSVP for the

installation. Its always a shiningmoment as everyone dresses up

and looks super sharp. Dont forgetto bring an unwrapped toy for a

child. See you then, and bestwishes for the holidays.

Ray Adauto,

ExecutiveVice President

EPAB

4 Builders Outlook 2 15 issue 11

Bringing it all together for the end of year

Executives

Message


5/16

GINDILB

El P

soSIN 0951E

5 15 issue 11 Builders Outlook

Builder Confidence DropsThree Points in November Builder confidence in the market for

newly constructed single-family homesslipped three points to 62 in Novemberfrom an upwardly revised October readingon the National Association of HomeBuilders/Wells Fargo Housing Market Index(HMI).

Even with this months drop, builderconfidence has remained in the 60s for sixstraight months a sign that the single-family housing market is making long-termheadway, said NAHB Chairman TomWoods, a home builder from Blue Springs,Mo. However, our members continue tovoice concerns about the availability of lots

and labor.The November report is pullback from

an unusually high October, and is more inline with the consistent, modest growth thatwe have seen throughout the year, saidNAHB Chief Economist David Crowe. Afirming economy, continued job creationand affordable mortgage rates should keephousing on an upward trajectory as weapproach 2016.

Derived from a monthly survey thatNAHB has been conducting for 30 years,the NAHB/Wells Fargo Housing MarketIndex gauges builder perceptions of currentsingle-family home sales and salesexpectations for the next six months as"good," "fair" or "poor." The survey also

asks builders to rate traffic of prospectivebuyers as "high to very high," "average" or"low to very low." Scores for eachcomponent are then used to calculate aseasonally adjusted index where anynumber over 50 indicates that morebuilders view conditions as good than poor.

Two of the three HMI componentsposted losses in November. The indexmeasuring sales expectations in the nextsix months fell five points to 70, and thecomponent gauging current salesconditions decreased three points to 67.Meanwhile, the index charting buyer trafficrose one point to 48.

Looking at the three-month movingaverages for regional HMI scores, the Westincreased four points to 73 while the

Northeast rose three points to 50.Meanwhile the Midwest and South heldsteady at 60 and 65, respectively.

Multifamily Drop Pushes

Housing Starts Down 11Percent in October,

Permits Rise Led by a steep drop in multifamily

production, nationwide housing starts fell11 percent to a seasonally adjusted annualrate of 1.06 million units in October,according to newly released data from theU.S. Department of Housing and UrbanDevelopment and the Commerce

Department. Multifamily starts declined25.1 percent to a seasonally adjustedannual rate of 338,000 units while single-family production edged down 2.4 percentto 722,000 units. Both sectors postedpermit gains.

The fact that permits are rising isconsistent with our builders continuedoptimism in the housing market, saidNAHB Chairman Tom Woods, a homebuilder from Blue Springs, Mo. Eventhough starts dropped in October, theyhave stayed above the one million mark forseven straight months the longest streakin almost seven years.

This months decline can be attributableto the volatile multifamily sector adjusting totrend after an unusually high September,

as well as the storms and flooding affectingsingle-family production in the South, saidNAHB Chief Economist David Crowe.However, with permits ticking upward, weexpect to see the housing market continueto grow at a modest pace.

Combined single- and multifamily startsrose in the Northeast and Midwest, withrespective gains of 10.2 and 15 percent.Meanwhile the South fell 18.6 percent andthe West dropped 16.2 percent.

Overall permit issuance rose 4.1 percentto 1.15 million units in October. Multifamilypermits rose 6.8 percent to a rate of439,000 while single-family permitsincreased 2.4 percent to 711,000.

Regionally, the Northeast, Midwest andSouth posted respective permit gains of 5.9

percent, 2.4 percent and 7.5 percent. TheWest fell 2.6 percent.

New Home Sales Rise

10.7 Percent in October Sales of newly built, single-family homes

rose 10.7 percent to a seasonally adjustedannual rate of 495,000 units in October,according to newly released data fromHUD and the U.S. Census Bureau.

Our builders are reporting continuedoptimism in the housing market, and areadding inventory in anticipation of futurebusiness, said Tom Woods, chairman ofthe National Association of Home Builders(NAHB) and a home builder from BlueSprings, Mo.

Sales this year are running 15.7 percentahead of 2014, said NAHB ChiefEconomist David Crowe. With a firmingjob market, affordable home prices, andrising pent-up demand, todays report isanother indicator that the housing marketcontinues to move on a modest upwardtrajectory.

New-home sales were up in three out ofthe four regions. Sales rose 135.3 percentin the Northeast, 5.3 percent in theMidwest, and 8.9 percent in the South.Sales fell 0.9 percent in the West.The inventory of new homes for sale was226,000 units in October. This is a 5.5-

month supply at the current sales pace.

