Builders utlookwww.elpasobuilders.com 2015: issue 8

HOUSING: Pending home sales rose just 0.5%

The annual awards presented bythe Texas Association of Builders tookplace at the summer TAB/SunbeltShow in Grapevine. The Star Awardshonor the best of the best in TABmembership and are considered apremier acknowledgment ofperforming to the highest standards.Tropicana Homes won two awards,The Best Custom Home built by aVolume Builder and The SalesProfessional of the Year Awardpresented to Sylvia Sandoval. At theceremony Tropicana Homes RandyBowling accepted the congratulationsfrom the gathered goers. I have tosay that this award speaks of thecommitment we have as a companyto provide El Paso quality customhomes built by a company with a longhistory of building in El Paso,Bowling told the Outlook.Additionally how great is it to havethe honor given to Sylvia for heroutstanding work with us, hecontinued. We are so proud to haveher represent Tropicana Homes.

As for the Texas Association of

Builders Executive Director ScottNorman praised the winners for theirhard work and dedication. Everyyear we comb through the nomineesand its as tough to choose a winneras in any competition. This year forTropicana to win in two separatecategories is extra special and wethank them for what they represent asTexas builders, Norman said.

The news filtered into El Pasonearly as fast as it happened makingthe celebration a company affair. Ihave to say that everyones phone litup when we got the first award, butgetting two was something special,Sylvia said. My family celebrated atthat moment and when we got backhome.

Tropicana Homes is an El Pasobased home builder with nearly 60years of home building in El Paso.The EPAB congratulates RandyBowling, Bobby Bowling IV, andSylvia Sandoval for their Star Awards.

Diana Olick CNBC

U.S. home buyer demand remainedsteady in July, although consumers didnot react significantly to easingmortgage rates. An index of so-calledpending home sales from the NationalAssociation of Realtors, whichrepresents signed contracts, notclosings, was basically flat, rising 0.5percent from an upwardly revised Junereading.

The index is now up 7.4 percentfrom one year ago. Pending salesslipped in June but had otherwisebeen rising for five months.

"Contract activity in most of thecountry held steady last month, whichbodes well for existing-sales tomaintain their recent elevated pace toclose out the summer," said LawrenceYun, chief economist for the NAR in arelease. "While demand and salescontinue to be stronger than earlierthis year, Realtors have reported sincethe spring that available listings inaffordable price ranges remain elusivefor some buyers trying to reach themarket and are likely holding back

sales from being more robust." Closed sales of existing homes,

based on contracts signed in May andJune, increased two percent in July,according to NAR, as the number ofhomes for sale remained stubbornlylow, and higher home prices continuedto sideline first-time home buyers. Yunsaid he had expected to see more first-time buyers return to the housingmarket this summer and was surprisedby their poor showing.

Mortgage rates, which had beenrising in May and June, pulled back inmid-July, which may have broughtmore buyers to the table. Also, theexpectation in July was that theFederal Reserve would begin raisinginterest rates in September. That mayhave pushed some buyers into themarket, fearing higher rates.

A roller-coaster ride on the U.S.stock market, due to fears of China'seconomic woes, has more nowbelieving the Fed will not raise ratesthis fall. It has, however, also addeduncertainty for some home buyers.

"In light of the recent volatility in thestock market, it's possible some

prospective buyers may err on the sideof caution and delay decisions, whileothers may view real estate as a morestable asset in the currentenvironment," said Yun. "Overall, theprospects for ongoing strength in thehousing market remain intact for now.The U.S. economy is growingalbeitat a modest paceand the labormarket continues to add jobs."

Pending home sales in the Northeastincreased 4 percent July from June

and in the Midwest were unchanged.In the South, sales increased 0.6percent. The West was the only regionto see weakness, with pending homesales down 1.4 percent for the month.

Added Yun: "Uncertainty in theequity marketseven if the Fed raisesshort-term rates in Septembercouldstabilize long-term mortgage rates andpreserve affordability for buyers."

STAR AWARDS:Tropicana Homes scoresbig at Texas Builder gala

A roller-coaster ride on the U.S.stock market, due to fears of

China's economic woes, has morenow believing the Fed will not raise

rates this fall.

2 Builders Outlook 2015 issue 8

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32015 issue 8 Builders Outlook

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Earlier in August the circus that

sometimes is city council really irked me

when Representative Lilly Limon

introduced and agenda item that would

have classified contractors as wage

thieves. The idea that Representative

Limon had was to help protect those

workers who end up either not being

paid for the work theyve done or at the

scale required by law or contract. What

she said was this: contractors, sub-

contractors, flea market operators and

restaurateurs are the biggest employers

in the wage theft allegations and so

therefore contractors, restaurateurs and

flea market owners would be denied

permits if an allegation of wage theft

was presented to the city against that

employer. Read it again, just to make

sure you understand what she was

implying. All that would be needed to

trigger a permit denial would be an

allegation, not a confirmed adjudicated

case, simply an allegation that you as

the employer didnt pay someone. How

absolutely absurd is that?

