builders outlook 2015 issue 6
DESCRIPTION
The official publication of the El Paso Association of BuildersTRANSCRIPT
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Builders utlookwww.elpasobuilders.com 2015: issue 6
Water:
GOING GREEN: New Texas law eases solar restrictions during development phase
The U.S. House of Representatives passedlegislation on May 12 that would prevent theEnvironmental Protection Agency and U.S. ArmyCorps of Engineers from vastly increasing federaljurisdiction over the nations waterways andwetlands without going through the proper rule-making process.Approved by a bipartisan vote of 261 to 155, H.R.
1732, the Regulatory Integrity Protection Act, wouldrequire the EPA and the Corps of Engineers towithdraw their proposed rule and develop a new
plan in consultation with state and localgovernments and other affected stakeholders,including the small-business community. The billalso stipulates that such a plan must be based onsound economic and scientific analysis.This legislation would prevent a federal land grab
that would raise housing costs and harmconservation, water quality, job growth, andeconomic development, said National Associationof Home Builders Chairman Tom Woods, a homebuilder from Blue Springs, Mo.
By proposing to dramatically enlarge the definitionof waters of the United States to include almostany body of water, such as ditches, mud flats,isolated ponds, and other water features, theagencies would vastly increase federal regulatorypower over private property.The proposed rule would not add any meaningful
environmental protections but it would exacerbateregulatory uncertainty by significantly extending theareas in which home builders are required to getpermits, Woods said. In turn, this would lead tobureaucratic delays, additional costs, and moreexpensive homes. The agencies failed to consult with state and local
governments before unveiling their plan last year,prompting 34 states to formally request that theproposed rule be withdrawn. Moreover, EPA and theCorps of Engineers did not adhere to theRegulatory Flexibility Act, which requires anassessment of how the proposal would affectAmericas small businesses.A coalition of more than 40 business
organizations, including the NAHB, the AmericanFarm Bureau Federation, the National Associationof Manufacturers, and the National Association ofRealtors, also opposes the plans of the EPA andCorps of Engineers to expand their regulatorypowers.The NAHB is urging the Senate to pass
companion legislation S. 1140, the Federal WaterQuality Protection Act, sponsored by Sens. JohnBarrasso (R-Wyo.) and Joe Donnelly (D-Ind.).
By WENDY HUNDLEY, Dallas Morning News
More Texas homeowners will be allowed to installsolar panels, under a new law set to go into effectSeptember 1.Residential developments with more than 50
homes cannot ban or restrict homeowners frominstalling solar panels, even while new homes arestill being built, according to the legislation recentlysigned into law by Gov. Greg Abbott.It means that more homeowners can access
their basic right to free energy coming from thesun, said Kaiba White, energy policy and outreachspecialist for Public Citizen Texas.The legislation addresses what some say is a
loophole in existing law.In 2011, Texas lawmakers restricted homeowner
associations from banning solar energy systems.But homebuilders were still allowed to prohibit suchsystems in new developments that were still underconstruction.Developers had felt that the exception was
necessary to protect housing investments.Solar energy advocates had cried foul, saying it
could take years for housing projects to becompletely built out.Some residents who purchased their homes over
a decade ago still havent been allowed to installsolar systems because their developments are stillbeing expanded, White said.While the new law allows developments with 50
homes or fewer to ban or restrict solar panelsduring the construction phase, those smallerprojects will be subject to the law once construction
has been completed, White said.Residents who live in communities with
homeowner associations must still go through theHOAs approval process, she noted.The legislation was supported by the Texas
Association of Home Builders.It recognizes the builder/developers ability to
maintain the character of the neighborhood whileallowing homeowners to install solar panels if they
abide by their HOA regulations, said Scott Norman,executive director of the association.The new law was applauded by alternative
energy advocates.This legislation is a positive step toward
restoring a homeowners property rights so thatthey can choose to harness local, clean solarenergy, Larry Howe, one of the founders of PlanoSolar Advocates, said in an email.
House passes pro-property rights water bill, NAHB urges companion legislation
U.S. House of Representatives passes legislation that curbs the EPA andU.S. Army Corps of Engineers' federal jurisdiction over waterways andwetlands
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2 Builders Outlook 2015 issue 6
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Let us help you use natural gas to turn prospects into buyers. For more information, contact Eduardo Lucero at [email protected] or (915) 680-7216.
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32015 issue 6 Builders Outlook
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There are a few things in my worldthat frighten me. Running into a snakeis one of them, walking into a spiderweb another. Getting an IRS letter, orrunning out of gas another. But theresone thing that sends chills up my spinebecause it signals something reallywrong or really really wrong. Thatsgetting a bill from a utility that saysCREDIT. How can a utility tell me its acredit when every other month theythreaten to shut me off. Well Im here totell you thats exactly whats beenhappening the last two months with theEl Paso Water Utilities. Weve gottentwo series of credit on the bills, in otherwords theyre saying we paid too muchfor something. Youd think that it waswater or maybe the sewer service.
Nope, think again. Its because theyrerefunding the highly controversialfranchise fee that apparently has hadenough of a bad taste in the PSB worldthat they ordered refunds beforebeginning round two of a new franchisefees coming our way. If youve noticedyour bill has a credit you should readthe enclosed important informationabout your EPWU bill notice.
READ IT. You will find a confusing chart that
either tells you what your franchise fee
will be or what your water charges willbe. If I read the chart correctly I thinkwere about to be absolutely#%#$%$@@. I cant print the words Iwant but you get the message. Hereswhat I think will happen and I have yetto get someone to tell me that Im rightor wrong:
Our office has what is called a wetfire sprinkler system. When we built theplace we had choices to go wet or godry, meaning we would install acommon water fire sprinkler unit withwater ready to meet a coderequirement, or we would use achemical system that would not requirewater.