National

Builder News


6/16

Housing Market

Faces Slower Growth

in 2016 Realtors Say

Home sales will continue to grownext year, but will face headwindsincluding a lack of first-time buyers andrising mortgage rates, Realtors say.

More than 5.4 million existing single-family homes will be sold in 2016, upfrom an estimated 5.3 million homessold in 2015, Lawrence Yun, chiefeconomist at the National Associationof Realtors, said at the groupsconvention Friday in San Diego.

Mr. Yun anticipates that median

home prices will grow at an annualrate of 5%, compared with 6% thisyear. Still, Mr. Yun said the marketcontinues to face some steepheadwinds. Pending home salesaforward-looking measure of thehousing marketare on the decline.

Rising home prices are becomingan obstacle for first-time buyers, hesaid.

Mr. Yun expects the rate for a 30-year fixed mortgage to rise to 4.5%from 3.8% as the FederalReserve moves to raise short-terminterest rates and the economystrengthens. That would make homeseven less affordable.

The homeownership ratewhich

already sits near 50-year lowswill dipeven further, Mr. Yun said. But that islargely a positive trend, as youngpeople will start moving out of theirparents basements and becomerenters.

Cristian DeRitis, a senior directorat Moodys Analytics, said he alsoexpects prices and sales to rise. Mr.DeRitis said he is expecting pricegains of about 3.3%.

Were clearly not going back to therate of growth during the boom, hesaid. We think its going to be fairlycontained and slow and steady.

Still, he said, rising rents will startdriving young professionals to stop

delaying buying homes, especially inmore expensive markets, such asCalifornia, Florida and the Northeast.

Housing Affordability

Opens Doors to

Homeownership

As Americas home builderscelebrate National HomeownershipMonth in June, lower interest rates andhome prices are boosting housingaffordability across the country.

According to the latest NAHB/WellsFargo Housing Opportunity Index,66.5% of new and existing homes soldbetween January and the end ofMarch were affordable to familiesearning the U.S. median income of$65,800.

Now is a great time for consumersto buy homes, said NAHB ChairmanTom Woods, a home builder from Blue

Springs, Mo. Both first-time andmove-up buyers can take advantage ofthese favorable market conditions andstart building their American Dream.

The national median home pricedeclined from $215,000 in the fourthquarter to $210,000 in the first quarter.Meanwhile, average mortgage interestfell from 4.29 percent to 4.03 percentin the same period.

First-time home buyers also can findhelp qualifying for a mortgage withlow-downpayment programs offered byFannie Mae and Freddie Mac that aregeared primarily toward the first-timehome buyer market. These lendersnow offer mortgages with 3%

downpayments, allowing more

creditworthy borrowers who lack thefunds for a large downpayment toobtain a home mortgage.

As housing affordability continues toimprove, more consumers candiscover the benefits ofhomeownership, including the fact thatit is a primary source of net worth formany Americans, and is an importantstep in accumulating personal financialassets over the long term.

The financial benefits ofhomeownership begin in the first yearfor most home owners, through theability to deduct mortgage interest andproperty taxes paid off their taxableincome. This can result in savings of

thousands of dollars every year,especially in the early years of themortgage when interest makes up thelargest portion of the monthly payment.

In addition to the financial benefits tofamilies, homeownership alsostrengthens communities. Homebuilding increases the property taxbase that supports local schools andcommunities.

Homeownership builds strongercommunities, provides a solidfoundation for family and personalachieve ment and improves the qualityof life for millions of people, saidWoods.

Labor Force Loss

While the unemployment rate is 5.1%and has fallen smartly since peaking at10% in October 2009, a key questionis why? Part of the decline is due topeople finding work who werepreviously unemployed, however partof the decline is from people dropping

out of the labor force. To this end,there are 92 million Americans who arecurrently not part of the labor force.But that number includes, amongothers, retirees, students, and stay-at-home parents, groups that bynecessity dont work and are thus notpart of the labor force. That said,realistically how many Americans arenot in the labor force, and moreimportantly, is the problem gettingworse?

First, the population of the US isroughly 319 million. Of that number,about 65 million are under 16 and areexcluded from employment data forobvious reasons. That leaves roughly255 million Americans who are over16. However, that number includes 43million Americans over 66, the age atwhich full Social Security benefits areavailable. Excluding such persons,even though some are employed,leaves 212 million people between 16and 66.

Of the 21 million between ages 16and 20, 54% are in school, and one-third are in the labor force, meaning

they are working or actively looking forwork. And of the 23 million personsbetween 21 and 25, 73% are in thelabor force and 13% are in school.Thus, between the ages of 16 and 25,6 million people neither work norattend school. For these ages, this isthe number of persons who are reallynot part of the labor force.