The good news is that several city

reps werent at all happy with what Ms.

Limon was saying and with good cause.

Most vocal was Representative Emma

Acosta to whom I fired off an email with

my concerns on the agenda item. She

read my concern into the official record

(much to my surprise) and was

immediately attacked by Ms. Limon

saying that Mr. Adauto doesnt know

what hes talking about. The problem

is that I do know and I was really irate

that they would lump all our members

as thieves. Can you imagine? When

the agenda item was summarily

dismissed I had the time to compose an

email to the council members, Mayor

and City Manager. In it I told them in no

uncertain terms that I thought it much

more useful if the city cleaned up its

own house first before looking for dirt in

ours. My point was illustrated by the

screw ups at the city Engineering

department and how that department

repeatedly issued the wrong wage

scales to contractors doing city jobs

(there by stealing wages from the

workers because of the misapplication

of scale) and then penalizing the

contractors for using the wage scale

they issued them. So in effect what Im

saying to Ms. Limon and the city council

and Mayor, look at cleaning up your

sins before looking elsewhere for

blame. I also told them that our

association has always supported and

asked our members to pay prevailing

wages (or better) to employees. We

support the Fair labor standards act and

we hope that the city does as well.

Two other notes on the council: 1.

they gave the city manager a raise then

(guess who) a small vocal group of

dissenters wanted to take it back.

Absolutely wrong in so many ways,

regardless of the size of the raise. I did

speak at the council meeting on that

point as did other business leaders and

even LULAC. 2. There will be a vote in

November on dropping at least one

weekly city council meeting a month. I

wish it were just two a month because

of the absolute waste associated with a

weekly meeting. City employees

prepare all week before a meeting,

attend a pre-council meeting and then

the actual meeting for an agenda item

that may be moved, postponed or

dropped. Think of the cost of that and

ask yourself is there a better way?

Yes there is and you have a say in that

in November. Do your homework. I am

supportive of it and my suggestion is

that you should be also. More on this in

another issue.

Perspective

Ray Adauto,

Executive

Vice President

EPAB

4 Builders Outlook 2015 issue 8

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BUILDING SINCE 1950El Paso

52015 issue 8 Builders Outlook

Single-Family Gains

Push Housing Starts

Led by a strong jump in single-family

production, nationwide housing starts inched up

0.2 percent to a seasonally adjusted annual rate

of 1.206 million units in July, according to newly

released data from the U.S. Department of

Housing and Urban Development and the

Commerce Department. This is the highest level

since October 2007.

Single-family starts rose 12.8 percent to a

seasonally adjusted annual rate of 782,000 units

after an upwardly revised June reading while

multifamily production fell 17 percent to 424,000

units.

Our builders are reporting more confidence in

the market, and are stepping up production of

single-family homes as a result, said NAHB

Chairman Tom Woods, a home builder from Blue

Springs, Mo. However, builders are still

reporting problems accessing land and labor.

This months drop in the more volatile

multifamily side is a return to trend after an

unusually high June, said NAHB Chief

Economist David Crowe. While multifamily

production has fully recovered from the

downturn, single-family starts are improving at a

slow and sometimes intermittent rate as

consumer confidence gradually rebounds.

Continued job and economic growth will keep

single-family housing moving forward.

Regionally in July, combined single- and

multifamily starts rose by 20.1 percent in the

Midwest and 7.7 percent in the South. The

Northeast and West posted respective losses of

27.5 percent and 3.1 percent.

After several months of permit gains, overall

permits fell 16.3 percent in July. Single-family

permits dipped 1.9 percent to a rate of 679,000

while multifamily permits dropped 31.8 percent to

440,000.

All four regions posted permit losses in June.

The Northeast, Midwest, South and West posted

respective drops of 60.2 percent, 4.6 percent,

1.7 percent and 9.9 percent.

New Home Sales Up

5.4 Percent

Sales of newly built, single-family homes

rose 5.4 percent to a seasonally adjusted

annual rate of 507,000 units in July,

according to newly released data from

HUD and the U.S. Census Bureau.

Our builders are reporting higher traffic

and more serious buyers, and are adding

inventory in anticipation of future

business, said Tom Woods, chairman of

the National Association of Home Builders

(NAHB) and a home builder from Blue

Springs, Mo.

Todays report is in line with other

government data and improving builder

sentiment and shows a gradual but

consistent housing recovery, said NAHB

Chief Economist David Crowe. As job

growth and consumer confidence continue

to strengthen, the housing market should

make additional gains this year.

Regionally, the Northeast, South and

West posted respective gains of 23.1

percent, 5.8 percent, and 6.7 percent. The

Midwest registered a 6.9 percent decline.

