Oklahoma State Home Builders Association

An Affiliate of the National Home Builders Association

Good News Overrides the Bad

 
Posted on September 8, 2014 by By Carol Hartzog Communications

(EDITOR'S NOTE: The fall issue of the Oklahoma Builder magazine will arrive in your mailbox mid-month. For those of you who like online reading, we republish the columns you will see in the magazine. Here, Kurt Dinnes gives his state rep. report, in this case, the column is reprinted in full.)

First, let me say what an honor it is to serve as your new State Representative. I would like to personally thank Brandon Perkins for his service and dedication during his term as State Representative, as well as the help and direction he gave me to prepare for my service as NAHB State Representative.

Kurt Dinnes
Kurt Dinnes

My job is simply to carry the "water" (information) from the NAHB to you as members and, equally as important, vice versa. This "information exchange" is vital.

I recently returned from the NAHB Summer Executive Board Retreat held this year in Santa Barbara. I am not quite sure why they call it a "retreat." Perhaps it's the setting, which was beautiful. However, every day was filled with meetings. These meetings were a little more laid back and personal compared to the three other annual NAHB Board of Director meetings I attended. This allowed for a broader discussion of the issues facing our industry and the national leadership.

Here's a summary of the relevant issues affecting our industry:

Budget

A summary of the preliminary 2015 budget shows a loss of about $3.3 million. That is the bad news. However, the good news is the deficit is less than half of what was projected for 2014.

Considerations are on the table to make further cuts in expenses. Other factors that will contribute to lowering the annual deficit are an increase in membership. Currently, membership is slightly up at .08% and projected to be higher next year as the economic conditions are expected to improve.

Also, leadership is considering the possibility of cutting the Summer Executive Board Meeting or cutting one of the three Board of Directors meetings.

Field Reps Back

One program that was previously voted on and passed was reinstatement of the National Field Representative Program, which connects NAHB at the grassroots level by providing the tools to support local HBAs in person, one-on-one. This includes direct assistance with everything from recruitment, EO training to member services and benefits. The field representatives will live in the region they serve and will be expected to be on the road in local HBAs 42 weeks per year. There will be 15 representatives phased in, five at a time for the next three years, for a total cost of about $2.3 million yearly when fully implemented.

Leadership Candidate Endorsed

For the first time in many years, the NAHB has two approved candidates for Third Vice Chairman -- Dean Mon of Shrewsbury, N.J., and Randy Noel of LaPlace, La. Two very qualified candidates to say the least. As is typical in these types of runoffs, each state typically endorses a candidate. We as a state chose to endorse Randy Noel, after much discussion from each of the candidates' state election chairman and careful consideration for the direction we as a state feel the NAHB leaderships need to move. For more information on Randy Noel: http://www.randynoel3rdvicechair.com.

One of the Top Three in the Nation

NAHB membership plaque grand award to OSHBA for highest retention
NAHB membership plaque grand award
to OSHBA for highest retention

The economic report by Dr. Crow, the NAHB chief economist, provides critical statistics and predictions.

The good news is Oklahoma still remains one of the top three states in getting back to normal building levels and leading the nation in housing recovery. On the national front, housing growth is expected to finish the year with about a 1.7 percent increase and is projected to increase by 3.4 percent by the end of next year. Nationally, we currently have about a 5.5-month new-housing supply.

Lower interest rates have definitely helped fuel the housing recovery. However, mortgage rates are expected to rise slightly toward the end of the year. Dr. Crow's long-term projection is for rates to be at .3 percent by the end of 2016. I sure hope this projection is high! We all need to continue to lobby for reasonable mortgage rates to keep this recovery going.

Although employment numbers were up last month, one of the factors stalling a more rapid recovery is employment growth remains slower than other historical recession recoveries.

Dr. Crow identified other obstacles to a more rapid recovery: 1) Although jobs are up, the income levels are remaining the same and not keeping up with inflation; and 2) The pricing of new homes currently is very challenging because the cost of construction is up, thus making it more difficult to compete against existing home pricing and appraisal values are not appropriately reflecting the new construction increases. We need to work diligently with the NAHB push for appraisal reform!

Dr. Crow ended his report with more good news. The Builders Optimism Index for the first time since the downturn has risen over 50, to 53! This says a lot about builders' confidence as housing continues to make a recovery.

Other issues we should to watch:

AD&C Credit

The NAHB is monitoring and addressing AD&C credit availability through a variety of initiatives. Overall, AHB members are reporting an increase in availability of AD&C credit. However, NAHB continues to hear from small volume builders who are still having difficulty finding the funding, citing regulatory burdens and impediments at community banks. In August, NAHB's senior officers met with presidents of the Federal Home Loan Banks of Chicago and Atlanta. This initial meeting was to help NAHB obtain more information regarding the challenges community banks face and identify possible solutions.

Contract Liability Exclusion

Through contractual liability exclusion, some insurers are trying to eliminate coverage to builders for construction defects caused by subcontractors. If they are successful, this could create a difficult coverage gap to fill.

Some insurers attempt to avoid insurance coverage in all construction-defect cases by expanding the policy's "occurrence" requirement, which would disrupt the long-settled allocation-of-loss between builders and their insurers and deprive builders of insurance for which we have paid substantial premiums. The NAHB has filed a number of amicus briefs in cases that challenge the insurers' overly broad interpretation of the contractual liability exclusion. I will be checking with my insurance provider pertaining to this potential exclusion. You may want to check with your insurance provider as well.

Housing Finance Reform

Bipartisan legislation, S. 1217, "The Housing Finance Reform and Taxpayer Protection Act of 2014", was passed by the Senate Banking Committee. This legislation would maintain an appropriate level of government support while providing a constant and affordable supply of mortgage credit. Also, it ensures a government backstop would only be triggered under extreme circumstances and after significant levels of private capital are first exhausted. NAHB is actively engaging the Senate to advance this reform legislation and pass S. 1217, and is encouraging us as members to reach out to our senators on this effort as well.

OSHA's Injury and Illness Prevention Programs (I2P2)

As you know, OSHA has for years been developing a new rule that would require each employer to establish a complicated safety system and implement an onerous process to address workplace safety and health hazards. Last spring, OSHA announced it was making the I2P2 Rule a long-term action, rendering it unlikely that the agency will issue a rule during this administration. OSHA's action is a direct response to the opposition from NAHB, its members and other associations with an employer membership base.

If there is an issue that interests you, please let me know, and I will fill you in. Please feel free to call me direct or email me any industry issues that affect you. Remember, we are ALL members of the NAHB and the NAHB is there to serve us.

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