Our costs comparison at the timeshowed that we would save substantialmoney going wet. So thats what wedid. The first clue that it wasnt going tobe a lot cheaper was when we got a billfor over $4000 to get the requiredconnection to the building. The firedepartment demanded a 4 water lineand so the utility came and put it in.Next the fire suppression system wasinstalled with pipes running into all partsof the building.
Then came the expensive inspections,because we needed a water backflowpreventer checkup, a power checkup,
alarm hook up, and separate phone line.That was just to get started. Well, thatnever goes away so long as you have awet system. These are yearly fees forwater that you hope will never be used.Stagnant water, under pressure andsubject to freeze. (Yep in 2008 thatsexactly what happened resulting in$40,000 worth of damages.) Our regularbill was about $17 a month for the pastcouple of years. Recently it went up toabout $18.60. The explanation for theincrease has never been clear and Ithink its because the utility reallydoesnt know.
Then in 2014 we began to get afranchise fee for another $17 a month.Remember we have two separatemeters, one for the fire sprinkler waterand one for the regular water use. Ouroffice was being charge TWO franchisefees for one location, meaning that mytax was now twice what I used to payfor water for the sprinklers alone. Weare being charged over $360 a year forwhat? No service, not for waterbutwait. The notice says that the City of ElPaso was charging the PSB over$3,000,000 for the use of roads andrights of way. What? Are we about tosee other departments get charged aswell? Sorry sir, your call to the police
department for the wreck is going tocost you $546 because we get chargedto use the streets we patrol. Or howabout this: Sun Metro has raised thecost of a bus ride to correspond withnew franchise fees being charged by theCity of El Paso. Please deposit $16.50or get off the bus. Sounds stupiddoesnt it, but thats exactly how the CityCouncil got the PSB to cover a $4million deficit in their budget. I askedthe PSB board where the money went,and I was told it goes into the generalfund at the City. For what no one cantell me. And no explanation as to whenthe franchise fee goes away. Me thinksit never will like all other taxes (anyoneremember the promise from thecommunity college?)
So now every residential customer,business and building with fire sprinklerswill be charge a new franchise fee. Likeit or not because they say pay it or getcut off. Somehow I think thats anotherstory waiting to be investigated. Untilthen, read your bill. Dont throw it away,keep it and try to figure it out and thencall me. Im starring at it now and its ablur from the tears Im shedding.
Perspective
Ray Adauto,
Executive Vice PresidentEPAB
4 Builders Outlook 2015 issue 6
Whats The Fee?
EPWU Franchise Fees a real head scratcher
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BUILDING SINCE 1950El Paso
52015 issue 6 Builders Outlook
New-Home SalesReach Seven-YearHigh Sales of newly built, single-family
homes rose 2.2 percent to aseasonally adjusted annual rate of546,000 units in May, according tonewly released data from HUD andthe U.S. Census Bureau. This is thehighest new-home sales rate sinceFebruary 2008.Our builders are seeing motivated
buyers and the release of pent-uphousing demand, said Tom Woods,chairman of the National Associationof Home Builders (NAHB) and a homebuilder from Blue Springs, Mo.However, builders are facing supplychain challenges, which is affectingthe inventory of new homes.This months new-home sales
report is consistent with othergovernment data and rising builderconfidence that indicate a continualrecovery of the housing market, saidNAHB Chief Economist David Crowe.The uptick in existing-home salesbodes well for builders, as it showsthat the sellers are able to buy a newhome.Regionally, home sales were mixed,
rising 87.5 percent in the Northeastand 13.1 percent in the West. The
Midwest registered a 5.7 percentdecline and the West fell 4.3 percent.The inventory of new homes for sale
was 206,000 units in May. This is a4.5-month supply at the current salespace.
Surface Joins IBS,KBIS for 2016 Design& Construction Week The NAHB International Builders
Show (IBS) and the Kitchen & BathIndustry Show (KBIS) todayannounced the addition of TheInternational Surface Event (TISE) asan official show partner for Design &Construction Week (DCW), Jan. 19-22, 2016 in Las Vegas. TISE joins theInternational Window Coverings Expo(IWCE) as a partner event. TISE is the leading floor covering,
stone and tile industry event in thecountry, so they are a natural fit totake part in Design & ConstructionWeek, the largest annual residentialconstruction event in the nation, saidNAHB Chairman Tom Woods, a homebuilder from Blue Springs, Mo. Weare pleased to be able to welcomethem back as an official show partner,and look forward to another greatshow in 2016.As owners of KBIS, the National
Kitchen & Bath Association is thrilledto have TISE back as an official showpartner for Design & Construction
Week, remarked NKBA CEO BillDarcy. "As a founding partner in DCWit is incredibly rewarding for us to seethe continued growth of this must-attend event. By joining forces to forgethe DCW partnership, NKBA andNAHB have demonstrated that there isenormous strength in collaboration.Bringing so many industryrepresentatives together in onelocation creates huge value foreveryone involved." This strategic agreement adds
value for buyers and exhibitors at bothvenues, explained Dana Teague, VicePresident, Design Group, InformaExhibitions U.S., Construction & RealEstate. Attendees and exhibitorsreaped the benefits of this megadesign and construction event. Lastyear was the first year TheInternational Surface Event joinedforces with Design & ConstructionWeek and we look forward to makingit an even better experience in 2016.Truly industry collaboration at its best.In 2014, the National Association of
Home Builders (NAHB) and theNational Kitchen & Bath Association
(NKBA) launched Design &Construction Week in Las Vegas asIBS and KBIS co-located for the firsttime, along with IWCE. Building uponthat success, other organizations havebeen invited to join on as partners,with TISE becoming an official partnerin 2015 and again in 2016. TheInternational Surface Event is madeup of SURFACES,StonExpo/Marmomacc Americas andTileExpo.All the shows except TISE take
place Jan. 19-21 at the Las VegasConvention Center, while the TISEexhibits are open Jan. 20-22 at theMandalay Bay Convention Center.In January, more than 3,700
exhibitors and 125,000 attendeesparticipated in the five shows thatmade up the second Design &Construction Week. IBS and KBIShave agreed to co-locate this annualevent through at least 2020.Registered attendees will have
access to all tradeshows held duringDesign & Construction Week.Registration for Design & ConstructionWeek shows open on Sept. 1, 2015.