The inventory of new homes for sale

was 218,000 units in July. This is a 5.2-

month supply at the current sales pace.

Builder Confidence

Rises One Point

Builder confidence in the market for

newly built, single-family homes in August

rose one point to a level of 61 on the

National Association of Home

Builders/Wells Fargo Housing Market

Index (HMI). This is the highest reading

since November 2005.

The fact the builder confidence has

been in the low 60s for three straight

months shows that single-family housing is

making slow but steady progress, said

NAHB Chairman Tom Woods, a home

builder from Blue Springs, Mo. However,

we continue to hear that builders face

difficulties accessing land and labor.

Todays report is consistent with our

forecast for a gradual strengthening of the

single-family housing sector in 2015, said

NAHB Chief Economist David Crowe. Job

and economic gains should keep the

market moving forward at a modest pace

throughout the rest of the year.

Derived from a monthly survey that

NAHB has been conducting for 30 years,

the NAHB/Wells Fargo Housing Market

Index gauges builder perceptions of

current single-family home sales and sales

expectations for the next six months as

good, fair or poor. The survey also

asks builders to rate traffic of prospective

buyers as high to very high, average or

low to very low. Scores for each

component are then used to calculate a

seasonally adjusted index where any

number over 50 indicates that more

builders view conditions as good than

poor.

Two of the three HMI components

posted gains in August. The index

measuring buyer traffic increased two

points to 45 and the component gauging

current sales conditions rose one point to

66. Meanwhile, the index charting sales

expectations in the next six months held

steady at 70.

Looking at the three-month moving

averages for regional HMI scores, the

West and Midwest each rose three points

to 63 and 58, respectively. The South

posted a two-point gain to 63 and the

Northeast held steady at 46.

Editors Note: The NAHB/Wells Fargo

Housing Market Index is strictly the

product of NAHB Economics, and is not

seen or influenced by any outside party

prior to being released to the public. HMI

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

information on housing statistics is also

available at housingeconomics.com.

industrynews

The Associated PressShort of cash and unsettled in their

careers, young Americans are waitinglonger than ever to buy their first homes.

The typical first-timer now rents for sixyears before buying a home, up from 2.6years in the early 1970s, according to anew analysis by the real estate data firmZillow. The median first-time buyer is age33in the upper range of the millennialgeneration, which roughly spans ages 18to 34. A generation ago, the median first-timer was about three years younger.

The delay reflects a trend that cuts to the

heart of the financial challenges facingmillennials: Renters are struggling to savefor down payments. Increasingly, too,they're facing delays in some keylandmarks of adulthood, from marriage andchildren to a stable career, according toindustry and government reports.

These shifts help explain whyhomeownership, long a source of middleclass identity and economic opportunity,has started to decline. The share of theU.S. population who own homes has slid to63.4 percent, a 48-year low, according tothe Census Bureau.

And when young adults do sign thedeed, their purchase price is nowsubstantially more, relative to their income,than it was decades ago. First-time buyersare paying a median price of $140,238,nearly 2.6 times their income. In the early1970s, the starter home was just 1.7 timesincome.

Millennials are "still very interested inbuying a house, but they're delaying thatdecision," said Svenja Gudell, chiefeconomist at Zillow. "Once they starthaving kids, they begin looking for homes.We're also finding thatgiven how muchrental rates are currently risinga lot offolks are having a hard time saving for adown payment and qualifying for amortgage."

Millennials increasingly find themselvesin a situation like that of Lou Flores, a 30-year-old portfolio manager in San Diego.He shares a one-bedroom apartment withhis boyfriend, paying $1,400 a month tolive within walking distance of Balboa Parkand the zoo.

Flores' parents had built their nest eggby steadily upgrading their homes,ingraining him with the notion that "rentingwas a waste of money." But the medianhome in San Diego costs more than a halfmillion dollars, according to the area'sassociation of Realtors.

So Flores figures ownership is at least afew years away.

"Here in California, if you're not marriedor with someone, it's impossible to buy ahome without financial backing from yourparents," Flores said.

Few first-timers around the country canlean on their parents. Among homebuyerslast year under age 34, 14 percentreceived down payment help from family orfriends, according to a Federal Reservesurvey.

Most first-timers still depend on personalsavings for at least some of their downpayments. But rising rental prices havecomplicated the task of socking awaymoney for a down payment. Fueled by asurge of renters across all age ranges,rental prices nationally have grown atroughly twice the pace of average hourlywage growth, which was a paltry 2.1percent over the past year.

A result is that those prices are

consuming more income. A striking 46percent of renters ages 25 to 34the coreof the millennial populationspend morethan 30 percent of their incomes on rent,up from 40 percent a decade earlier,according to a report by HarvardUniversity's Joint Center of HousingStudies. (The housing industry generallyregards a figure above 30 percent asfinancially burdensome.)