Of the 105 million persons betweenthe ages of 26 and 50, 82% work, 8%care for a family member, which is not

surprising given the number of school-age children and aging parents, 2%attend school, while 6% are either ondisability or would like employment butare not seeking it out. Of the 62million persons between 51 and 66,two-thirds work, 16% are retired and12% are disabled, with the remaining6% split between those wanting butnot looking for a job and those caringfor a family member. Thus, betweenthe ages of 26 and 66, there are 20million persons not working, not caringfor a family member, not in school, andnot retired, the number effectively notin the labor force.

So compared to decades ago arethings better or worse? It depends.Compared to 1999, when labor forceparticipation rates were at their all-timehigh, several things are apparent.First, back then Baby Boomers were intheir prime working years, today theyare in their 50s and 60s and rapidlyretiring. Second, the percentage offull-time students has risen for everyage category. Third, the percentagethat are disabled and fourth, the

percentage wanting a job but notlooking for one have both risen acrossall age categories. Its these last twocategories that are of concern.

In conclusion, the real number ofAmericans not in the labor force is atmost 26 million, not the 92 millionnumber that is widely cited, becausemany of those individuals are inschool, caring for a family member, oras increasingly is the case, haveretired. That said, the increase in thepercentage of discouraged workers,those on disability, those in school, andthose that are retired has risen byabout five percentage points since

1999, thereby reducing both the laborforce participation rate and theunemployment rate.

Elliot Eisenberg, Ph.D. is President of

GraphsandLaughs, LLC and can be

reached at [email protected].

His daily 70 word economics and policy

blog can be seen at www.econ70.com.


Economic

Outlook

Guest

Outlook

Elliot Eisenberg

Economic & PolicyBlog

Reality Check:

Americans not in the labor force is at most 26 million


7/16

7015 ISSUE 11 Builders Outlook

Trends

Technology Construction

10 trends defining the construction industryBy Emily Peiffer, http://www.constructiondive.com

When experts discuss rapidlyevolving industries, construction rarelymakes its way into the conversation. In

some ways, this exclusion iswarranted, as veteran constructionmanagers and executives have oftenbeen resistant to major advancementsand new methods in their industry.Kevin Max, managing director of majorprojects advisory at KPMGs New Yorkoffice, called construction "an industrythat evolves and moves rather slowly"during an interview with ConstructionDive in May.

Change, however, is becoming a morewelcome concept for builders, as many areembracing innovations and changingconsumer tastes. At the same time, trendsin the markets have a major impact onconstruction professionals, who mustconstantly keep up with the strength of the

industry as it struggles to get back on itsfeet.

To help busy professionals stay up-to-date with the latest trends in thecommercial and residential sectors, wevecompiled a list of 10 major trends drivingconstruction.

1. The shortage of qualified laborcontinues to plague the industry.

Everyone knew this was coming. Duringthe recession and subsequent years ofstruggle for the building industry, qualifiedlabor across all sectors fled in search ofwork elsewhere. Now that the industry isrecovering, those workers just aren'tcoming back. The area hit the hardest hasbeen skilled craft labor. Builders inresidential, commercial and industrial

sectors can't find the qualified workersthey need for new projects. The Bureau ofLabor Statistics recently found thatcontractors had 143,000 unfilled jobs on

their books in June.The Associated General Contractors of

America also reported this month that only28 states added construction jobs betweenJune and July. The association blames this"uneven growth" on tight budgets forfederal and state projects impactedlargely by Congress' inability to pass long-term highway construction funding aswell as the exodus of older workers, theunreliability of construction jobs in anuncertain economy, and the lack of tradeschools encouraging new constructionemployees to enter the field.

Although the construction industry hasseen a strong rebound this year, its growthhas been crippled by this lack of qualifiedlabor. Unless more workers start to comeout of the woodwork and enter the field,the pace of growth will continue to bedisappointing.

2. The use of BIM and technology/appson job sites is increasing.

Construction has been somewhat behindthe times when it comes to adopting newtechnologies and innovations. In April, wereported on a Texas A&M study that foundthe construction industry lags behind manyothers when it comes to using mobileapps, cloud-based systems and othertechnology. However, some contractorshave begun to realize the potential benefitsof new tech options.

Building Information Modeling hasquickly become the most significant andwidely adopted new technology method

employed in the industry. The process ofcreating digital models to provideinformation for planning construction hasproven beneficial for both safety reasons

as managers can use BIM to helpassess risks on job sites and to plan waysto do more of the work off-site and foreconomic reasons as it can helpcontractors save thousands of dollars ofunnecessary spending on scaffolding andstaging.