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Despite GDPgrowth stalling inQ1, this time dueto bad weather, aport strike on thewest coast, arising dollar andfalling oil prices,the economicrecovery remainsintact. The poorperformance of
the US economy from January throughMarch was aberrant, and the incomingemployment, housing, and servicesector data all point to a modesteconomic pickup. GDP growth the restof the year should average 2.6%, withgrowth in Q2 closer to 1.75% as theeconomy slowly rebounds from a toughQ1. An expected pick-up in wages andoil exploration activity and possiblyincreased corporate spending on plantand equipment suggest that 2015 willprobably improve as it progresses. Despite falling energy prices,
household spending has been verylackluster. As a result, savings ratesare up and spending on durable and
non-durable goods has been weak.Simultaneously, because the strongdollar has made US exports morecostly abroad and imports cheaperhere, manufacturing activity hasslowed. And due to falling oil prices, oilexploration has plummeted, with just646 rigs in operation, down from a highof almost 1,600 eight months ago.That said, rig counts have stoppedfalling and should start to rise as oilprices firm. Moreover, the labor marketcontinues to strengthen. Voluntary quitrates are rising, the number involuntaryterminations keeps falling, and jobcreation, while slightly down from lastyear, is strong. At this rate ofimprovement, there will be little slack inthe labor market a year from now. A definite economic bright spot thus
far in 2015 has been housing, and thatis due to rising household formation.After averaging roughly 1.2 millionannually from 1983 through 2006,household formation averaged just600,000 through September 2014.Since then, it has been rising at anannualized rate of 1.5 million. Add tothis increasing credit availability, and
housing starts should reach anannualized average rate of 1.175million during the second half of 2015,with new single-family constructioncontributing at a pace of 775,000 unitsand multifamily adding 400,000.Despite being severely constrained bya lack of inventory, pending homesales are strengthening and existinghome sales should continue rising by6% annually as should home prices. As for inflation, its benign but will
likely slowly begin creeping up from itscurrent anemic level. The strong dollarwill not strengthen further and oil willnot weaken more, thus the trends thathave exerted strong deflationarypressures on imports and energyrespectively should dissipate.Moreover, as the unemployment ratefalls, labor shortages will become anincreasing reality and that will causewages to rise. This should helphousehold spending and encouragecorporate investment. However, slowlyrising prices and wages, albeit fromvery low levels, will push the Fed toraise short-term rates late this year,probably in September but possibly in
December. The Fed will then raiserates very slowly thereafter due toweak global growth. Long-term rateshave bottomed and 10-yr Treasurieswill end the year at close to 2.6% asthe economy strengthens. In short, the economy continues to
grow modestly. Short-term rates willstart rising in the fall, wages areshowing nascent signs of rising, andresidential construction activity looks tostrengthen as we go into 2016. Mostcritically, continued solid job creationwill keep the recent rise in householdformation up and the likelihood of arecession during the next six months iszero.
Have a wonderful summer and seeyou in August! (Remember, I will not bewriting an article in July).
Elliot Eisenberg, Ph.D. is President ofGraphsandLaughs, LLC and can be
reached at [email protected] daily 70 word economics and policyblog can be seen at www.econ70.com
6 Builders Outlook 2015 issue 6The Economy
Economic Forecast for the Second Half of 2015: A Single, Possibly a Double but No Homeruns
Elliot Eisenberg
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72015 ISSUE 6 Builders Outlook
Builders utlook on the scene |
June General Meeting
By Ray Adauto, EPAB
Our June general membership meeting
had the honor of having two of our most
outstanding members present on the
topic of TRID, the new consumer
protection laws that redefine how a
consumer purchases a home. The law,
which originally was to go into effect
August 1 has been fast tracked and law
makers joined industry professionals in
asking that it be delayed until later.
Bowing to pressures, and frankly not
understanding the implications of the law,
the Federal Consumer Protection Bureau,
who has oversight, delayed the action
until October 1, 2015. In spite of the
delay our presenters, Dean Innis,
President of Rocky Mountain Mortgage
and Cindy Bilbe, President of Stewart
Title of El Paso, both said that our local
mortgage and title companies are ready
to roll. As a matter of fact many of the
items required in the new law have been
in place at Rocky for some time.
In the mortgage business we have to
stay abreast of the regulations affecting
the mortgage industry, Innis told the
Outlook. We have had in place many of
the new requirements not only to protect
the consumer but to give us an
opportunity to mainstream the practice so
everyone is more comfortable and
professional, he continued. As far as the
title companies Cindy Bilbe literally
seconded what Innis had said. The
changes in how we close means that we
really have to be aware of the changes,
establish best practices, and then
implement them. We cant wait to catch
up, we have to be proactive in this as it
has serious consequences to both the
consumer and to the professionals in the
industry, Bilbe continued.
What that means is that home sales
now have more regulations to understand
and it will affect how sales are finalized.
Builders and their agents must be aware
of the rules in order to meet timelines and
avoid penalties. I think that one thing we
have to understand as a builder is that we
will probably have a longer grace period
for the buyer to back out, and until the
consumer signs the contract, nothing is
final, said EPAB President Edgar
Montiel. Having Dean come out and
present this was timely, and having Cindy
add the title companies view really gave
those in attendance a sense that were on
top of the issues and concerns, and that
we have experts in the field to help,
Montiel commented.
The board of directors approved two
new members, L & P Building Supplies
from Las Cruces, and Emser Tile. In
addition we welcomed a new trade school
partner member Vista College.
The next general meeting is scheduled
for August 12 at the El Paso Club, noon,
preceded by a board meeting at 11.
Please contact the EPAB office for more
information and reservations. Call 915-
778-5387.