Some of the cost burden stems from ashift toward people who envisionthemselves renting for several years andtherefore seeking the kinds of amenitiesmore commonly associated with homeownership. Based on searches for rentalson RadPad in June and July, for example,apartments with stainless steel appliancesand swimming pools weredisproportionately popular in cities withlower homeownership rates such as LosAngeles, Chicago and Washington.

Nearly a fifth of Washington-areasearches sought apartments with stainlesssteel appliances, compared with 5 percentnationwide. More than a third ofChicagoans wanted an apartment with apool, versus 18 percent nationally.

Job security has become a more centralconsideration for first-time buyers. TheMoney Source, a mortgage lender andservicer, examined applications from 5,404millennial homebuyers. It found that thebuyers had averaged nearly 4.5 years intheir field of work and had held theircurrent job for slightly more than threeyears. Those figures point to how criticalcareer stability has become for ageneration that entered the workforceduring the Great Recession and its slow-growth recovery.

Housing industry experts note thatsurveys still show a strong desire to buyamong millennials, but that their timelinesfor purchasing depend on achieving morestability in their careers.

"As long as there is the job market tosupport millennialsjust as it has forprevious generationsI don't believe theirhabits will change," said DariusMirshahzadeh, CEO of The Money Source.

imagination didthey think thatseven years laterthe rate would stillbe zero. Of late,reasons the rateremains low includea rapid slowdown inChinese growth, atumbling Chinesestock market, theongoing Greekcrisis, and closer tohome, very weak

inflation and slow growth. Despite theseproblems, the Fed will raise rates soon, quitepossibly in mid-September.

While Chinas GDP is now growing at asub-7% rate for the first time in decades,outside of a small reduction in Americanexports to China and slightly weaker rawmaterial prices, the impact of the slowing willbe little felt by us. As for the stock market

swoon, its important to note that equitiesplay a minor role in the Chinese economy.Fewer than 15% of Chinese householdfinancial assets are in the stock market, andthe value of all tradeable shares is about30% of GDP, compared to 125% here. As aresult, just as the run up in prices had littleimpact on the real Chinese economy, thebust will be no different. Also, the recentstock market sell-off, just like the previousone, is not a harbinger of economic decline.

Looking to Europe, while Greece is likelyto roil the EU for years, it is no largereconomically than Oregon. Moreover,because 83% of Greek debt is held by otherEuropean nations, the IMF and the ECB,only 17% is held by private banks. Thus,even a complete Greek bankruptcy would dolittle damage to the rest of Europe. This wasevidenced during the run up to the snapreferendum Prime Minister Tsipras recentlycalled to improve his bargaining position. Itbackfired as there was virtually no increase

in volatility in European stock, bond andforeign exchange markets. In terms ofimpact to the US, a slightly weaker euro willhurt exports marginally but there will be few,if any, other consequences.

As for our economy, the unemploymentrate is fast approaching 5% or fullemployment, and the labor market has hit itsstride. Last year, monthly employmentgrowth averaged 260,000, the best since1999, and so far this year it is averaging arespectable 208,000. In 2013 it was 199,000and in 2012 it was 188,000. As you can see,monthly employment growth peaked in 2014,suggesting that there will be no moreadditional mass movement from the ranks ofthe unemployed to the working. As for GDPgrowth, it was 2.4% last year, 1.5% in 2013,and has averaged 2% since the end of therecession. Here too, there appears noindication that rapid GDP growth is rightaround the corner. Finally, inflation, whilevery low, has stopped falling and is starting

to creep up and wage growth may see someincreases in the near future.

With foreign economic turbulence unlikelyto impact the US, domestic GDP andemployment growth not expected tomeaningfully improve, and inflation andwages hopefully on the rise, there is nolonger any reason for the Fed to wait beforeraising rates. Moreover, by raising rates thisSeptember, the Fed will be able to waitseveral quarters before tightening again. Bycontrast, if they wait to raise rates, they maybe forced to increase rates rapidly, and thatcould be disruptive.

Elliot Eisenberg, Ph.D. is President ofGraphsandLaughs, LLC and can be reachedat Elliot@graphsandlaughs.net. His daily 70word economics and policy blog can be seen

at www.econ70.com

6 Builders Outlook 2015 issue 8The Economy

Rate Rise in September?

Elliot Eisenberg

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Why Americans wait longer than ever to buy first homes

These shifts help explain whyhomeownership, long a sourceof middle class identity andeconomic opportunity, hasstarted to decline.