Apps for phones and tablets have alsoemerged as game changers for the jobsite. A wide variety of apps are availablethat can help contractors view purchaseorders, floor plans and site plans; scheduleappointments; submit change orders; lookup building codes and manufacturersinstructions; track weather; and more.OSHA even offers a smart phone app thatoutdoor workers and supervisors can useto gauge the heat index of an outdoor worksite and the risk the crews face duringany point of the day.

Construction professionals need to keepup with the latest technologies available,as they can save time, money and lives.

3. Homebuilding mergers andacquisitions will likely be on the riseafter the major Standard Pacific/RylandGroup deal.

When Standard Pacific and the RylandGroup first announced their merger in May,analysts instantly offered predictions of animpending surge of similar mergers in thehomebuilding industry, which has been inthe midst of what Builder magazine called"an acquisition wave."

Between 2012 and 2014, more than 20mergers and acquisitions occurredbetween builders in an effort to createshareholder value, acquire land andimprove operating efficiency. The StandardPacific/Ryland merger, however, rockedthe narrative, as the consolidation of thetwo publicly traded builders will create thefourth-largest homebuilder in the U.S.Earlier this month, the two companiesannounced their combined name would bethe CalAtlantic Group.

Standard Pacific Chief Executive ScottStowell told The Wall Street Journal heexpected the major merger to lead toothers. "We're out in front of what we thinkwill be a wave of consolidation in ourindustry," he said.

His prediction has so far proven correct,as Taylor Morrison, the seventh-largestU.S. homebuilder by volume of sales,revealed its plans to start building inChicago and two North Carolina marketsafter acquiring three divisions of 64th-ranked Orleans Homebuilders.

Which builders will be next to catch themerger wave? We expect more acquisitionnews to pop up throughout the year.

Continues on page 12


8/16

Buildeers Outlook

On the Scene

PRO AM Golf Tournament

November 2 15

Presented by

The annual Pro-Am golf outing was

held at Coronado Country Club on

November 9. The event which is

sponsored by StrucSure Home

Warranty consists of club pros from

around west Texas and New Mexico

playing in their final round of point

accumulation for the Sun Country

PGA. Our event was hosted for the

first time at the prestigious Coronado

Country Club on the west side. This

tough course is not friendly for those

who have never played it, and its

tough for those who have. The day

was beautiful so I cant blame the

weather for our play today, said DonRassette who was teamed up with

Frank Torres and Scott Whisenant

from StrucSure. I can tell you that

this course offers some of the most

challenging golf anywhere in the

state, probably the nation, said Scott.

Tough course, beautiful day. The

country club sits high up on the

Franklin mountain range and gives

the golfer a breathtaking view of the

city and into New Mexico.

This is the first pro-am in nearly 30

years at Coronado and we are so

grateful to the El Paso Association of

Builders for sponsoring us, said Mark

Gonzalez, head pro at the club. All

the pros really appreciate all that the

EPAB does for us in bringing in these

teams, matching us up in a greatevent and sponsored by the

Association just makes it extra

special, Mark continued. The event

was moved to Coronado when club

member Bobby Bowling IV, who sitson the clubs board, asked if we would

consider it. With our hiring of Mark

Gonzalez as the pro the Club really

wanted to showcase our course to the

other pros from around the area, and

we thought we could help the

Association in a partnership this

year, Bobby told the Outlook.

The 19 teams that played all had fun

or had fun at the frustration the layout

gives even the most seasoned golfer.

Im glad we pulled this one off in

such a great day especially when the

weather wasnt so great right beforeand right after our tournament, said

Sam Shallenberger, golf chairman for

the EPAB. My thanks goes out to

the players, but my special thanks go

out to the partners and advertiserswho put up the money for us and

allowed us to make a little bank for

the Association, he continued.

Our tournament will continue to

evolve over the next few years and

our Sponsoring Partner StrucSure

Home Warranty has made a long time

commitment to it. We love coming to

El Paso and helping the Association

in a fun way, always good for us, and

a great day for those playing, said

Scott Whisenant of StrucSure.

Thank you for allowing us to be

involved, he continued.

StrucSure Home Warranty partners on EPAB Pro-am; Weather cooperates, course tough


9/16


10/16

by Christopher Elliott, Fortune

Hilton has become the latest hotel chain

to face government fines for allegedlyblocking their guests personal Wi-Fi

hotspots. It joins a growing list of hotel and

convention centers that have been accused

of falling afoul of federal law, which forbids

such activity.

Theres big money at stake. A facility can

earn hundreds of thousands of dollars from

selling wireless access, and for some

hoteliers, income from Wi-Fi subscriptions

can mean the difference between profit and

loss.

In recent months, though, the FCC has

cracked down on hotels and convention

centers. Among the fines:

In October 2014, Marriot t agreed

to pay $600,000 to resolve an FCC

investigation. In August, trade show and

convention telecom services provider

Smart City Holdings LLC was fined

$750,000 for Wi-Fi blocking at several

sites.

