Building Business News
Volume Volume 17 18 •• NO.7 NO.11
February 2013 November July2012. 2011
www.kchba.org
The Official Newspaper of The Home Builders Association of Greater Kansas City
Governor Brownback Proposes Eliminating the Mortgage Interest Deduction
Kansas Governor Sam Brownback
Kansas Governor Sam Brownback made his priorities clear through the release of his proposed budget for Fiscal Year 2014. One of his top priorities is to completely eliminate the mortgage interest deduction (MID). This proposal, combined with an additional plan to extend the .6 cent sales tax that was set to expire on June 30, 2013, is intended to enable the Governor to patch a multimillion dollar budget deficit. The KCHBA’s Board of Directors reaffirmed its position in March 2012 that the MID historically is the cornerstone of homeownership and is vital to the housing industry’s continued recovery. According to the National Association of Home Builders, the MID benefit is worth more to the middle class and particularly beneficial to younger households who tend to be recent homebuyers. Approximately 65 percent of Kansans who claim the mortgage interest deduction earn less than $100,000 per year. The MID was created as part of a new federal tax code in 1913 and has survived every tax overhaul to date. While many suspected that the Brownback administration would try to eliminate the MID again this year, it was surprising to see this important housing incentive singled out as the only solution to solving the state’s fiscal problems. In September 2012, more than 800 people from Kansas and Missouri took part in a Rally for Homeownership to send a message to their local, state and federal lawmakers that homeownership is critical to a strong, prosperous nation and important to America’s families.
Early Registration Posts 273 Entries for Spring Parade of Homes
Plans for the Spring Parade of Homes are underway and already 273 entries were entered by the early deadline in January. Final deadline is February 8, so don’t miss the opportunity to be a part of this exciting year. Entry forms for the Parade and the American Dream Awards are available at www.kchba.org or contact Gina Battle, 913-7332219. See important deadlines, dates, and rates on page 2.
Dynamic Selection of Education and Training Sessions Offered Take advantage of classes through the winter and spring months that are designed to provide members with information and knowledge to succeed in the homebuilding industry. The HBA has organized sessions ranging from economic outlooks and business management to design ideas and marketing through social media. Some courses go toward professional designations from the National Association of Home Builders as well as for contractor licensing in many local jurisdictions. “Our goal with this line up of classes PRSTRT STD U.S. Postage PAID Permit No. 108 Lawrence, Ks
David Crowe, NAHB Chief Economist is to give the members what they want, so we surveyed them directly,” said
Beatriz Ibarra, HBA Vice President of Government Affairs. “Members clearly want a variety of opportunities to be informed on the industry, learn new skills, stay on top of trends, and understand laws and regulations.” As a result, the following sessions are scheduled through March: • Economic Outlook with Elliot Eisenberg • Business Management for Building Professionals • Green Building for the Building Professional • Marketing through Social Media
• Economic Forecast with NAHB’s David Crowe • Lunch with NAHB’s Top Lawyer David Crump • NAHB Certified Sales Professionals • 60 Design Ideas in 60 minutes • The Key to Navigating Building Code Changes that Take Effect on April 1 (See details on page 3)
“I encourage members to contact the HBA to let us know what types of subjects interest them,” added Ibarra.
Inside this Edition
Fiscal Cliff Deal Reached
P4
Permits Jump in 2012
P 14
February 2013
Calendar
Feb 6, 8:30 am-5:00 pm
www.kchba.org
Business Management for Building Professionals
Feb 7 & 8, 8:30 am-5:00 pm Certified Green Professional (CGP) Education February 12, 11:30 am
Tri-Area Council Meeting
February 14, 11:30 am
Economic Forecast with NAHB’s David Crowe
February 19, 11:30 am
Board of Directors Meeting
February 19, 11:30 am
Lunch with Board of Directors and NAHB Lawyer
Feb 27, 28 & March 1, 8:30 am-5:00 pm
Certified New Homes Sales Professional (CSP) Education
Page 2
For more information or to register for any event, go to www.kchba.org or call 816-942-8800
Volume 19 • NO. 1
Education & Training Certified Green Professional (CGP) Class Offered NAHB’s Certified Green Professional™ designation recognizes builders, remodelers and other industry professionals who incorporate green building principles into homes. Class work leading to the designation provides a solid background in business management and green building methods, as well as the tools to reach consumers. The HBA is offering the class February 7 and 8, 8:30-5 p.m. The Green Building for Building Professionals is a two-day course that results in the CGP certification. Participants learn how green homes provide buyers with lower energy costs and higher value. Strategies are discussed to incorporate green-building principles into homes without driving up the cost of construction. Green homes provide buyers lower maintenance, better indoor air quality
and better long-term value. Techniques are also discussed for competitively differentiating green home products with increased indoor environmental quality as well as energy and resource efficiency. Cost for the two day course is $370 for members. To earn a CGP designation, Business Management for Building Professionals class must be completed and the HBA is offering that class February 6, 8:30 a.m.5:00 p.m. The cost for this class is $215 for members. In this class you will learn the management skills that give industry leaders the edge. This course provides a foundation in best business practices so valuable to smaller businesses: planning, organizing, staffing/directing and controlling. Instructors teach practical and applicable tools for management success using case studies and sample forms.