By Ray Adauto, EPABCynthia Bilbe, President of Stewart

Title El Paso, told the Builders Outlookhow much she hoped Ted Jones wouldbe welcomed as a speaker for theassociation. Clearly she had nothing toworry about as Dr. Ted Jones, ChiefEconomist for Stewart Title gave apresentation during a lunch and learnevent at the EPAB office. Meeting Ted,as he likes to be called, was a veryenthusiastic crowd wanting to hear whatthis well versed man would say about ElPaso, Texas, and the world. Hisconfidence in El Paso was quick and tothe point. I am here to tell you that ElPaso is in a very good spot, rightbetween the second and fourth largestcities in the United States (Los Angelesand Houston) and that should excitethose of you here, Jones said. He wenton to explain that demographically andgeographically El Paso is sitting in agood position for growth and business.

While the majority of the reportpresented was positive there were someareas of concern. El Paso will actuallybe attracting about 15,000 more peoplea year than what will be leaving, andthat means housing will be needed,mostly rentals, Jones said. The otherconcern is that these new Millennialswont be able to buy because to buytoday requires a FICO of 740 or more,

and who knows any Millennials with thathigh of a score? he quizzed. What Dr.Jones table showed was that El Pasohas a low median priced home, nearly$100,000 less than the national average,but we also have less income makingeven the median price out of place forthe majority. We have to work hard asan industry to ensure we are buildingtowards the economics of the peopleliving here, so do that and youll make alot of money, Jones said.

Ted Jones was introduced by Ms.Bilbe, who made her own presentationon the CFPB TRID regulation

72015 ISSUE 8 Builders Outlook

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ByLaura Kusisto

By 2024, the U.S. will create between 14

million and 16 million new households, according to

the report to be released Tuesday by the

Mortgage Bankers Association.

Over the next decade, Americans will

emerge from their childhood bedrooms or

rental apartments and start becoming

homeowners again, a new report says.

Homeownership has plunged to its lowest

level in half a century. But over the next

decade the country will see a surge in new

household formation, with many of those

families choosing to own rather than rent.

By 2024, the U.S. will create between 14

million and 16 million new households,

according to the report to be released Tuesday

by the Mortgage Bankers Association. Of

those, as many as 13 million will be owners

and as few as three million will be renters, the

bankers say.

The report says that as many as 1.3 million

additional owner households will be created

each year. That is a significant pickup from the

recession, when the number of owner

households has been basically flat.

Its a huge amount of housing demand any

which way you cut this, said Lynn Fisher,

MBAs vice president of research and

economics.

The homeownership rate rose from less than

64% in the late 1980s to more than 69% in the

mid-2000s before dropping to below 64%

again in 2015.

If current homeownership rates by age and

race persist, the reports authors expect the

homeownership rate to grow modestly to

64.8%. If those rates of homeownership by

group revert to higher long-term trends, they

expect the homeownership rate to rebound to

66.5%.

Some economists have predicted that the

homeownership rate will continue to decline

given that Hispanic families are expected to be

the largest share of new households and they

tend to have low rates of homeownership.

Millennials in their 20s and 30s have also been

slow to transition from renting to buying.

But experts at the Mortgage Bankers

Association say that downward spiral will level

off or reverse in part for a simple reason: The

U.S. population is growing older and those

older people are much more likely to own than

to rent.

Four out of five households headed by

someone age 25 or younger rented their home,

compared with just 44% of those ages 35 to

39. Two-thirds of the projected population

growth among Hispanics will be among people

40 years old and older.

Indeed, most of the new households formed

over the next decade wont be young people

striking out on their own but those over the age

of 60. Baby boomers are expected to form

nearly 13 million new households, netting 10

million additional owner households. That is

compared with just over five million households

formed by the younger millennial generation,

netting an additional four million owners.

Ms. Fisher said that some of that is driven by

people over the age of 60 living longer and

healthier lives. Some are likely to choose to

stay in their current homes but others may

choose to sell and become renters or divorce

and form separate households, driving growth

in housing demand.

SPECIAL REPORT Builders Outlook Issue 8 2015

Long Term Market View: Home Buyers to Make Comeback in Next Decade, Mortgage Bankers Say

www.elpasodevnews.com

The stalled Westin Hotel and retail

complex that is planned near the El

Paso International Airport is not dead,

according to a City Council agenda

item. City Representatives will

consider extending deadlines to the

incentives package and lease

agreement that was approved for the

project in 2013 due to an active

lawsuit brought by nearby hotels.

Acequia Park, the name given to

the complex by the developer, EP

Vida, will consist of a 220-room hotel

and attached retail complex on nine

acres at the corner of Airway

Boulevard and Boeing Drive.

The $64 million project was

supposed to commence construction

within twelve months of the

incentives package approval, or by

May 2014. The project has since

been delayed due to a lawsuit filed

by a group of nearby hotels. (Story:

Airport Hotels Suing City of El Paso

and Westin Developer)

An amendment that will be

considered by City Council this week

states that the incentives agreement

will be extended due to the pending

litigation. This will allow the developer

to receive the same amount of time

for incentives and reimbursements.

