FOUNDATIONS NEWSLTR DECEMBER

2022 OCTOBER MEMBERSHIP REPORT

Membership Total: 401 Retention rate: 93.5%

STAFF

John Eischen, Executive Director

John@RochesterAreaBuilders.com

Shelly Bahlmann, Shelly@RochesterAreaBuilders.com

Golf Outing, Sporting Clays, Home Show, Directory, Newsletter, RAB Update, Member Plus App & RAB Events App Rebekah Fierst, Rebekah@RochesterAreaBuilders.com

Ambassadors, Awards, Builders, Bags & Brews, Commercial Builders Council, Community Relations, Education, Membership, Fashion Show, Program, Remodelers Council, Executive & Remodelers Tour, 40 Below Elizabeth Sullivan-Burton, Elizabeth@RochesterAreaBuilders.com Builders Exchange Trustees and Showcase Committee, Website GOVERNMENT & PUBLIC AFFAIRS CONSULTANT

Rick Dold, Rick@GodwinDold.com

BOARD OF DIRECTORS

PRESIDENT

LIFE DIRECTORS

Steve Buss, Cornerstone Builders & Real Estate, Inc. (Rep)

NATIONAL DIRECTORS

Dana Hlebichuk, Widseth

Levi Kaiser, Benike Construction Todd Severson, TLS Companies, LLC

STATE DIRECTORS

Mike Allen, Mike Allen Homes, LLC

Jean DeWitz, DeWitz Home Builders, Inc.

Kathy Einck, Maplewood Homes, LLC (Rep)

John McGuine, JM Consulting

Dan Severson, Dan Severson Builders, Inc., Kenneth Bush, Bush Companies

MISSION STATEMENT

December 2022

4 5 12:00 PM Government Affairs Committee

6 8:30 AM Remodelers Council Exec. 11:30 AM Executive Committee 3:30 PM Builders Exchange Board of Trustees

7 7:30 AM CBC Meeting

8 Holiday Party

Holiday Party 6:00 PM

9 10 11 12 13 3:00 PM Board Meeting

14 7:30 AM Green Building Committee

15 7:30 AM Membership Committee 11:00 AM 40 Below: Salvation Army Bell Ringing

16 17 18 19 11:30 AM Fashion Show Committee

20 21 12:00 PM Ambassadors Committee 4:30 PM 40 Below Exec Committee

28 3:00 PM Development Services Advisory Committee

29 30 31

22 23 24 25 26 27 11:30 AM Home Show Committee

COMMITTEES & COUNCILS

With over 20 committees and 5 councils, there is no shortage of opportunities to get involved with the Association. From planning events, to awarding students scholarships, to participating in community projects, there are many options to choose from. As is often said, “You get out what you put into the Association”.

40 BELOW COUNCIL

This is an active, connected and engaged group of young professionals in the building industry. Through community involvement, professional development and networking events, this group is creating a welcoming atmosphere to cultivate long-term connections both

COMMERCIAL BUILDERS COUNCIL

The members of this Council are interested in all aspects of commercial and industrial construction. They will support one another and provide information to the community.

REMODELERS COUNCIL

The goals of this Council are to provide education for themselves in various areas of remodeling and to promote their expertise to the consumer.

DEVELOPMENT COUNCIL

The members of this Council are interested in the areas of industrial, commercial and residential development. They support one another and provide information to the community.

BUILDERS EXCHANGE COUNCIL

This Council provides access to commercial projects currently out for bid in our area. Members can view plans and specs in our office and also online at their office if they subscribe to the Plans Online Service. Members also receive the Weekly Bulletin and access to the website, giving them information on posted projects.

Contact Rebekah if you are interested in joining a council or committee.

FROM THE PRESIDENT

Showcase of Homes and the Remodelers Tour. The number of entries and the number of people that went through the homes increased from spring to fall tours. It was fantastic to hear from the builders, realtors, and remodelers about the leads they gained by being part of the tours. I had the pleasure of handing out awards to the winning builder for each division.