The FCC also is proposing a

$718,000 fine against systems integration

firm M.C. Dean Inc. for alleged Wi-Fi

blocking at the Baltimore Convention

Center.

The Hilton case began a year ago, when

the Federal Communication Commissions

(FCC) Enforcement Bureau received a

complaint that the Hilton Anaheim in

Anaheim, Calif., a convention hotel a mile

away from Disneyland, was blocking

visitors personal Wi-Fi hotspots unlessthey paid the hotel a $500 fee for Hiltons

Wi-Fi. The government alleges the hotel

failed to com ply with its inquiry.

The FCC proposed a $25,000 fine

against Hilton, for apparently willfully and

repeatedly violating a commission order by

failing to respond to the bureaus letter of

inquiry and obstructing the Bureaus

investigation into whether Hilton willfully

interferes with consumer Wi-Fi devices in

Hilton-brand hotel and resort properties

across the United States.

We strongly disagree with the decision

by the FCC Enforcement Bureau, says

Aaron Radelet, a Hilton spokesman. Hilton

supports open access to private Wi-Fi

networks for our customers through their

personal devices, while at the same time

protecting their personal information. We

have a policy in place that states our

commitment to secure open access and

prohibits hotels from blocking Wi-Fi, and it

is repeatedly communicated to all

properties.

Radelet insists the company cooperated

with the FCC by providing extensive

background and details in a timely and

efficient manner. He notes Hilton did not

block Wi-Fi to collect a fee and that it

hasnt been notified of any other

complaints.

Why block Wi-Fi?

Sometimes hotels engage in access-

point blocking in an effort to preserve the

quality of its own guest Wi-Fi, according to

Ben Miller, a Wi-Fi expert who blogs at

Sniffwifi. A fundamental rule in any Wi-Fi

deployment is that performance suffers

when more than one access point operates

on the same channel in the same place,

he says. When guests set up personal

hotspots, that often happens.

Marriott justified blocking Wi-Fi hotspots

last year using those reasons. But the FCC

gave the hotel chain a $600,000

government fine for allegedly interfering

with its guests personal wireless hotspots

at one of its large convention properties.

The hotel chain argued that it is having the

authority to disrupt these connectionswould make customers less vulnerable to

hackers and unauthorized network

access.

Interestingly, Marriott petitioned the FCC

to clarify its rules on managing its wireless

networks. At the time, Hilton and the

American Hotel & Lodging Association, a

trade group, also supported its efforts. But

under intense pressure from guests and

consumer advocates, the petition was

quietly withdrawn earlier this year.

Better wireless networks

Although interference with an existing

Wi-Fi network is a legitimate problem, the

solution isnt to block other networks, some

say. Instead, hotels and convention centers

have to construct a better wireless network,says Casey Collins, CEO of C3-Wireless,

which builds wireless networks for the

travel industry.

The systems, he adds, must be designed

to carefully, using proper channel spacing

and power settings over enterprise-class

equipment. For example, most of the

interference issues exist in the 2.4 GHz

band, so hotels should design systems inthe 5 GHz band range, where there is

more space and less usage, and deploy

advanced techniques such as band

steering. The alternative is a hodgepodge

of conflicting networks, creating such

congestion that nobodys Wi-Fi network

works well including the venues.What should guests do?

Hotel guests are right to ask if their

personal hotspot is being blocked. Among

hotel and convention center operators, the

idea that you can block a rogue access

point is justified, in sharp contrast to the

FCCs stated position, Collins adds. If you

suspect your hotspot isnt working right

because of interference, you could

contacting the hotels IT department to get

your device whitelisted, which means the

blocking system will see the MAC address

of your device and allow it to pass traffic.

But he admits its a long shot.

And if that doesnt work? Tell the hotel

manager that youll complain to the FCC if

the hotel does not cease blocking yourpersonal hotspots, says Miller. And then

do it.

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11/16

Jed Kolko, Professional Builder

More young adults are living with their

parents in 2015 than during the

recession. Despite widespread

expectations (including my own) that

young people would move out as the

job market recovered, they are not.

The share of 18-34 year-olds living

with parents was 31.5% in 2015, up

from 31.4% in 2014. (These Census

data are from March of each year. See

note at end of post on data and

methods.) Using different Census data,

Pew recently reported that in 2014 the

share of young adults living with

parents or relatives was at its highest

level since 1940 for men and even

earlier for women.

After dropping a bit from the late1990s to the early 2000s, the share of

18-34 year-olds living in their parents

home rose steadily from 2005 to 2012

and has remained near this post-

recession high even as the economy

has recovered and unemployment foryoung adults has dropped sharply.

