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The official publication of the El Paso Association of Builders
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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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The city council circus continues,
vote for less meetings
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 [email protected]. 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
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
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