8.19.15
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News of home prices soaring skywardoften focuses on metro areas that arebig, hot, and densely populated.These are also places where large,public builders continue to gain market
share, acquiring regionals that have strong landpositions and a deeply entrenched, expertknowledge of the area. While theyre in acquisitionmode, the nationals look toward market leaders,says Charlie Scott, a consultant to the homebuilding industry and a contributing editor toProfessional Builder. Though land is a motivatingasset, Scott says, Many of those market leadersare customer-centric home builders. The irony ofthe current climate isnt lost on Scott. Myexperience is that when a giant buys one of ourclients, the voice of the customer isnt kept intact.
While its true that Metropolitan Statistical Areas(MSAs) such as Houston, Phoenix, Los Angeles,and Washington, D.C., are drawing a wide range ofbuyers, so are metros that we hear less about, suchas Detroit, Nashville, Tenn., and Portland, Ore. Orconsider the Ogden-Clearfield, Utah, MSA, which iswithin commuting distance of Salt Lake City andhome to Hill Air Force Base, Utahs sixth largestemployer. These MSAs boast jobs, a sense ofplace, and the sorts of lively communities thatattract young homebuyers and downsizers alike.
Theyre also areas where regional builders havestayed at the top of the market by leveraging thepower of being local. Using data provided byMeyers Research, we took a closer look at the topcompanies in those metros to find out how theyremaking the most of being homegrown.
Ogden-Clearfield, Utah Ivory Homes
Ivory Homes has been Utahs No. 1 volumebuilder for 27 years running, and it expects this yearto be its 28th, says the companys interim CEODave Wolfgramm. Job growth has been fueled byHill Air Force Base, Utahs sixth largest employer.The base, which employs local contractors inaddition to the military, attracts 80 percent first-timebuyers and 20 percent move-up buyers, Wolfgrammsays. Though Hill tends to be a cyclical stabilizer inslower times, when theres a hiccup there, it ripplesthrough the housing industry very quickly,Wolfgramm notes.
But in addition to boasting an active military baseto stoke area growth, Ogden-Clearfield serves as a
bedroom community for Salt Lake City, which is ahalf hour south by car or light rail. Ogden drawsmove-up buyers in search of a bigger, moreaffordable house than theyll find in Salt Lake. Theviews are just as great, and we can offer beautifulprojects that are 20 to 30 percent cheaper thanwhat youd get in Salt Lake Valley, says EricFreebairn, area sales manager.
We know this corridor very well, werecommitted to it, and we dont build outside of it,Wolfgramm says. People commit to us becausewere time-tested. Ivory prides itself on a 92percent customer satisfaction rating (Weve beenas high as 97 percent, Wolfgramm adds) thatresults in 5 to 10 percent of buyers each monthbecoming repeat customers. Service before, during,and after the sale makes a potentially stressfulrelationship as seamless as possible, Wolfgrammobserves.
Ivory prevails by having deep roots in thecommunity and an insistence on buyers having thesame (the company refuses to sell homes toflippers), as well as balanced inventory, diverseproduct lines, and strong land positions. Were gladwe didnt join the feeding frenzy in 2006 and 2007,Wolfgramm recalls. When builders were scoopingup land at high prices, Ivory pulled back. Then thesellers came knocking at our door because theprice was right, and now were at work.
Detroit Lombardo Homes
As the auto industry has rebounded, so hasDetroit, now a promising place for youngentrepreneurs. The under-35 population there hasgrown by almost 60 percent during the last 15years, with redevelopment punting city revitalizationinto the national spotlight. Michigan has had sucha black cloud over it, says Anthony Lombardo,president of Lombardo Homes. But newbusinesses have found their way into our market,allowing us some independence from the autoindustry.
Detroits surrounding communities have longboasted good schools and an affluent population.But its not just about Detroit; its about Michigan asa whole, Lombardo insists. For all the negativepress that Detroit has received, he says, Michiganis a beautiful place, a vacation destination, andhome to excellent colleges and universities.
A private, family-owned company, Lombardo hasdominated by serving first-time and move-up
buyers. But even Lombardo got socked during thedownturn. Rising costs in land, construction, anddevelopment made it tough to make margins.During the bust, the company was able to buydeveloped lots for less than replacement cost.Lombardo admits that he got overextended, buthes also sanguine about the outcome, saying theeducation, the land position, the training, theproduct, the limitation of home builders that cameas a result were worth being over-leveraged. Nowthe company is buying raw land and developing ititself in school districts where buyers want to live.Thanks to current land holdings, Anthony Lombardosays that for the next six to eight years, thecompany will maintain its market share. Rolling outnew floor plans, elevations, and options in responseto buyer feedback has also helped Lombardo staycompetitive.
Nashville, Tenn. Ole South Homes
The auto industry has helped fuel Nashvillesresurgence, too. Gen eral Motors had all but shutdown, and now its blowing and going, says JohnFloyd, founder and own er of Ole South Homes.Factor in jobs at Vanderbilt Uni ver sity, as well as inthe health care and music industries, and its nowonder that Nashville is sizzling.
In a market where margins are tight and regionalsvie neck-and-neck for the top spot, Ole Southmaintains an edge. Its getting the lots on line thatsthe trick, says Floyd, of the inventory balance. Youcant be too far out there. He also appears to run atight ship. This year we will have done our10,000th home. Weve been in court four times in10,000 houses. We take care of our problems, hesays. But Floyd has another leg up on thecompetition: He knows how to hold onto talent. OleSouth offers profit-sharing and employees get apercentage check twice a year. If the nationalssurpass his local company, so be it, Floyd says,using saltier language. But youre not going tosteal my employees.
Ole South builds houses affordable for workingfolks, and thats what the company is proudest of.The Nashville suburbs are 65 percent blue collar, amarket that the company dominates. Ole South canbuild a much nicer affordable house than it did 10years ago, but Floyd says that when interest ratesgo up, some of the bells and whistles may have togo away. He knows of 10 big builders trying to get afoothold in Nashville, but says that his biggest
SPECIAL REPORT B
Adapting to market shifts: Local Home Builders at the top of their market
In an era of consolidation, here'show four regional builders are stayingindependent while maintaining a leadspot.