Spring Parade of Homes April 20-May 5, 2013
Entry deadlines & pricing for a black & white or color rendering are:
Last Chance deadline
Members Non-Members B/W Color B/W Color
Feb 8
$1,995 $2,295
$2,995
$3,295
Other Important Dates: Feb 21-25 Builder Proofing Feb 25 Substitution within subdivision deadline Mar 1 Early deadline American Dream Awards Contest $250 Mar 8-11 Online viewing of Parade Guide Mar 20 Sold/Unfinished notification deadline Mar 22 Late deadline American Dream Awards Contest $400 Mar 28 Deadline to get contest marketing material and price changes Apr 16 & 17 Material pick up Apr 19 & 20 Judging Apr 20-May 5 Parade Dates Apr 24 Awards Ceremony www.kchba.org
Building Business News B
Volume Volume 19 19 •• NO.2 NO.2
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Education & Training
Education builds a better homebuilding industry with learning opportunities for builders, remodelers, project management and sales. Get informed on housing policy, finance, business management, design, new homes sales, marketing and building technology. Come to the HBA for the knowledge you need to grow a profit.
FEBRUARY
Business Management for Building Professionals February 6, 8:30 a.m. - 5:00 p.m., Cost $215 Learn the management skills that give industry leaders the edge. This course will offer best business practices in planning, organizing, staffing/directing and controlling. Green Building for the Building Professional February 7-8, 8:30 a.m. - 5:00 p.m., Cost $370 Learn how to apply the ANSI-approved National Green Building Standard™ in the construction of a new home, remodel, site development or multifamily project. *Participants must also take Business Management class on 2/6/2013.
February 2013.
MARCH
60 Design Ideas in 60 Minutes Tri-Area Council Meeting March 12, 11:30 a.m. - 1:00 p.m., Cost $25 (Lunch included) Join three top area designers, including Lisa Mermis, owner of Twigs Interiors, and Emmie Shaw with Sherwin-Williams, to learn about the latest and greatest trends in today’s home design. The Key to Navigating Building Code Changes that Take Effect April 1, 2013, Date and Time TBD Learn how to comply with new residential building code changes in Olathe, Shawnee, Leawood and other cities across the KC metro area.
Marketing through Social Media Tri-Area Council Meeting February 12, 11:30 a.m. - 1:00 p.m., Cost $25 (Lunch included), Space is limited Kate McKinney, contributor to the Kansas City Business Journal on social media, will lead this class on how to use social media to reach new customers and market your business. Economic Forecast with NAHB’s David Crowe February 14, 11:30 a.m., Cost $30 Union Station, 30 West Pershing Rd, KCMO 64108 Hear from NAHB’s Chief Economist on the future of the housing industry with some Jack Stack Barbeque on the side. Lunch with NAHB’s Top Lawyer David Crump February 19, 11:30 a.m., Cost $30 (Non-Board members) Get your legal questions answered by NAHB’s top lawyer and learn how recent changes in the law may impact your approach to business planning or business succession. NAHB Certified Sales Professionals February 27-March 1, 8:30 a.m.-5:00 p.m., Cost $375 Learn the key techniques used by seasoned real estate veterans for greeting, closing and overcoming objections. All classes will be held at the HBA (except for the event on 2/14/13). To sign up for a class or for more information, please contact Andrew McKeegan at (816) 942-8800 or andrew@kchba.org. Building Business News
www.kchba.org
Page 3
February 2013
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Add Value To Your Home A survey by the National Association of Home Builders showed that having natural gas in a home increases its resale value by 6%. Natural gas--the cleaner, greener and now, value-added, fuel.
Page 4
NAHB Survey, Fall 2010
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Kansas Gas Service delivers safe, clean and reliable natural gas to more than 630,000 homes and businesses in Kansas.
Natural Gas…the Cleaner, Greener Choice.