Because the share of young adults

living with their parents rose suddenly

after the housing bubble of the mid-

2000s burst, its natural to explain thistrend in terms of recent housing and

labor market dynamics. After all, young

adults with jobs are much less likely to

live with their parents than young

adults without jobs are. Plus, rising

rents and student debt burdens mightbe holding young people back from

moving out of their parents homes.

However, alongside recent swings in

the housing and job markets, there

have been profound long-termdemographic shifts that are related to

young adults living arrangements. For

instance, an unusually high share of

18-34 year-olds are at the young end

of that range, and younger young

adults (18-24) are much more likely to

live with parents than older youngadults (25-34). An especially important

trend is that people are waiting longer

today than in the past to get married

and have kids so the share of 18-34year-olds who are married with kids

has plummeted from 49% in 1970 to

36% in 1980

How much have these longer-term

demographic shifts contributed to the

increase in young adults living withtheir parents? Using regression

analysis, I estimated how much these

demographic shifts contributed to

changes in young adults living with

parents in order to extract thedemographics-adjusted trend. I

included a standard set ofdemographic variables: five-year age

subgroup, marital status, presence of

children, sex, race, ethnicity, nativity(i.e. native- or foreign-born), current

school enrollment, and educational

attainment.

Adjusted for demographic shifts, theshare of young adults living in their

parents home was actually lower in

2015 than in the pre-bubble years of

the late 1990s. In other words, young

people today are less likely to live withtheir parents than young people with

the same demographics twenty years

ago were. To be sure, even the

demographics-adjusted share of young

adults living with their parents has

climbed back up since the housing

bubble burst around 2006, but itremains below pre-bubble levels from

the 1990s.

, 32% in 1990, 27% in 2000, 22% in

2010, and just 20% in 2015.

Unsurprisingly, married young adultsand those with children are far less

likely to live with their parents than

single or childless young adults.

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12/16

10 trends defining

the construction

industryBy Emily Peiffer,

http://www.constructiondive.com

Continued from page 7

4. Tight home inventory (especially for

starter homes) and rising home prices

are creating a seller's market and

hindering low-income and first-time

buyers from entering the market.

The housing market is slowly crawlingback from the depths of the recession.Economists keep a close eye on theresidential industrys stability, as it is amajor indicator of the overall economy.But housing growth has been unable tokick into high-gear due to the lingeringproblem of a lack of affordable, available

inventory on the market.Zillow reported fewer homes were

available for sale in June than a year ago.The inability to find a home in anaffordable price range makes thehomebuying process even more difficult.And with a smaller supply of entry-levelhomes, more low-income buyers will beforced to remain renters.

At the end of August, Black KnightFinancial Services found that home pricesin 13 of the 40 metros surveyed hit newpeaks.

As a result of this ultra-limited supply ofhomes, bidding wars have heated up.Sellers can price their properties higherbecause there aren't enough options forbuyers to choose from.

Although home prices haven't risen asrapidly as rents, they have still steadilyincreased making home purchaseseven further out of reach. In August, NARchief economist Lawrence Yun said therising prices of existing homes areexacerbating the nation's "inequalityproblem."

For the housing market to truly take off,housing inventory will need to expandgreatly and give potential homebuyers areason to make the leap into ownership.

5. Tiny houses are becoming more

than just a fad and have builders taking

notice.

Tiny houses have captured the attentionnot just of the building industry, but of theworld. These microhomes have created a

trend of small-living and off-the-gridlifestyles. The dwellings also are quick tobuild and cost an average of $23,000,according to The Tiny Life.

While some expected tiny homes to bea passing fad, they have proventhemselves to be a popular alternative tothe rising prices of megahouses. The firstofficial Tiny House Jamboree in ColoradoSprings, CO, drew 40,000 people, andBrad Pitt's post-Hurricane Katrinarecovery organization Make It Right marked the devastating storms 10thanniversary by constructing a model of ahigh-tech, energy-efficient microhouse.

So far, big builders have seeminglyshied away from the growing popularity ofthese tiny homes, paving the way forsmall, craft builders to capitalize on the

burgeoning market.

6. There has been heightened attention

on job site safety and stricter

punishments for managers and

executives who put workers in danger.Safety has always been an issue for the

construction industry. According to theBureau of Labor Statistics, constructionlaborers have the 10th most dangerous

job in America. Recently, there has been

more focus on job site safety and stricterpenalties for those who contribute to anunsafe work environment.

Just this month, a jury ordered NewYork Crane and Equipment Corp. ownerJames Lomma and his companies to pay$47.8 million to the families of two NewYork construction workers who died whena crane collapsed on their job site in 2008;and Joseph Kehrer and Kehrer BrothersConstruction were slapped with $1.79

million in fines from OSHA for "willfullyexposing" eight workers to asbestos.