By Amy Albert, Editor-in-Chief
ProBuilder.com
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competitors are his local brethren. If the nationals
can live with the profit margins here in middle
Tennessee, they can have at it, he says. Im not
going to get all strung out on lots. Id rather be third-
largest and sleep well than build 1,200 houses a
year and stare at the ceiling all night.
Portland, Ore. Manor Homes Between the famed beauty of the Pacific
Northwest, great farmers markets, esteemed
colleges and universities, plus a quirky and
independent spirit, Portland draws many kinds of
people for all kinds of reasons. As did other metros,
this one underwent hard times and has now
rebounded for builders.
Manor Homes competes for Portlands top spot
with two publicly traded builders. But Manors
owner, Randy Questad, who was born and raised in
a Portland-area construction family, knows that
being a hometown guy matters when it comes to
serving new homebuyers. The edge that Manor
maintains follows this and other precepts for
maintaining market share as a regional (for more on
those precepts, see Leveraging Local, page 38). Of
the competition from the nationals, Questad says,
simply, Were way more in tune with the market.
Manors sweet-spot niche is first-time move-up
buyers. The company is able to be more flexible and
responsive than a big builder, Questad says,
because it can let buyers customize and do
whatever they want. Later, a month after close,
contact with new homeowners is initiated so that the
buyer and someone from Manor can walk the house
together to address any issues. This is done again
at 11 months. Says Questad, Were as good as it
gets when it comes to serving our customers and
making sure they have a good buying experience.
In such a popular place to live, keeping the land
supply chain intact is one of the biggest challenges
to staying on top. I wish I had less going into the
crash and picked up more after, says Questad of
land prices tripling in the current boom.
Attracting and keeping talent plays a key role in
Manor maintaining its competitive edge, too. We
hire passionate people, Questad says. Our job
supers like what they do. We give them the freedom
to run their jobs, and we stay out of the way.
Manor Homes competes for Portlands top spot
with two publicly traded builders. But Manors
owner, Randy Questad, who was born and raised in
a Portland-area construction family, knows that
being a hometown guy matters when it comes to
serving new homebuyers. Photo: courtesy Manor
Homes
Leveraging Local Charlie Scott, longtime housing industry
consultant and a contributing editor to Professional
Builder, foresees more acquisitions over the next
few years. However, he also notes that many local
builders are in a position to stay independent
because of how theyve grown post-downturn,
solidifying land assets and repositioning themselves.
Heres advice from Scott on how to prevail in your
market by playing to your strengths.
1. Celebrate your smallness. Youre not going to purchase better, have better
software, or get better financing than a national
giant. Youre a regional expert, offering great
product that honors local architecture and offers an
authentic sense of place. Sign on with those as your
unique selling proposition.
2. Embrace your flatness.Fewer levels of hierarchy between ownership,
senior leadership, and your customers offers a
competitive advantage over big firms. Often, market
leaders publish the owners name and number on
the website. This sends a message about customer
service and inspires confidence in potential
customers.
3. Emphasize being a local.Again, youve got an edge. The best local builders
are much more adept than the large public
companies at knowing the A and B locations,
whereas the giants often start stretching into the C
and D sites. Thats fine during good times, but when
the market turns, the C and D sites are the first to
collapse.
4. Listen to the customer. Often, both giants and the resale market reduce
home building to price per square foot. Successful
market leaders know that what makes them unique
is customer service, architecture, and design. Use
third-party firms to gather unbiased feedback.
Deliver what the customer is asking for, and offer
superior follow-up.
5. Serve your community. Get involved with local charities to help enrich the
community at large. Your investment resonates with
residents, who arent just homebuyers, but are
realtors, planners, and local businesspeople. In
addition to doing good work, youre creating an
effective marketing tool.
One of the smartest ways to stay competitive is
making sure you have the finest superintendents,
salespeople, warranty people, and operations
people. Successful builders know how to honor local
talent and maintain great relationships with all the
best local trades.
Builders Outlook Issue 6 2015
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10 Builders Outlook 2015 issue 6AROUND THE NATION
S BankingInternet & Mobile Merchant Services
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by Matt Stevens, Los Angeles Times
Sprawling green lawns around newhomes, businesses and schools inCalifornia will be a thing of the pastunder new state building codesapproved in May.
This alone won't solve the drought,but over time landscapes will have amuch lower water demand. It will resetthe norm for what we think aboutlandscape.
The California Building StandardsCommission cut the amount of watermany landscapes can use by more than20% and effectively forced developersto plant less turf and more drought-friendly foliage. It's the latest of myriadrecent efforts state officials have madeto reduce water use to comply with Gov.Jerry Brown's executive order to cuturban water use by 25% amidCalifornia's fourth year of drought.
"This alone won't solve the drought,but over time, as buildings are built andnew landscape goes in with less turf,landscapes will have a much lowerwater demand," said Peter Brostrom ofthe Department of Water Resources. "Itwill reset the norm for what we thinkabout landscape."
Under current regulations, a complexformula determines how much watercan be used on the landscape of anewly constructed commercial orresidential building. Changes approvedFriday to the California Green BuildingStandards Code will require newconstruction larger than2500 square feetto use about 22% less water. Additionsto existing buildings that require apermit also are subject to the new rules,officials said.
Schools will be forced to use 35% lesswater, but much of their landscapes areplay areas that get an additional waterallowance.
The changes are in response to Gov.Brown's executive order, which requiredbuilders to use drip or micro sprayirrigation if they use drinkable wateroutside newly constructed homes andbuildings. Officials decided that directivewas too prescriptive and insteadreduced the water allowance for newconstruction, Brostrom said.
The move comes days after theMetropolitan Water District of SouthernCalifornia pumped $350 million ofadditional funding into lawn-removalrebates and other conservationprograms.
"This change limits how much grassgets planted in the first place," Brostromsaid.