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Volume 19 • NO. 2
Fiscal Cliff Deal a Net Positive for Housing and Home Building The fiscal cliff, an economically damaging set of tax hikes and spending reductions scheduled to begin in 2013, has been avoided — for now — and that is good news for housing in the short run. The enactment of H.R. 8, the American Taxpayer Relief Act of 2012, will extend permanently most of the 2001/2003 tax cuts. The legislation prevents a fiscal drag of approximately $600 billion in 2013, which would have been large enough to push the current weak economy into recession. That in turn would have reduced demand for both owner-occupied and rental housing and threatened the ongoing recovery for home building. That outcome has been prevented, although future fiscal policy debates loom on the horizon. For example, a legislative fight over the debt ceiling and the delayed sequester will take place in February. And 2013 may be a year in which Congress finally considers comprehensive tax reform. But for now, the following items in H.R. 8 are of interest to housing and home builders:
Business Tax Items
ing deductions and credits such as the real estate tax deduction and the 25C energy efficiency tax credit from shrinking in value. Permanently sets the parameters of the estate tax. The legislation extends the $5 million (indexed to inflation) exemption amount set in 2010, but raises the rate of tax to 40% for estate value above the exemption amount. A higher exemption amount protects large numbers of small businesses. Extends present law section 179 small business expensing through the end of 2013. The provision increases the maximum amount of depreciation and the income phase-out threshold in 2012 and 2013 to levels in effect in 2010 and 2011 (500,000 and $2 million, respectively). This provides cash flow and administrative cost benefits for small firms. Extends the section 45L new energyefficient home tax credit through the end of 2013. This allows a $2,000 tax credit for the construction of for-sale and for-lease energy-efficient homes in buildings with fewer than three floors above grade.
Permanently extends the 2001/2003 tax rates for adjusted gross income levels under $450,000 ($400,000 single). This is good news for small businesses and home builders, as 80% of NAHB members are pass-through entities paying taxes on the individual side of the code. The legislation protects the vast majority of membership from business tax hikes and keeps the 15% rates for capital gains and dividends for income levels under $450,000 ($400,000 single). Permanently extends the Alternative Minimum Tax patch. In a typical tax year, about five million taxpayers are subject to the AMT. The permanent patch prevents many NAHB members from facing higher tax liability and protects hous-
Extends through the end of 2013 mortgage debt tax relief. This is an important rule that prevents tax liability from many short sales or mitigation workouts involving forgiven, deferred or canceled mortgage debt. This will enable more short sales to move forward and reduce downward pressure on home prices. Deduction for mortgage insurance extended through the end of 2013. Extending the deduction reduces the cost of homeownership for those using PMI, FHA or VA mortgage insurance. This is particularly helpful for first-time home buyers. The deduction begins to be phased out for those earning more than $100,000 and a Continued on page 5 complete phase
www.kchba.org
Home Owner Tax Items
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Volume 19 • NO. NO.1 2
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Government & Politics Continued from page 4
out is reached for households with an adjusted gross income of $110,000 or more. Extends the section 25C energyefficient tax credit for existing homes through the end of 2013. The tax credit is an important remodeling market incentive, keeping the lifetime credit cap at $500. Reinstates the Pease/PEP phase outs for deductions. For married taxpayers with adjusted gross income (AGI) above $300,000 ($250,000 single), the Pease limitation reduces total itemized deductions by 3% for the dollar amount of AGI
above the thresholds. For example, a married couple with a $350,000 AGI would be $50,000 above the limit and must reduce their Schedule A deduction total by $50,000 multiplied by 3%, or $1,500. This would raise their taxes by about $500. The Pease rule will affect only a very small number of households who use the mortgage interest deduction.
Multifamily Tax Items Extends the 9% Low Income Housing Tax Credit (LIHTC) rate for allocations through the end of 2013. Absent the credit fix, the LIHTC program would
February January 2013.
suffer a loss of equity investment for affordable housing projects. Extension through the end of 2013 of base housing allowance rules for affordable housing. The military’s basic housing allowance is not considered income for purposes of calculating whether the individual qualifies as a low-income tenant. Also noteworthy are items that are not in H.R. 8, including an itemized deduction cap or a defined fast-track tax reform process. Nonetheless, the return of the Pease rules suggests that items like the mortgage interest deduction will be under debate in 2013.
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Building Business News
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To advertise, call your account executive or Kate Mariani-Vacek at (816) 234-4097. www.kchba.org
Page 5
February 2013
Page 6
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Volume 19 • NO. 2
Events & News Save the Date for the
HBA of Missouri Legislative Day March 5
Kansas Area Council Hears from “Safety Dave”
More choIceS. More StYLe. LeSS tIMe.
“Safety Dave” Redlin, Progressive Environmental & Safety, presented at the KS Area Council meeting. HBA members learned about new fall protection rules that OSHA will begin to enforce on March 15, 2013 and all the various options for complying with the rules. Attendees also learned about resources available to the industry for keeping up to date on OSHA rules. Look for more educational offerings from the HBA in the coming weeks on how you can maintain the highest levels of safety in the industry. Shown: Mindy Arnold, Designed 4 You, Dave Redlin, Greg Cox, Summit Custom Homes
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3 Interior wood species: natural pine, oak or map 9 Interior finishes: Six different factory stains, two paint choices or a primed finish let homeowners create or complement any look. 3 Interior wood species: Select from the rich grain of natural pine, oak or maple for the window or door interior.