Also during August, the owner and theproject manager of a Californiaconstruction company were sentenced totwo years in prison for what Cal/OSHAcalled the "preventable death" of a daylaborer who was buried alive in 2012. Thiscase was particularly unusual, ascontractors rarely get jail time for a jobsite accident. Dave Cogdill, executivedirector of the California Building IndustryAssociation, said he had never heard of a

jail sentence for a fatal constructionaccident in California.

These increasingly strongerpunishments and higher penalties aremeant to send a message to constructionmanagers and contractors who allegedly

cut corners when it comes to workersafety .

7. 3-D printing and off-site construction

are emerging as possibly more efficient

ways to build.

Will 3-D printing alter the constructionindustry forever? The jury is still out onthat one. If it does have a significantimpact, it will likely occur many yearsdown the road. For now, however, buildersare experimenting with the newtechnology, which can drastically reducebuilding time and costs. A technologystartup in Chattanooga, TN, for example,is reportedly using the world's largest free-form 3-D printer to build walls for newhomes.

Builders are also eyeing 3-D printingoptions for in-space construction, as well

as researching how to 3-D print a car andhome which can also share energy from the same material.

Similarly, many are also improvingefficiency through off-site constructionmethods. A Kansas City startup is buildingthe city's first net-zero home usingalternative construction processes toreduce costs and build time. To do so, thecompany plans to ship construction kitswith pre-cut structural insulated panels,windows, fixtures and most other buildingmaterials, to the local builder who willconstruct the house.

8. The green building market is

growing, and builders are often

encouraged to adopt green practices.

Green building is far from a new

concept, but environmentally friendlyconstruction has been picking up steamand likely won't let up anytime soon.

Carnegie Hall, for example, qualifiedthis month for LEED Silver certificationafter a massive renovation to make165,000 square feet of the concert hallsnon-performance space more energy-efficient.

President Obama's Clean Power Plancould also have significant implications for

the green building movement in thecommercial and industrial space, as hisproposed standards include tax credits forelectricity generated in 2020 and 2021from renewable energy plants that beginconstruction early. The new standardscould spur a wave of solar and wind farmsacross the U.S. Already, Colorado brokeground this month on the state's largestsolar farm.

However, the green building movement

has come with its fair share ofcontroversy. The new 2015 InternationalEnergy Conservation Code has sparkeddebate among builders andenvironmentalists, who are debating whichcodes could potentially harm the buildingindustry, despite possible benefits for theenvironment. One of the largest clashesoccurred this month in St. Louis, MO,where the committee charged withrecommending which new building codesthe county should adopt recommendedthe county remove some of the measuresmeant to reduce energy usage in newhomes due to higher costs.

The green building trend is here to stay,but it will likely continue to face oppositionalong the way.

9. Regulators and law enforcementhave been cracking down on

corruption in construction.

The construction industry is no strangerto corruption problems. Recently, therehas been a surge of officials crackingdown on corrupt developers andconstruction executives who used theirbusinesses for their own gain.

August saw a heat wave of corruptioncharges. At the start of the month, sevenFlorida construction executives werecharged with pocketing $36 million in U.S.tax credits intended for government-subsidized, affordable housing projects inthe Miami area. Later in August, a LasVegas construction "kingpin" was orderedto serve 15.5 years in a federal prison and

pay $13.4 million for his role in anelaborate scheme to take over the city'shomeowners' associations and divert theirconstruction contracts to his company.

To combat corruption in the constructionindustry, the Manhattan DA launched atask force earlier this month to identifyand prosecute corruption in New YorkCity's construction industry. With effortslike the Manhattan task force, the industryas a whole could start to see an influx of

corruption charges and punishmentsdesigned to deter similar practices.

10. Builders are hoping millennials will

finally start buying homes instead of

staying renters.

Millennials seem to be all anyone cantalk about when discussing the housingmarket. Will they finally leave the rentinglifestyle and make the plunge intohomeownership? Will student debt causethem to delay ownership even longer?The residential industry overflows withconstant reports of buying activity for thecoveted 18-34 age segment.

Just this month, reports revealed:Millennials are more likely to put offbuying their first homes than they are topostpone marriage or purchase cars; first-

time homebuyers are renting for anaverage of six years before they buy,more than twice as long as in the 1970s;and sales of existing homes to first-timebuyers fell in July to their lowest sharesince January, even as overall salesincreased for the third consecutive month.

These reports paint a bleak picture ofthe current millennial-homebuying climate.To snag the young buyers, builders needto offer more entry-level home options ataffordable prices.


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Voluntary benefits can do twothings for your benefit program: they

can give smaller employers, whomight not be able to afford benefits, away to provide a variety of benefits atno cost. For other employers, itprovides a way to enhance theemployer-provided benefit program.