He predicted that the new rules willforce builders to limit the amount of turfgrass they install to no more than aquarter of the total outdoor landscape.Officials say at least half of all urbanwater use is outdoors, and stateregulators have stressed the need to letlawns go brown as the hot summermonths approach.
Tracy Quinn, a civil engineer andpolicy analyst for the Natural ResourcesDefense Council, said she wasdisappointed that only buildings largerthan 2,500 square feet would have tocomply with the new rules.
In Gov. Brown's April order, hecalled on officials to regulate wateruse in all newly constructed homes.The changes "don't fully respond tothe governor's executive order," shesaid.
Still, Quinn praised the newregulations, which she said givelandscapers "a lot of flexibility" todecide how to design water-efficientspaces, including the use of dripirrigation, captured rainwater,recycled water or gray water.
"Given the emergency, the actiontoday is a tremendous positive step,"she said. "This is going to move usaway from large lawns with a lot ofturf, but I don't think it will put anexcessive burden on developers asfar as landscape design."
ElPasoDisposal
772-7495
Changing landscapesCalifornia drought brings tighter building codes to cut turf use
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112015 issue 6 Builders Outlook
What are the most popular featureshome buyers want? And how do theycompare to your wish list?With a rebounding housing market
comes a rebounding home buyer.Recent data from the U.S. Census
Bureau found that homes built in2012 were bigger and moreexpensive than homes that wereconstructed in the last few years.However, todays home buyers arealso more conscious of being green(sort of). Recent new home buyerswanted a unified living space andthey placed a high value on storage,storage, storage. How do thesepreferences compare to the featuresand amenities that you're looking forin your new home search?Heres what a recently released
survey, What Home Buyers ReallyWant, of 3,682 home buyers by theNational Association of HomeBuilders (NAHB) found: When itcomes to home buyer preferences,energy efficiency was a frequentcharacteristic on the most wantedlist. Ninety-four percent ofrespondents said they wantedEnergy Star-rated appliances, 91percent wanted an Energy Star-ratingfor the entire home, 89 percentwanted Energy Star-rated windowsand 88 percent wanted ceiling fans.
Cost savings not environmentalimpact played a major role inmaking energy efficiency a desirablecharacteristic, as 67 percent ofrespondents said they wereconcerned about the homes impacton the environment, but would not
pay more for it. However, 73 percentagreed that projected utility costswould influence their purchasedecision. On average, home buyerswere willing to pay $7,095 more for ahome that would save them $1,000 ayear in utility costs.Another big want for home buyers?
A way to clear the clutter: 93 percentwanted a laundry room, 90 percentwanted a bathroom linen closet, 86percent wanted garage storage and85 percent wanted a walk-in kitchenpantry. Home buyers want help withorganization they want laundryrooms to keep dirty laundry out of theway, said Rose Quint, NAHBsassistant vice president for surveyresearch and an author of the study,during a webinar to discuss thefindings of the survey. Of those whowanted a laundry room, 57 percentconsidered it essential and would notbuy a home that didnt have one.In addition, home buyers are
looking for bigger (think three-car ormore) garages. Theyre using theextra space in garages, not for anextra car, but for storage. Of those,32 percent considered garagestorage as a must-have area in thehome.Based on the survey, buyers can
expect to see more homes thatreflect casual living that makes thekitchen the center of the home. Quintnoted that the kitchen is where manyhome buyers not only cook, butentertain and watch, well, cookingshows. In that respect, buyers arelooking for an open floor plan, where
the kitchen opens up to the diningarea and living room.So what did respondents give a big
thumbs down to? Elevators, homesin a golf course community, only ashower stall in the master bath (givethem their tubs too!) and a two-storyentry foyer, which they view as costlyto heat and cool.
Below is the complete list of themost wanted and least wanted characteristics home buyers want ina new home, followed by thepercentage:
Features Most Home Buyers Want
Energy Star-rated appliances94 percent Laundry room93 percent Energy Star-rating for the wholehome 91 percent Exhaust fan in bathroom90 percent Exterior Lighting90 percent Bathroom Linen Closet90 percent Energy Star-rated windows89 percent Ceiling fans88 percent Garage Storage86 percent Table space for eating in kitchen85 percent Walk-in kitchen pantry 85 percent
Features Fewer Buyers Want
Elevator 70 percent Golf course community66 percent High-density community56 percent
Only a shower stall in master bath 51 percent Gated community 48 percent Mixed-use community44 percent Two-story family room 43 percent Wine cooler 42 percent Wet bar41 percent Laminate countertop40 percent Two-story entry foyer38 percent Laundry chute 32 percent Outdoor kitchen31 percent Game room 31 percent His & Her baths 31 percent Glass front cabinets 31 percent
Patricia L. Garcia is content managerfor NewHomeSource. You can findher on Google+.
SPECIAL REPORT:
Buyers wish list
-
12 Builders Outlook 2015 issue 6
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Lowes - Visit www.LowesForPros.com/NAHB or call 877-435-2440 and register to save 2% on your Lowes Accounts Receivable (LAR) purchases and free delivery on purchases over $500. Save an additional 5% every day at the store when they mention the 5% at time of purchase and when using their LAR.
General Motors - $500 exclusive private offer on most Buick, Chevrolet and GMC vehicles. Business Owners receive a $1000 private offer on select vehicles and may also qualify for additional incentives, visit www.nahb.org/ma and click on the GM logo to find out more.
AT&T, Verizon, Sprint & T-Mobile - Savings up to 35% including a free analysis of new and existing plans. Program offers free mobile to ANY mobile, free mobile device management, dedicated help desk support, and much more. Visit www.eMemberBenefits.com/NAHB or call 866-430-NAHB (6242). 2-10 Home Buyers Warranty - Visit www.2-10.com/NAHB or call 855-280-1328 to receive exclusive access to discounts on select products, including the Builder Backed Service Program and the systems and appliances warranty.