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“ENERGY STAR” is a registered trademark of the U.S. Environmental Protection Agency. “Andersen” and all other marks where deno © 20
Building Business News B
Volume Volume 19 19 •• NO. NO.2 2
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Events & News
February 2013.
Pittsburg State Students Compete at IBS Each year at the International Builders Show, the NAHB student chapter holds the Residential Construction Management Competition. Teams are made up from NAHB student chapter members across the country from high schools, two-year and four-year colleges. This is Pittsburg State University’s 4th year of the competition. Our first year, the team earned 3rd place overall out of 39 teams and Rookie of the Year honors. Last year, the team placed in the top ten. The competition gives students the opportunity to apply skills learned in the classroom to a real construction company by completing a management project/ proposal. Students are given the problem, which usually consists of little more than a site survey of a piece of undeveloped property, and have 4 months to prepare a 150-page proposal. The proposal consists
of market analysis, marketing and sales strategy, site design, product design, and cash flow/financial analysis. Proposals are submitted to a group of construction company executives who act as judges. During the International Builders Show, students defend their proposals to the judges in front of an audience. Our student chapter has been partners with the HBA of Greater Kansas City for the past four years and the HBA has been very supportive of worthwhile student chapter activities, such as the Residential Construction Management competition. Without the support of our sponsor chapter, we would not be able to compete Left to right: Pittsburg State University team members Taylor Conner, Brandon in these types of events. The PSU NAHB Humbard, Alexander Kenney, Kelsey Billingsley, Spencer Yohn, and Jacob Carlson student chapter assists with the Spring and Fall Parade of Homes as Parade Drivers and Faculty have served as parade judges for the past two years.
The HBA Appoints new Committee and Council Chairs The following is the leadership of HBA committees and councils appointed by the Board of Directors Executive Committee at its January meeting.
Parade Committee
Government Affairs
Tommy Angotti, Factory Direct Appliance
Harold Phelps, Phelps Engineering (KS) Brenner Holland, Hunt Midwest Real Estate Development (MO)
Zalman Kohen, Summit Custom Homes Patrick Willis, Willis Construction
Associates Council
Missouri North Area Council
Bob Frost, Frost Construction
Gary Kerns, Gary Kerns Homebuilders Brenner Holland, Hunt Midwest Real Estate Development
Sales and Marketing Council
Missouri South Area Council
HBA-PAC
Roy Ragland, Homes by Chris Jennifer Mann, Hunt Midwest
HBA of Missouri Legislative Day (March 5, 2013) Travis Graham, Graham Construction Misty Hanson, Stewart Title Building Business News
Justin Pfeifer, Pfeifer Homes Zalman Kohen, Summit Custom Homes
Builders, how tight are your homes and ducts? Know where you stand before the new code takes effect.
Contact us today and be ready. IECC2012@pphkc.com
Kansas Area Council Jim Lambie, Lambie Custom Homes Rocky Rhodes, Allure Luxury Homes
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February 2013
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HBA Industry News
Volume 19 • NO. 2
Missouri Legislative Day is Right Around the Corner
Attendees from 2012 included: Phil Yancey, Weber Carpet, Tate Hammons, Misty Hanson, Stewart Title, Andrew McKeegan, HBA, Kim Hipsher, First American Title, Tom Woods, T.E. Woods Homes, Rep. Sheila Solon, Steven Cowen, HBA, Travis Graham, Graham Construction, Bob Frost, Frost Construction Company.
On March 5, 2013, HBA members from across the State of Missouri will have an opportunity to make their collective voice heard at the annual MO Legislative Day in Jefferson City. Under the umbrella organization, the Home Builders Association of Missouri (HBAM), members from the various HBAs will meet in Jefferson City to send a message to their elected representatives that they are paying attention to what is happening within the General Assembly and that they are willing to share their views on issues that impact the home building industry. Members will have the opportunity to learn about legislation impacting their industry and business, build relationships with their elected representatives and network with fellow
HBA members from Kansas City and across the state. With so much at stake for the home building industry, your participation has never been more important. Reforming tax credits is at the top of several key lawmakers’ agendas. In addition, workers compensation issues will be debated and there may be a renewed interest in establishing a uniform statewide fire and building code and sprinkler systems. This year’s MO Legislative Day Co-chairs are Travis Graham and Misty Hanson. They are helping to ensure that the event meets the needs of our members and remains a success as in years past. Members may register for the event on the HBA’s website, www.kchba.org.
We proudly support the home building industry.
Page 8
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Building Business NewsBB
Volume Volume 19 19 •• NO. NO.2 2
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HBA Industry News
February 2013.