However, the developer will still need

to begin paying rent as originally

scheduled.

Construction must be completed

within 24 months of the date the

lawsuit is finalized.

10 Builders Outlook 2015 issue 8DEVELOPMENT

ECONOMY

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City to Extend Westin Hotel/Retail Complex Deadlines

An artistic rendering of the Acequia Park hotel and retail

development planned for El Paso International Airport land.

(Ronkot Design Vimeo Channel)

New U.S. single-family home salesrose a bit less than expected in July, butthe trend pointed to housing marketstrength that should underpin economicgrowth for the rest of the year.

The Commerce Department said onTuesday sales increased 5.4 percent toa seasonally adjusted annual rate of507,000 units. June's sales pace wasrevised slightly down to 481,000 unitsfrom the previously reported 482,000units.

Economists polled by Reuters hadforecast new home sales, which accountfor 8.3 percent of the market, rising to a510,000 unit-rate. Sales were up 25.8percent compared to July of last year.

The housing market is gaining stream,with data last week showing homeresales jumped to a near 8-1/2-yearhigh in July and groundbreaking on newhome building climbing to its highestlevel since October 2007.

The recovery in the sector, whichtouches almost all spheres of the U.S.economy, is being driven by a tighteninglabor market. Solid job growth isboosting confidence among Americansand encouraging young adults to moveout of their childhood homes.

Housing is expected to contribute togross domestic product this year, butremains constrained by a persistentshortage of homes available for sale.

New homes sales surged 23.1 percentin the Northeast to the highest levelsince May 2014. Sales increased 6.7percent in the West and were up 5.8percent in the populous South. In theMidwest, sales fell 6.9 percent.

The stock of new houses for saleincreased 1.9 percent to 218,000 lastmonth, the highest level since March2010. Still, supply remains less than halfof what it was at the height of thehousing boom.

At July's sales pace it would take 5.2months to clear the supply of houses onthe market, down from 5.3 months inJune. The median price of a new homerose 2 percent from a year ago to$285,900.

Sales slightly less

than expected

112015 issue 8 Builders Outlook

Obama's Clean Power Plan: Solar Energy, Panels Expected To Increase In Homes As Costs Continue To Drop

By Sarah Berger www.ibtimes.com

If President Obama has his way, agrowing number of states will beusing sunshine for more than just ahealthy dose of Vitamin D. From theEast Room of the White HouseMonday, Obama laid out hisambitious plan for Americans toemploy solar energy to power theirhomes, and energy experts predictthey will, largely due to increasingaffordability.

The trend we have seen over thepast six years has been a massivedecrease in solar energy prices forconsumers, said Rhone Resch, CEOof Solar Industries EnergyAssociation, a group that found solartechnology coupled with a growingindustry has led to plummeting pricesover the past decade. Solar energyis significantly lower than natural gas,and those rates are guaranteed for20 years. The price [of natural gas]might be low today, but you cant lockin that price for 20 years, like youcan with solar energy."

The Popularity Of The Solar

Industry

The U.S. residential solar marketgrew by 76 percent during the firstquarter in 2015, with 437 newmegawatts of solar electric devicesinstalled in the first three months ofthe year, a trend that the SolarIndustries Energy Associationattributed to falling prices. Theaverage cost of a residential solarsystem has become lower than it wasin 2010 by 50 percent. UnderObamas Clean Power Plan, whichsets targets and guidelines for how tomeet the new carbon emissionlevels, Americans can expect to seeeven further declining costs, Reschsaid. The proposed regulations tocombat climate change will likelyspur an exponential amount ofadditional solar deployment, alongwith the 50,000 megawatts that areexpected to come online--meaningthey will be fully generating powerand past the testing phase- before2020, Reschs group predicted.

olar Industries Energy Associationwas not alone in its optimistic outlookfor the future of solar energy inAmerican homes. Americans willcontinue to install rooftop solar as itbecomes more and more affordable,especially if Obama's plan passes,Gabe Elsner, the executive directorat the Energy and Policy Institute,anticipated. Prices are expected todecrease an additional 40 percent by2017 according to Deutsche Bank,and Bloomberg New Energy Financeforecast a total of $3.7 trillion in solarinvestment between now and 2040.

"The cost of renewable energy isplummeting and becoming morecost-competitive every year... Even ifwe ignore the negative impacts of

fossil fuels, clean energy will be ableto compete head-to-head with fossilfuels in the market, and when wefactor in energy efficiency, the CleanPower Plan will save families moneyon their bills," said Elsner, whoseWashington, D.C.-based pro-cleanenergy think tank works to exposeattacks on clean technology andcounter misinformation by fossil fueland utility interests.