The board has been making progress on getting the former “plan room” at the builders office leased out. I have heard from a few of the past presidents that this has been in the works for several years. It is good to see that we are going to put this space to good use once again.

construction from the City of Rochester, a savings of about $400 per home.

This year’s Holiday Party is planned for December 2nd. Fun night of games, food and drinks. Don’t forget to wear your Ugly Christmas Sweater!!!

Thank you again for being members.

Hello Friends,

I am happy to say I can call you friends. This year has been amazing. I have made a lot of new friends and have strengthened friendships that were already developing. Serving as your President this year has been a privilege and I thank all of you for making my job easy. The group of women (FYI, there was a moment that the number of women out numbered the men) and men that have served on the Board of Directors are wonderful and I am thankful for their commitment to this organization. We have done some great things together.

It’s been great to see so many members at our Networking Nights over the past year. Networking is key part of our businesses and how we grow our contacts and clients. I won’t lie we have seen some changes in our membership numbers, but we have been able to maintain over a 90% retention. Along with networking we continued to have our Spring and Fall

RAB has a great partnership with the Kasson Mantorville carpentry program and has been providing job shadow opportunities for their students since 2017. Job shadowing is an opportunity for our members to reach future employees and to teach the young people that the trades are a great career. Thank you to the members/businesses that have been a part of this program and are making it successful.

The members of Rochester Area Builders, with the help of Rick Dold and John Eischen, were a large part in the creation and adaptation of the new UDC – Unified Development Code. Thank you for your valuable input.

Studs, Struts and Stilettoes is returning in April 2023. Do you have an eye for design and love to build? Entries are being accepted now, along with sponsorships! Both help contribute to the success of this event.

RAB was involved in removing the requirement of having a certificate of survey for a new residential

Consider your marketing investments now to get the best bang for your buck.

If you did not receive information about your marketing opportunities contact Shelly

Becky Holmen Haley Lighting 2022 RAB President

BECKY HOLMEN President

Rochester Area Builders, Inc

THANK YOU!

Check presentation! At the October RAB Networking Night, 40 Below presented a check for almost $6k to Jeremiah Program Rochester for their meaningful work in our community.

It is an honor to support the important missions of our local nonprofits. To all of you who attended, donated, sponsored, and everything in between - thank you!

From left to right: Matt Aldrich, RSBS Management (40 Below Vice Chair); Carissa Frandrup, Jeremiah Program; Adam Giannini, Knutson Construction (40 Below Chair)

Thank you Warners’ Stellian for hosting the October Networking Night. Lots of great conversation and networking were had by all.

FLAT READINGS FOR SINGLE-FAMILY BUILT-FOR-RENT

BY ROBERT DIETZ on NOVEMBER 17, 2022

are not statistically significant. The current four-quarter moving average of market share (6%) is nonetheless higher than the historical average of 2.7% (1992-2012) and sets a data series high as this submarket expands.

Single-family built-for-rent construction leveled off during the third quarter of 2022 as the overall housing market slowed. This occurred after an exceptionally strong second quarter for rental housing production.

According to NAHB’s analysis of data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, there were approximately 16,000 single-family built-for-rent (SFBFR) starts during the third quarter of 2022. This is 6% lower compared to the third quarter 2021 total. Over the last four quarters, 68,000 such homes began construction, which is a 42% increase compared to the 48,000 estimated SFBFR starts in the prior four quarters.

The SFBFR market is a source of inventory amid challenges over housing affordability and downpayment requirements in the for-sale market, particularly during a period when a growing number of people want more space and a single-family structure. Single-family built-for-rent construction differs in terms of structural characteristics compared to other newlybuilt single-family homes, particularly with respect to home size.

Given the relatively small size of this market segment, the quarter-to-quarter movements typically

Importantly, as measured for this analysis, the estimates noted above only include homes built and held by the builder for rental purposes. The estimates exclude homes that are sold to another party for rental purposes, which NAHB estimates may represent another five percent or higher of single-family starts based on industry surveys. Indeed, the Census data notes an elevated share of singlefamily homes built as condos (non-fee simple), with this share averaging 4% over recent quarters. Some, but not all, of these homes will be used for rental purposes. Additionally, it is theoretically possible some single-family built-for-rent units are being counted in multifamily starts, as a form of “horizontal multifamily,” given these units are often built on single plat of land. However, spot checks by NAHB with permitting offices indicate no evidence of this data issue occurring at scale thus far.