More than 100 HBA Members Gather for a Q&A with KCMO Building Officials More than 100 HBA members took part in a question and answer session with Kansas City, Missouri building officials Greg Franzen, Jeff Lee and Virgil Phillips to learn more about implementation of the new building code that took effect on October 1, 2012. The discussion touched upon a wide range of topics from submitting building plans and correct air barrier procedures to insulating water lines. As new building codes take effect across the Kansas City metro area,
Building Business News
the HBA plans to host future sessions with building officials from Kansas and Missouri jurisdictions. Several jurisdictions, including Shawnee, Olathe and Leawood will see new building codes take effect on April 1, 2013. The HBA was part of a long process to revise building codes in Kansas City, Missouri and Overland Park, Kansas. Staff continues to work to ensure that members have the information and resources they need to comply with the new codes. HBA members meet with KCMO officials
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November2013 February 2012
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Happy Anniversary The strength of an association is in its membership and a thank you goes out to all of those members who continue to support the HBA. 1948 McCray Lumber and Millwork 1974 Graham Construction Company 1976 Grandview Furnace Company 1978 Barney Ashner Homes, Inc. 1983 Price Brothers Residential Inc Jim Haas Builders, Inc. 1984 Brown Midwest, LC 1986 Segebrecht Charles Construction 1987 Top Master 1988 Bickford & Company, Inc. Dixon Construction Company, Inc. Design Homes, Inc. 1989 Pfeifer King Building Corporation
1990 United Heating & Cooling 1997 Herrman Customized Construction, Inc. Kansas/Missouri Secured Title 2000 J Davis Drywall LLC 2001 Signature Quality Homes, LLC Royal Metal Industries, Inc. 2002 Gahagan & Eddy Building Company LLC Mark Hoelting Building LLC 2004 MonierLifetile 2006 Kirkwood Realty Co., LLC KC MASS Services Breen Development Window World of KC Kreimendahl Painting
2008 The Hardwood Guy 2009 Rosehill Gardens, Inc Mission 159, LLC Time Warner Cable Kansas City Peak Auctioneering First National Bank 2010 Legacy Custom Homes LLC Associated Air Products Integrated Electronics, Inc. Quinn Real Estate Company 2011 Rare Construction, Inc Accent Doors of Kansas City 2012 Alenco, Inc. Norton & Schmidt Consulting Engineers, LLC Kansas Gas Services Empire KC Midstates Wholesale Supply
5 Solid Reasons to Call K&E Flatwork Today!
Volume Volume 1819 • NO. • NO. 11. 2
Welcome
New Members Let’s make them feel at home! Ryan Homes, L.L.C. Wayne Whiles 13747 Cody St., Overland Park, KS 66221 (816) 728-7878 whilesd@kc.rr.com Sunlite Science & Technology, Inc. Jeff Chen 345 N. Iowa St., Lawrence, KS 66044 (785) 856-0219 jchen@sunlitest.com www.sunlitest.com Refined Interior Staging Solutions Helen Bartlett 5543 Aberdeen Rd., Fairway, KS 66205 (913) 206-5616 hbartlett6@aol.com http://www.refinedinterior.com/
Blue Linx Nick Welshons 1727 Warren St., Kansas City, MO 64116 (816) 842-3367 nicholas.welshons@bluelinxco.com www.bluelinxco.com
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Online Resources for HBA Members! Register for HBA Events Safe & secure online registration Personalized calendar of events. Notification of your events
Update Your Membership Change your profile, contact info & membership directory listings.
Call today 816-942-8800, or email gina@kchba.org or scorless@kchba.org
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Volume 19 • NO. 2
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HBA Industry News
February 2013.
List of Improving Housing Markets Expands to 242 in January
In the latest sign of a burgeoning recovery in U.S. housing markets, the number of metropolitan areas on the National Association of Home Builders/ First American Improving Markets Index (IMI) rose for a fifth consecutive month to 242 in January. This is up from 201 markets listed as improving in December, and includes entrants from 48 states and the District of Columbia. The IMI identifies metro areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. A total of 47 new metros were added to the list and six were dropped from it this month. Newly added metros include such geographically 6 diverse locations as Los Angeles, Calif.; Auburn, Ala.; Des Moines, Iowa; Nashville, Tenn.; Richmond, Va.; and Cleveland, Ohio. “The IMI has almost doubled in the past
NAHB Life Directors Appointed Congratulations to Harold Phelps, Phelps Engineering and Mark Hoffman, Hoffman Construction on being awarded the designation of NAHB Life Director. Formal recognition of their achievements will take place at the IBS Board of Directors Meeting in Las Vegas.