What are voluntary benefits?Under a voluntary benefit program,

the employer offers employees amenu of benefits; employees pay forthe ones they want through payrolldeduction. The employee pays all ofthe cost and the benefits providerhandles all administration andprovides all needed educationmaterials. Voluntary medical plans,such as cancer insurance, have no

minimum participation requirements,unlike employer-sponsored medicalcoverage.

Voluntary benefits include: Dental insurance. Vision insurance. Long-term care insurance. Short-term disability insurance.

Long-term disability insurance. Accidental death and

dismemberment insurance. Life insurance. Options include

term life insurance, interest-sensitivewhole life (variable life) anddependent life coverages.

Supplemental health coverages,including cancer/specified diseaseinsurance, critical illness insuranceand hospital indemnity plans, whichpay specified flat amounts.

Auto and homeowners insurance. Nontraditional benefits, such as

prepaid legal services, pet insuranceand more.

Advantages of Voluntary BenefitsEmployees like voluntary benefits.

Even when they pay 100 percent ofpremiums, they get the benefit ofgroup discounts. Through groupbuying power, voluntary programs canoften offer more generous coverageterms than programs available in theindividual market. In life and healthinsurance underwritten on a groupbasis, employees can also obtaincoverage without going through amedical exam. These guaranteedissue amounts might be small, butthey can be valuable for peoplewhose health prevents them frombuying coverage on the individualmarket.

ConsiderationsAlthough voluntary benefits have

many advantages, be sure toconsider the following before offeringthem: Does the voluntary program

provide real value? Employees arelikely to view a voluntary program asemployer-sanctioned. If it provideslittle real value, it could create anegative impression of the rest ofyour benefits program. Bewarecertain discount programs, such asdental discount cards, which mightprovide only limited discounts.

Does the voluntary programenhance existing offerings? If youprovide group life to employees thatpays one or two times salary, avoluntary life insurance plan with a

higher benefit could provide realvalue to employees who need morecoverage.

Does ERISA apply to theprogram? The Employee RetirementIncome Security Act of 1974 (ERISA),governs employee benefits. As afederal law, it applies to most grouplife and health programs unless theymeet all four of these conditions:

1 The employer or employeeorganization makes nocontributions.

2 Participation is completelyvoluntary.

3 The employer or organizationdoes not endorse the program.Endorsement has a broadmeaning.

Avoid using company logos onpromotional/informational material,encouraging employees to sign up, oreven negotiating with the insurer forbetter terms for your employees. Youcan permit the insurer to publicize the

program to employees or members,collect premiums through payrolldeductions and remit them to theinsurer. 4 The employer accepts nopayment in connection with theprogram, other than reasonablecompensation for administrativeservices in connection with payrolldeductions. When ERISA applies toa benefit program, the sponsor hasadditional responsibilities. Thesponsor or its designatedadministrator must file an annualForm 5500, provide participants with

important information about planfeatures and funding, act as afiduciary in the management andcontrol of plan assets and establish agrievance and appeals process forbenefit disputes. ERISA also givesparticipants the right to sue forbenefits and breaches of fiduciaryduty. Although the responsibilitiesimposed by ERISA are not onerous,the failure of your insurer oradministrator to do any of the abovefor your plan could expose your firm,as plan sponsor, to fiduciary liability.

Before offering any voluntarybenefits, we recommend talking withan experienced benefit consultant tosee how they fit into the rest of yourbenefit program. For more informationon employee benefitsvoluntary andotherplease call us.

Builders Outlook 2 15 issue 11

My deepest thanks go out to our

sponsors for the golf pro am, for

everyone who bought a tee box sign,

advertised with us or sponsored the

food and drink. To my bud Scott

Whisenant from StrucSure, wecouldnt do this without your strong

partnership and support. To Mark

Gonzalez at the Coronado Country

Club thanks for hosting us. To Bobby

Bowling IV thanks for asking if we

could do the golf there. My thanks

also to Margaret in the office and of

course to Ray for his work. This is a

good event for us and Im sorry a lot

of you couldnt play in it this year. Im

stepping down as AssociatesChairman and will concentrate on golf

for the coming year, so my plans are

for three golf outings this year instead

of two. We like to Pechanga, so well

do two of those and the more serious

pro-am. Im looking forward to it,

hope you are to. To all my fellow

associates thank you for a good year.

Im hoping to see you at the

installation in December and want to

wish you happy Thanksgiving. Eat alot.

Sam ShallenbergerMorrison Supply

Joe BernalEmployer Benefits of El Paso

Voluntary Benefits Offer Many Advantages,Some Pitfalls

Associates

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15/16


16/16

builders outlook 2015 issue 11

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