AXA Equitable - Offers full-service, low-cost retirement plans that can help reduce taxes while saving for life in retirement. Visit www.axa.com/nahb or call 800-523-1125, option 3, department 2046 and mention NAHB.
UPS Savings Program & YRC Freight - UPS discounts of up to 36% on a broad portfolio of shipping services. Savings of at least 70% on less-than-truckload shipments 150 lbs. or more with UPS Freight and YRC Freight. Visit www.1800members.com/NAHB or call 1.800.MEMBERS (800-636-2377) for more information. TransFirst - Payment solutions with average savings of 16% per year. Web/mobile tools, credit card and eCheck processing and more. Free "Savings Analysis" call 800-613-0148 or visit www.TransFirstAssociation.com/NAHB.
Dell - Up to 30% off on all Dell computers. Call 800-757-8442 and Mention NAHB or visit www.dell.com/nahb
Associated Petroleum Products (APP) - Earn $0.015 for EVERY gallon purchased using the APP Fuel Card program. Visit www.associatedpetroleum.com/nahb to enroll or call 800-929-5243, Option 6 & mention NAHB.
GEICO - Exclusive discounts for members on auto and home owners insurance. Visit www.geico.com/disc/nahb or call 800-368-2734 and mention NAHB for a free quote.
Hertz - Up to 20% off on rental cars and FREE Gold Plus Rewards membership. Visit www.hertz.com/nahb or call 800-654-2200 and use CDP# 51046.
Avis - Up to 25% off rental cars and FREE Avis Preferred Service membership at www.avis.com/nahb or call 800-331-1212 and use AWD code G572900
Budget - Up to 20% off rental cars and FREE Budget Fastbreak at www.budget.com/nahb or call 800-283-4387 and use BCD code Z536900
Office Depot - 10% off all delivery orders. Free shipping on orders of $50 or more. Call 800-274-2753 mention NAHB.
Omaha Steaks - Save 10%, in addition to any online specials. www.OSincentives.com/promo/nahb
Endless Vacation Rentals - 25% discount on over 200,000 vacation rentals worldwide. Call 877-782-9387 and mention NAHB at time of reservation or go to www.endlessvacationrentals.com/nahb
Wyndham Hotel Group - 15% off at over 7,400 hotels. Call 877-670-7088 and mention ID 8000002688. Go to www.nahb.org/ma and click on the Wyndham logo to find out more
FTD - 20% off floral arrangements and gifts at www.ftd.com/nahb or call 800-SEND-FTD use code 17421
NAHB Career Center www.nahb.org/careers - 20% off of standard rates for job posting & 15% off other HR services.
Version 4.27.2015
Interest Ratelikely toincrease With evidence that the U.S.
economy is rebounding from a winterslump, the Federal Reserve will likelysignal this week that an interest rateincrease is coming just not quiteyet.Many economists say that if the
economy keeps improving, the Fedwill most likely raise its key short-termrate when it meets in September.That rate has been held at a recordlow near zero since 2008.The Fed's timetable has far-
reaching impact: Once it beginsraising short-term rates, other rates for mortgages, auto loans,corporate borrowing could headhigher. Stock and bond prices couldbe squeezed.In recent weeks, key sectors of the
economy the job market, retailspending, home sales haveimproved. The gains mark a reversalfrom the January-March quarter,when the economy is estimated tohave shrunk, in part because of aharsh winter.Soon the Fed may sketch a slightly
brighter picture of the economy in astatement after its latest policy
meeting ends and in a newsconference by Chair Janet Yellen tofollow. The central bank will alsoupdate its economic forecasts.Among economists, the Fed is seen
as wanting to prepare investors for acoming rate hike if the economycontinues to improve whilestressing the reassuring message thatit will raise rates very gradually. Theidea is to avoid spooking investors,who are already on edge over thelikelihood of a rate hike and the threatof a default by Greece's government.The Fed wants to convince themarkets that the economy will besturdy enough to withstand slightlyhigher rates.When the Fed last met in April, the
economy had just emerged from astall-out. Growth in the January-March quarter had been depressedby weather that kept consumershome, a labor dispute that disruptedWest Coast ports, a stronger dollarthat slowed exports and cheaper oilthat triggered cutbacks by drillingcompanies. After its meeting, the Feddowngraded its assessment of theeconomy and gave no indication itwas any closer to raising rates.Recent economic reports have
turned more buoyant, with a reboundin home construction and retail salesand near-record auto sales.Perhaps most important, the job
market has revived, having added anaverage of 217,000 jobs a month this
year. The unemployment rate, at 5.5percent, is down from 6.3 percent ayear ago and 7.5 percent two yearsago. Even pay growth, which haslanguished during the economicrecovery, has begun to pick up.All that points to solid economic
growth of around 2.5 percent in thecurrent April-June quarter.Yet there are still lingering problems
that Yellen and other Fed officials arelikely to cite as reasons for delaying afirst rate hike a while longer. Thoughaverage hourly earnings rose 2.3percent in May from a year ago, wage
increases remain generally sluggish.Other labor market indicators
from the number of people jobless formore than six months to the numberof part-time workers who would preferfull-time jobs remain at levels theFed views as subpar.Beyond employment, the central
bank has yet to achieve its othermandate promoting stable prices.Inflation has remained persistentlybelow the Fed's 2 percent annualtarget. Too-low inflation tends to holdback economic growth.