Building Business News
two months as stronger demand during prime home buying season boosted prices across a broader number of metropolitan areas,” noted NAHB Chief Economist David Crowe. “Similar home price gains, and hence the IMI, may be tempered in the future as we see data from typically slower months for home sales.” The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. A complete list of all 242 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in January, is available at www.nahb.org/imi. A stateby-state listing of metro areas on the list is also available at: www.nahb.org/ improvingmarkets.
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Merrill Companies Breaks Ground at Prairiefire at LionsGate Merrill Companies held a groundbreaking ceremony for the first phase of Prairiefire at LionsGate, a mixed-use development at 135th Street between Nall and Lamar Avenues. It will have 207,000 square feet for retailers, including Kansas City’s first REI outdoor equipment store. It also will feature a 41,000-square-foot hall housing exhibits prepared by the American Museum of Natural History, the first collaboration of its kind for the New York institution. The first retailers are scheduled to open in October. The Museum of Prairiefire and other retailers are scheduled to open next spring. www.kchba.org
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February 2013
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Volume 19 • NO. 2
Industry News Builders & Buyers Bypass Budget Bullet
By Elliot Eisenberg, Ph.D The mortgage interest deduction (MID) cost the US Treasury $88.8 billion in 2011, making it the second largest tax break for individuals. That is precisely why the Congress has its sights set on it. However, there is much debate about how to reduce its costs to the Treasury and by how much.
Page 12
No matter what happens, reducing the MID will lower some house prices. That being said, how the Congress reduces the MID will determine how much how many houses lose value. And since so many of us own a home, sell homes or build homes, the MID will not be singled out for special treatment. Rather, the Congress will cap or phaseout the value
of all deductions, and in that way avoid favoring one deduction over another. While there are several possible approaches, based on White House and Senate details of their deal to avert the fiscal cliff, the most likely one calls for phasing out itemized deductions for households with incomes over $300,000. While at first blush this may appear to
be quite damaging, I think homeowners, realtors, builders, and the entire housing industry have all dodged a bullet and should sleep well for quite a while, or at least until the Congress reopens debate on the tax code when we hit the next fiscal stumbling block. Phasing out Schedule A deductions for couples with Continued on page 13
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Volume Volume 19 18 19 •• NO. NO.11 NO.2 2
Continued from page 12 incomes
over $300,000 limits the impact to buyers of only the most expensive houses. For example, with a 10% down-payment on a $1,500,000 house, mortgage interest would be $54,000/year, property taxes would average $16,500, and insurance would be about $8,000, totaling $78,500 in annual housing-related expenses. To finance that mortgage, the $78,500 should ideally not be more than 30% of gross income, which means qualifying requires having an annual income of
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Industry News roughly $260,000; comfortably below the income level at which deductions start phasing out.
“With huge deficits as far as the eye can see, the tax treatment of deductions is sure to continue to change and evolve. Enjoy the debate, but be aware that next time you may be on the menu.” That being said, how much will a house valued at $2,000,000 decline? By very little! In theory it will fall by the
Thanks to these HBA 2013 SPONSORS Platinum sponsor
Bank of Blue Valley Gold Sponsors
Cable-Dahmer Chevrolet SilveR SPONSORS Capitol Federal Henges Insulation Factory Direct Appliance Kansas Gas Service Ferguson Enterprises, Inc. Missouri Gas Energy Phelps Engineering First Federal Bank ProBuild K & E Flatwork Kansas City Star Bronze SPONSORS Kenny’s Tile & Floor Commerce Bank McCray Lumber & Millwork Complete Home Concepts Northcraft Flooring & Granite Continental Title Company Designed 4 You Owen Lumber Company First American Title Hermes Landscaping Shamrock Cabinet Kansas City Title Kitchens & Baths by Briggs Star Drywall & Insulation Locks & Pulls Sun Lumber Company Pacific Mutual Door & Window Pella Products of KC The Rob Ellerman Team ProSource of Lenexa United Heating & Cooling Secured Title of Kansas City Stewart Title Weber Carpet, Inc. Western Chandelier Wells Fargo Building Business News
one-time lump-sum amount necessary to compensate buyers for the new income taxes they will pay due to their being at
or above the phaseout threshold. With interest rates currently at 4%, this means, and trust me on this, every $1,000 in added income taxes reduces the house price by ($1,000/4% or) $25,000. However, in reality, these impacts will be dramatically mitigated by tax avoidance strategies available to the very wealthy including
HBA Staff
Office: 816-942-8800 Sara Corless Executive Vice President scorless@kchba.org, 816-733-2216 Beatriz Ibarra Vice President of Government Affairs bibarra@kchba.org 816-733-2237 Gina Battle Tour & Membership Records Coordinator gina@kchba.org, 816-733-2219 Marcia Jurgens Permit & Accounting Mgr. marcia@kchba.org, 816-733-2215 Stephanie Stollsteimer Director of Marketing and Communications stephanie@kchba.org, 816-733-2213 Lori Kodanaz Director of Consumer & Trade Shows lori@kchba.org, 816-733-2217 Andrew McKeegan Association Services Manager Andrew@kchba.org, 816-733-2224 Cindy Pearson Events Support Cindy@kchba.org, 816-733-2247 Phil Yancey Membership Manager Phil@kchba.org, 816-733-2245
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November February 2012. 2013.