Differing State-By-State

Although solar industry specialistshave estimated that the Clean PowerPlan will cause an uptick in thenumber of residential solar systemsdeployed each year, exactly howmuch of an increase will largely bedetermined by subsidies, which willdiffer state by state. States havesignificant policy flexibility under theplan, and while the new regulationsencourage families and businessesto invest in solar power, theyre notrequire to do so, Resch said. Stateswill have until 2018 to submit theirplans, and many states will mostlikely offer subsidiaries to residentialhomes that invest in solar energy,because the states can then countthose resulting emission reductionstowards the Clean Power Plan.

Still, the specifics of Obamas planas they relate to solar energy wereleft open to interpretation. "We willhave to wait another few years to findout if and how exactly distributedsolar will be incentivized in each ofthe 50 states," said Julie Pyper, a

senior writer at Greentech Media, aleading news site that covers cleanenergy. "A lot could change withrespect to the economics andbusiness models around solar in thattime."

Currently, the way solar energycould benefit its users variesdramatically state by state. Illinois, forexample, offers a rebate program fora variety of sectors, includingresidential, commercial andgovernment buildings that use solarenergy. Many states offer similarrebate programs, but the details ofthose programs differ. Even people inCalifornia and Arizona were puttingup solar panels with little to noincentives, often through a leasestructure with a solar company,Pyper said.

Prices of actual solar energy varyper state, as well. In 2011, it costCalifornia homeowners on averageabout $10,000 to go solar, but inFlorida it cost residents about$25,000. Still, the average Floridianwould save around $30,000 to$39,000 over the course of 20 years,and in California, New York, Nevada,New Mexico and Arizona thosesavings could reach beyond $40,000,Cost of Solar reported.Green For Everyone

Critics of the Obama plan say low-income families wont be able toafford the type of renewable energythat the proposal calls for, contrary towhat others have said. Proponentsfor the plan and the move toward

solar said the government is workinghard to create initiatives to helpfamilies strapped for cash make theswitch to renewable energy, such assolar panels.

Components of the initiativeannounced last month by the Obamaadministration include a NationalCommunity Solar Partnership thatwould do the following: unlockaccess to solar energy for nearly 50percent of households andbusinesses that do not haveadequate roof space to install solarsystems; set a goal to install 300megawatts of renewable energy infederally subsidized housing; providetechnical assistance to make it easierto install solar; and make availablemore than $520 million inindependent commitments fromphilanthropic and impact investorsand states and cities to advancecommunity solar energy and scale upsolar and energy efficiency for low-and moderate-income households.

Solar business models are allabout devising ways to spread outthe up-front costs required for solarinstallation, so that customers canstart saving money on their electricitybills from day one, said Pyper, theGreentech writer.

"Low-income families can affordsolar because utilities and privatecompanies are setting up programswhere they cover the costs, and forthe most part, these families simplysee a savings on their bills."

SPECIAL REPORT:

Critics of the Obama plan say low-income families wont be able to afford thetype of renewable energy that the proposal calls for, contrary to what othershave said. Proponents for the plan and the move toward solar said thegovernment is working hard to create initiatives to help families strapped forcash make the switch to renewable energy, such as solar panels.

12 Builders Outlook 2015 issue 8MARKET WATCH

Note: The Builders Outlook thought it

would be important to ask the

question about how the stock market

affects housing. For some of our

readers this will help you understand

it better and prepare you for the next

roller coaster ride.

by Thomas Metcalf, Demand Media

Macroeconomic variables, such as

the stock market, building permits and

housing starts, fluctuate in patterns

that repeat themselves in predictable

ways. As the economy pulls out of a

recession, investors, anticipating

increased home building, begin to buy

construction-related stocks, fueling

market movement. Rising stock

market prices precede the renewal of

the housing sector.

Stock Market and HousingThe housing and stock markets are

interconnected in multiple ways.

Major home builders shares are

traded in the stock market. Home

improvement companies tied to home

building also trade on the stock

exchange. The housing sector dips

deep into the economy as furniture

manufacturers, plumbers, electricians,

landscapers and more are all

dependent on housing. Housing starts

and the stock market are both leading

indicators of economic activity.

Psychological FactorsConsumer confidence is a major

consideration when people purchase

durable goods and real estate. Few

people are likely to commit to a big

mortgage payment if they feel that

their economic future is uncertain.

When the stock market retreats and

the value of portfolios declines,

investors are impacted

psychologically. Even if the portfolios

are in IRAs, which will not be touched

for years, peoples confidence is

shaken. Loss of confidence can

spread like a virus, affecting others

who have not been financially hurt but

have nevertheless become unnerved

by news surrounding the economy.

Funds for Home MortgagesDown payments for real estate

purchases have varied in the past,

but following the housing crash that

began in 2007, credit requirements

tightened. Lenders began requiring

larger down payments than they had

before the housing bubble and crash.