-
Membership News
132015 Issue 6 Builders Outlook
www.elpasobuilders.com www.epbuilders.org
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An improving economy will bringsighs of relief to many employers.Unfortunately, it could also bringincreased employee turnover. A strongbenefits program can help you retainyour valuable employees. What factors do employees cite
when they talk about leaving theirjobs? Leigh Branham, an employeeretention consultant, wrote in
Workforce Management that only 12percent of people exit-surveyed by theSaratoga Institute cited pay as thereason they left their employer. Of theseven hidden factors of whyemployees left, most had to do withpoor job fit, poor management (i.e.,lack of feedback and feelingdisrespected) and lack of opportunity.Ranking Number Six after these was:Stress or burnout issues arising fromwork-life imbalance, inflexibility andexcess of work hours and schedules,understaffing, poor health benefits,substance abuse and work-familycomplications. Using Voluntary Benefits to Combat
Employee Dissatisfaction A good benefits program can help
employers reduce employee stresscaused by work/life imbalance. And
voluntary benefits can help employerssoften the blow of changes in healthbenefits due to cost-cutting. MetLife, in its annual Study of
Employee Benefits Trends, found acorrelation between the number ofbenefits offered and the likelihoodemployees will stay with theircompany. The 2015 study found thatthe magic number was 11: with 11 ormore benefits offered, employeeswere more loyal, more likely torecommend the company as a greatplace to work and expressed a higherintent to stay. On the other hand,when an employer offered fewer thanfive benefits, employees were lessloyal, less likely to recommend thecompany as a great place to work,and expressed a lower intent to stay. The MetLife survey also found a
correlation between benefitssatisfaction and job satisfaction.Employees who are very satisfied withtheir benefits are almost four timesmore likely to be very satisfied withtheir jobs. As the big three benefitsmedical,
dental and life insurancebecomestandard, employers that offer morecan stand out from their competitors.Voluntary benefits allow employers toexpand their benefit portfolio at nocost. Interestingly, employees wantthese benefits even if they have to pay for them. However,
as the chart on the next pageillustrates, small employers are notmeeting their employees benefitneeds.
14 Builders Outlook 2015 issue 6
Summer starts and so do vacations.I am currently enjoying my time off andhope that you will do the same soon.The Associates Council is going tohost a bowling event on August 19 atBowl El Paso. This is a fun event thattakes us inside a sometimes coolervenue where we can share somenetworking, eat a little lunch, havesome refreshing beverages, and bowl.Some of you have been competitivebowlers for a while and it seems everytime we do this we get a whole new
set of new bowling fans. Our event isfor a team of 4 for $100 entry fee, andyoull get entry, shoes, three games,and voucher for some food. Not a baddeal these days. You should seesome fliers coming from Ray andMargaret soon. With our associationnot holding any meetings in July athome there is one big important one inGrapevine, Texas. The TAB Sunbeltshow that attracts lots of people to seeand learn about new products andservices for builders, and non-builders
alike. Check out the information onwww.elpasobuilders.com. I hope tosee you there as were looking forwardto the event and the TAB meetings.By the way theres a new water parkattached to the Gaylord Texan wherethe event is being held. Theres alsoanother one across the way calledWolf Creek. Either way, July is thetime to go to Grapevine. Until then, besafe and enjoy a good summer. Sam Shallenberger
Morrison Supply
Associates Council
Expert Advice
Joe BernalEmployees Benefits of El Paso
EAST2244 TRAWOOD, SUITE 101
stewart.com/el-paso
Melissa Walker, Dora Flores and Ruby Quartermane
WE KNOW THE GROUND YOU WALK ON
WWWWTTTY U YOU YYTW
K N N O
LLAARO
LAOORR
KN
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YY U Y
LALA
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execuTive oFFicerSedgarmontiel,President
Palo Verde Homes
carlosvillalobos,vicePresident
Pointe Homes
Donrassette,Secretary/Treasurer
Rassette Homes
SamShallenberger,Associateschair
Morrison Supply
FrankTorres,immediatePastPresident
GMf Homes
rayAdauto,executivevicePresident
Executive Vice President
JayKerr-Attorneyofrecord
Firth, Johnston, Bunn & Kerr
couNciL/commiTTeecHAirSAssociatescouncil
Sam Shallenberger
BuildPac
Randy Bowling
Landusecouncil
Linda Troncoso
YoungDesignerAward
John Chaney
remodelerscouncil
Rudy Guel
membershipretentiion
Patrick Tuttle
Financecommittee
Kathy Carrillo
Henry Tinajero
ADviSorYToTHeBoArDJay Kerr, Firth, Johnston, Bunn & KerrJames Martinez, Law Office of James Martinez
BoArDoFDirecTorSAntonio Cervantes, BIC Homes
Bret Thompson, foxworth Galbraith Lumber
Bud foster, Southwest Land Development Servises
Dan Ruth, Millienium Homes
Henry Tinajero, West Star Bank
Joe Bernal, Employee Benefits Of El Paso
John Chaney, Passage Supply
John Dorney, Dorney Security
Kathy Carrillo, Pioneer Bank
Kathy Parry, Hunt Companies
Leti Navarette, Custom Dream Homes
Linda Troncoso, TRE & Associates
Robert Najera, Joseph Homes
Walter Lujan, Dawco Builders
2014BuildermemberofTheYear
FrankTorres
GMf Homes
2014PatcoxAward
BretThompson
foxworth Galbraith Lumber
2014AssociatedofTheYear
JoeBernal
Employee Benefits Of El Paso
2014JohnShatzmanAward
Cindy Bilbe, Stewart Title
HonoraryLifemembers
Mark Dyer
Wayne Grinnell
Don Henderson
Chester Lovelady
Cliff C. Anthes
Anna Gill
Brad Roe
Rudy Guel
E H Baeza
PastPresidents
committedtoServe
ePABmissionStatement:
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.
2015 Builders Outlook is published and distributed for the El Paso Association of Builders
by Ted Escobedo, Snappy Publishing [email protected]
El Paso Texas 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
Edmundo Dena
Hershel Stringfield
Pat Woods
TABSTATeDirecTorSRandy Bowling
Greg Bowling
Sam Shallenberger
NATioNALDirecTorSBobby Bowling IV.
Demetrio Jimenez
NATioNALASSociATioNoF
HomeBuiLDerS
(800) 368-5242
TexASASSociATioNoF
BuiLDerS
(800)252-3625
www.elpasobuilders.com www.epbuilders.org
Builders utlook
For All Your Electrical NeedsResidential Specialists
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152015 Issue 6 Builders Outlook
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