systematically larger down-payments, cash purchases, corporate purchases and so on. In short, few homeowners will be impacted by the new tax treatment of deductions including the MID. For households with incomes below $300,000, there are no impacts stemming from this change and for those with higher incomes, the impacts will largely be mitigated by tax avoidance behavior. At worst, only homes worth well over a million dollars will be adversely affected. With huge deficits as far as the eye can see, the tax treatment of deductions is sure to continue to change and evolve. Enjoy the debate, but be aware that next time you may be on the menu. Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70 word economics and policy blog can be seen at www.econ70.com.
BuildingBusinessNews THE OFFICIAL PUBLICATION OF THE HOME BUILDERS ASSOCIATION OF GREATER KANSAS CITY
February 2013 • Volume 19 Issue 2 Copyright 2013 Published by the Home Builders Association of Greater Kansas City 600 E. 103rd Street, Kansas City, Mo. 64131 (816) 942-8800
Executive Vice President Sara Corless Editor Stephanie Stollsteimer Contributing Writer: Beatriz Ibarra Graphics Karla Peterie, Creative Services
2013 Executive Committee Home Builders Association of Greater Kansas City President Fred Delibero Vice President Chris Ragland Secretary/Treasurer Mark Mather Associate Representative Tommy Angotti Immediate Past President Kevin Stucker
To subscribe to Building Business News, call (816) 733-2224 To advertise in Building Business News call (816) 942-8800 For change of address requests, please fax changes to (816) 942-8367 or call (816) 942-8800 For more information, visit the HBA online at www.kchba.org
Page 13
February 2013
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Volume 19 • NO. 2
Single Family Housing Finishes 2012 with 43 Percent Gain Over 2011
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for events online
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Single family housing experienced significant growth in 2012 over 2011 and reached the highest number since 2007 according to the Home Builders Association of Greater Kansas City’s (HBA) monthly Residential Building Permit Statistics report. The year ended up 43 percent over last year with 3,299 compared to 2,301 in 2011. Including multi-family units the total for 2012 was 4,948 compared to 2,901 in 2011 for a 71 percent increase. Kansas City, Missouri led the metropolitan area with a total of 998 residential units in its three-county reach. Of those, 611 were single family units and 387 were multifamily. Overland Park followed with 583 total units which included 353 single family and 230 multi-family. Next was Olathe with 457 total units all from single family. The total growth was distributed fairly evenly among the top counties including Johnson County with 37 percent, Jackson County with 19 percent, Clay and Platte counties each with 13 percent, and Wyandotte County with 10 percent. “As we look back, 2012 seems to be the turning point to a modest recovery for the Kansas City housing market,” said HBA Executive Vice President Sara Corless. “Our statistics show that 2009 through 2011 were the lowest in thirty years. The last time Kansas City permitting activity was below 3,000 single family units was in 1982. These numbers are a bright spot for the homebuilding industry and home buyers.”
Building Business NewsBB
Volume Volume 19 19 •• NO.2 NO.2
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February 2013.