For some home buyers, the funds for

their down payment comes from their

stock portfolios. When the stock

market slides, so does the net worth

of investors. Without the necessary

liquidity to make the down payments,

home buyers are forced to defer their

purchases. Rising stock prices restore

portfolio values, creating the funds for

home buying.

Real Estate in PortfoliosAs the value of stock portfolios

increases, investors may look to other

investment instruments to diversify

their holdings. Real estate is one

alternative. Families will purchase

second homes or lock in current

prices and rates by purchasing

property with the intent to build later.

Investors will purchase rental homes.

Conversely, if the stock market were

to fall, it is likely that real estate prices

would follow suit.

Does the Stock Market Affect the Housing Market?

Membership News

132015 Issue 8 Builders Outlook

www.elpasobuilders.com www.epbuilders.org

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14 Builders Outlook 2015 issue 8

Here comes the end of summer and

weve been busy. Its not all work and

no play as many of us took some well-

deserved time off this summer. Some

of you probably are planning to do

some Labor day or other celebratory

event soon but the business of the

association goes on. Our bowling

event was awesome as we had 24

teams enjoy and afternoon of fun and

networking. Thanks to our sponsors

who stepped up and allowed us not to

worry about holding one or not. I also

am glad Ray changed the venue to

Oasis Bowl. I have heard nothing but

good about that place and how they

treated us. Coming up is some

important stuff with the association

and its ability to serve our needs. I will

be officially stepping down from this

spot and hope that we can fill it with

an energetic associate member willing

to spend time and money helping

represent the largest membership

group. If you think you have what it

takes talk to Ray or call me and Ill be

happy to share my experience. Its fun

but not for anyone who cant devote

time and money because thats what it

takes. I enjoyed my years of service

and will be there to help the new chair

any way I can. Get ready for Speed

Networking this September 15 at the

association hall. Sign up today or be

left out, simple as that. Enjoy your

late summer adventures and lets have

a strong September. Go sell

something.

Sam ShallenbergerMorrison Supply

Associates Council

Bowling with Builders, August 19, 2015

execuTIve OFFIcers

edgar montiel, President

Palo Verde Homes

carlos villalobos, vice President

Pointe Homes

Don rassette, secretary/Treasurer

Rassette Homes

sam shallenberger, Associates chair

Morrison Supply

Frank Torres, Immediate Past President

GMf Homes

ray Adauto, executive vice President

Executive Vice President

Jay Kerr -Attorney of record

Firth, Johnston, Bunn & Kerr

cOuNcIL/cOmmITTee cHAIrs

Associates council

Sam Shallenberger

build Pac

Randy Bowling

Land use council

Linda Troncoso

Young Designer Award

John Chaney

remodelers council

Rudy Guel

membership retentiion

Patrick Tuttle

Finance committee

Kathy Carrillo

Henry Tinajero

ADvIsOrY TO THe bOArD

Jay Kerr, Firth, Johnston, Bunn & Kerr

James Martinez, Law Office of James Martinez

bOArD OF DIrecTOrs

Antonio 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

TAb sTATe DIrecTOrs

Randy Bowling

Greg Bowling

2014 builder member Of The Year

Frank Torres

GMf Homes

2014 Pat cox Award

bret Thompson

foxworth Galbraith Lumber

2014 Associated Of The Year

Joe bernal

Employee Benefits Of El Paso

2014 John shatzman Award

Cindy Bilbe, Stewart Title

Honorary Life members

Mark Dyer

Wayne Grinnell

Don Henderson

Chester Lovelady

Cliff C. Anthes

Anna Gill

Brad Roe

Rudy Guel

E H Baeza

Past Presidents

committed to serve

ePAb mission statement:

The El Paso Association of Builders is a

federated professional organization representing

the home building industry, committed to

enhancing the quality of life in our community by

providing affordable homes of excellence and

value.

The El Paso Association of Builders is a

501C(6) trade organization.

2015 Builders Outlook

is published and distributed for the

El Paso Association of Builders

by Ted Escobedo, Snappy Publishing

ted@snappypublishing.com

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

Sam Shallenberger

NATIONAL DIrecTOrs

Bobby Bowling IV.

Demetrio Jimenez

NATIONAL AssOcIATION OF

HOme buILDers

(800) 368-5242

TexAs AssOcIATION OF

buILDers

(800)252-3625

www.elpasobuilders.com www.epbuilders.org

Builders utlook

Advertise your

business to the

home building

industry

The Builders Outlook is the official publication of the El

Paso Association of Builders. Our award winning monthly

newspaper is the only publication to target El Paso home

builders and related businesses.

Widely distributed throughout the city and available to

readers online, the Builders Outlook is an important

advertising medium for any business that want to reach this

valuable market.

Call 778-5387 today for more information

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152015 Issue 8 Builders Outlook

ElPasoDisposal

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