With the onset of the Great Recession and declines for the homeownership rate, the share of built-forrent homes increased in the years after the recession. While the market share of SFBFR homes is small, it has clearly been trending higher. As more households seek lower density neighborhoods and single-family residences, a growing number will do so from the perspective of renting. This will be particularly true as mortgage interest rates remain elevated and increase. Thus, the SFBFR market will expand in the quarters ahead.

TOWNHOUSE CONSTRUCTION MARKET SHARE RISING

BY ROBERT DIETZ on NOVEMBER 18, 2022

According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, during the third quarter of 2022 single-family attached starts totaled 38,000, which is 12% higher than the third quarter of 2021. Over the last four quarters, townhouse construction starts totaled 152,000 units, 7% higher than the prior four quarter total (142,000). However, these counts will soften in the quarters ahead as the overall building market slows.

Using a one-year moving average, the market share of newly-built townhouses increased to 14% of all single-family starts. As denser areas reopened following covid later, the townhouse market rebounded later. Moreover, as the spec single-family building market slows on higher interest rates, the townhouse construction market share will rise.

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when the percentage reached 14.6%, on a one-year moving average basis, of total single-family construction. This high point was set after a fairly consistent increase in the share beginning in the early 1990s. We are likely to see a new peak market share in the quarters ahead.

The long-run prospects for townhouse construction remain positive given growing numbers of homebuyers looking for medium-density residential neighborhoods, such as urban villages that offer walkable environments and other amenities. This will be particularly true for prospective first-time buyers in high cost metro areas once the Fed pulls back on the current tightening cycle.

FOUNDATIONS NEWSLETTER ADVERTISING

Rochester Area Builders Newsletter is an unbeatable opportunity to advertise to members and individuals associated with RAB. It is a source of valuable association and industry information, and is published and emailed monthly. Foundations is sent to over 1600 connected industry professionals. Ad sizes are listed under Display Ad Dimensions, and prices are located above. Ads may be changed from month to month. Our prices are for full color ads. We will gladly work with you to design your ad. Please send digital files for all ad copy, logos, and artwork. We use PC format. We accept Illustrator and Photoshop files. Convert all fonts to outlines. We also accept the following high resolution file types: .tif, .eps and .pdf (with all graphics and fonts embedded). If you have any other formats please contact us.

Newsletter Advertising Rates Per Issue 12 Issues New Member 12 Issues

Full color 1/2 Horizontal c $70.00 c $650.00 c $490.00

Full color Full Page c $90.00 c $900.00 c $675.00

Full Color Full Page Press Release c $25.00

Newsletter Display Ad Dimensions

1/2 Horizontal 8-1/2 x 5-1/2 Full 8-1/2 x 11

Send artwork to Shelly@RochesterAreaBuilders.com by the 15th of the month to be included in the upcoming Foundation Newsletter.

Shelly Bahlmann

Shelly@RochesterAreaBuilders.com 108 Elton Hills Ln NW Rochester, MN 55901 507-282-7698

GET UP TO $5,400 TO GET THE JOB DONE

USING THE PRIVATE OFFERS1 FOR NAHB MEMBERS IS EASY:

1. Get your NAHB proof of membership.

2. Visit your local Chevrolet, Buick or GMC dealer and mention this Private Offer.

3. Select an eligible vehicle(s) to purchase or lease and present your NAHB proof of membership.

For even more value, combine this offer with the National Fleet Purchase Program and Business Choice Offers. For full details on the Private Offer, NAHB members should visit nahb.org/gm

Example offer for NAHB members who are business owners purchasing a 2021 Chevrolet Silverado 2500 HD Crew Cab 1LT 4WD.