HOME BUILDERS ASSOCIATION OF GREATER KANSAS CITY
CASS COUNTY Archie Belton Cass County Cleveland Drexel Garden City Harrisonville Lake Winnebago Lee's Summit Peculiar Pleasant Hill Raymore Village of Loch Lloyd
CLAY COUNTY Clay County Excelsior Springs Gladstone Kansas City Kearney Lawson Liberty North Kansas City Pleasant Valley Smithville
Single Family Units^
M-F Units Sale%
M-F Units Rent
0 0 2 0 0 0 0 1 2 0 0 5 2 12
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 0 1 35 0 0 0 0 0 5 46
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
Residential Building Permit Statistics DECEMBER 2012 Total Units
S-F Units YTD
M-F Sale YTD
M-F Rent YTD
Total Units YTD
0 0 2 0 0 0 0 1 2 0 0 5 2 12
0 5 34 0 0 1 4 4 24 2 15 68 16 173
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 5 34 0 0 1 4 4 24 2 15 68 16 173
5 0 1 35 0 0 0 0 0 5 46
54 28 2 452 46 0 33 0 0 46 661
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
54 28 2 452 46 0 33 0 0 46 661
M-F Units Sale%
M-F Units Rent
Total Units
S-F Units YTD
M-F Sale YTD
M-F Rent YTD
Total Units YTD
0 0 0 0 0 0
0 0 0 0 0 0
7 0 0 1 0 8
43 15 11 19 13 101
0 0 0 0 0 0
0 0 0 0 0 0
43 15 11 19 13 101
0 0 13 13
0 0 0 0
0 0 0 0
0 0 13 13
22 2 113 137
0 0 0 0
0 0 377 377
22 2 490 514
1 0 0 0 2 3
0 0 0 0 0 0
0 0 0 0 0 0
1 0 0 0 2 3
3 18 0 1 5 27
0 0 0 0 0 0
0 0 0 30 0 30
3 18 0 31 5 57
280
0
26
306
3299
20
1629
4948
Single Family Units^ LEAVENWORTH COUNTY Basehor 7 Lansing 0 Leav. County 0 Leavenworth 1 Tonganoxie 0 8 WYANDOTTE COUNTY Bonner Springs Edwardsville KCK/Wyandotte Co
MIAMI COUNTY Louisburg Miami County Osawatomie Paola Spring Hill
December 2012
Comparison of Single Family Totals for Greater Kansas City (Cass, Clay, Jackson, Platte, Johnson, Leavenworth, Miami, Wyandotte Counties)
JACKSON COUNTY Blue Springs Buckner Grain Valley Grandview Greenwood Independence Jackson County Kansas City Lake Lotawana Lee's Summit Oak Grove Raytown Sugar Creek
PLATTE COUNTY Edgerton Kansas City Parkville Platte City Platte County Riverside Weatherby Lake Weston
JOHNSON COUNTY De Soto Edgerton Fairway Gardner Johnson County Leawood Lenexa Merriam Mission Hills Olathe Overland Park Prairie Village Shawnee Spring Hill
Building Business News
5 0 8 3 2 3 2 5 2 12 1 0 0 43
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
5 0 8 3 2 3 2 5 2 12 1 0 0 43
87 0 35 26 29 61 34 44 11 248 4 1 1 581
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 5 302 0 0 0 69 0 0 0 0 0 376
87 0 40 328 29 61 34 113 11 248 4 1 1 957
Month/Year January February March April May June July August September October November December Annual Total*
0 4 4 0 22 0 2 0 32
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 4 4 0 22 0 2 0 32
1 115 51 0 175 1 3 0 346
0 20 0 0 0 0 0 0 20
0 298 0 0 0 0 0 0 298
1 433 51 0 175 1 3 0 664
0 0 0 10 5 3 9 1 0 60 21 0 13 1 123
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 26 0 0 0 0 0 0 0 0 26
0 0 0 10 5 29 9 1 0 60 21 0 13 1 149
9 0 0 49 21 71 123 10 1 457 353 4 142 33 1273
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 26 292 0 0 0 230 0 0 0 548
9 0 0 49 21 97 415 10 1 457 583 4 142 33 1821
2006 750 833 1066 899 971 761 772 874 677 672 609 500 9,384
2007 353 475 824 687 677 616 546 515 397 597 385 313
2008 221 262 353 441 231 260 311 293 264 314 167 115
2009 96 129 131 184 189 204 196 207 219 226 192 182
2010 137 145 252 228 213 239 180 243 173 279 173 209
6,385
3,232 2,155 2,471
2011 90 121 180 210 230 262 204 205 202 205 185 207
2012 188 182 270 277 293 268 288 260 379 331 283 280
2,301
3,299
*Annual totals may not match seasonally adjusted numbers.
Comparison of Permits By Units Issued Year to Date* 2006-2012 2006 2007 2008 2009 2010 2011 2012
S-F Units 9384 6385 3232 2155 2471 2301 3299
M-F Units
3300 1524 1830 1497 253 600 1649
Total Units
12684 7905 5062 3652 2724 2901 4948
*Annual totals may not match seasonally adjusted numbers. ^The Single Family number is now units and includes both attached and detached units. %Multi-Family units are in buildings with 5 or more units and are divided by sale/rent. # Not available at time of report Permit information reflects the most recent data at time of publication. In order to ensure accurate recording of residential building permit statistics, the HBA may revise monthly and year-to-date figures when updated data is made available.
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February 2013
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Volume 19 • NO. 2
Oh yeah, here comes spring!
Take a fresh look at Kansas City's original premier home and garden event.
Friday-Sunday, March 22-24 Kansas City Convention Center Bartle Hall 13th & Broadway, KCMO
HOME
Kansas City
AND
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Get started this spring with inspiration, ideas and innovations for your home at Kansas City's premier home and garden event.
KCHomeShow.com
TM
Flower, Lawn & Garden
$8 in Advance, $10 General Admission Sunday 2-for-1 with a donation to Harvesters of $5 or 5 cans. Sponsored by
Home Builders Association of Greater Kansas City Š 2013
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Building Business News B