1Private offer amount varies by model; up to $500 offer for retail delivery and up to $1,000 offer for fleet deliveries. Valid toward the purchase or lease of eligible new 2020, 2021 and 2022 model year vehicles. Customer must take delivery by 1/3/2022. Not compatible with some other offers. Not valid on prior purchases. Excludes all Cadillac vehicles; 2020 Buick Cascada, LaCrosse, Regal and Verano; Chevrolet Colorado 2SA, Sonic, Trax, Volt and GMC Canyon 2SA; 2020-2021 Encore 1SV; Chevrolet Blazer, Camaro, Corvette, Equinox 1SM, Malibu 1VL, Traverse 1L0; GMC Acadia 1SV and Terrain 2SA. Additional GM models may be excluded at GM’s sole discretion. See dealer for details. 2Offer available to qualified fleet customers through 1/3/2022. Not compatible with some other offers. Take delivery 1/3/2022. See dealer for details. 3To qualify, vehicle must be used in the day-to-day operations of your business and not solely for personal/ non-business-related transportation purposes. Must provide proof of business ownership. For complete program requirements, including information regarding offers, vehicles, equipment, options, warranties and ordering, consult your dealer or visit gmbusinesschoice.com. 4Eligible purchases must be equal to or

Allowance requires purchase of the eligible accessories from your dealer. ©2021 General Motors, LLC. All rights reserved. The marks appearing in this ad are the trademarks

Reach

Qualified Customers Advertise on the RAB Website!

More than 3,000 people visit the RAB website each month, many of them looking for a contractor. Advertise on our site and reach them when they’re primed to buy! Banner ads are available in a variety of locations on the RAB site, from job posts to the contractor directory. Higher tiers come with priority placement in directory search results too. Contact us today to learn how you can start advertising, starting at $299.

Contact Elizabeth Elizabeth@RochesterAreaBuilders.com or 507-282-7698

BUILDING MATERIALS PRICES DECLINE FOR SECOND CONSECUTIVE MONTH

BY DAVID LOGAN on NOVEMBER 15, 2022

The prices of building materials decreased 0.2% in October (not seasonally adjusted) following a 0.5% decline in September according to the latest Producer Price Index (PPI) report. The index has decreased four of five months for the first time since 2015. The PPI for goods inputs to residential construction, including energy, was led 0.2% higher by prices of diesel fuel (+9.5%) and unleaded gasoline (+5.7%).

The price index of services inputs to residential construction decreased 0.7% in October, the seventh consecutive monthly decline. Prices have fallen a total of 14% since the index last increased in March 2022 and are just 1.4% higher than they were a year ago.

Softwood Lumber

The PPI for softwood lumber (seasonally adjusted) fell 1.7% in October following 5.5% and 3.1% declines in August and September, respectively. Softwood lumber prices are 4.4% higher than they were a year ago but have fallen 41.3% since March. The index remains 3.0% above pre-pandemic levels.

Steel Mill Products

Steel mill products prices decreased 6.6% in October and have fallen 21.6% since May 2022. The index is at its lowest level since May 2021 after five straight monthly declines, each of which has been larger than the last.

Ready-Mix Concrete

The PPI for ready-mix concrete (RMC) increased 0.4% in October but, similar to steel mill products, the pace of increases has slowed each of the past three months.

The index has climbed 9.1%, yearto-date, the largest October YTD increase in the series’ 34-year history.

The monthly increase in the national data was entirely driven by a 2.0% price increase in the Northeast region. Prices declined in the Midwest (-0.4%) and South (-0.3%) and were unchanged in the West.

Gypsum Building Materials

The PPI for gypsum building materials edged 0.2% lower in October—just the second monthly decrease since September 2020. The index is 45.6% higher than its January 2020 level.

Transportation of Freight

The price of truck, rail, and ocean transportation of freight each decreased in October. Trucking freight prices fell 1.4%–the fifth consecutive decline—while the indexes for rail and deep sea transportation of freight decreased 0.7% and 1.8%, respectively. Year-to-date, the prices of ocean, rail, and truck freight transportation have increased 25.2%, 6.5%, and 6.0%.