FOUNDATIONS NEWSLTR JANUARY

ROCHESTER AREA BUILDERS, INC.

2022 NOVEMBER MEMBERSHIP

Membership Total: 403 Retention rate: 94%

STAFF

REPORT

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

DIRECTORS

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

Jay Burke, Heartwood Homes

Jean DeWitz, DeWitz Home Builders, Inc.

Kathy Einck, Maplewood Homes, LLC (Rep)

John McGuine, JM Consulting

John Eckerman, RSP Architects

Kenneth Bush, Bush Companies

MISSION STATEMENT

January 2023

8:30 AM

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

4 7:30 AM CBC Exec.

5 11:30 AM Program Committee

6

7:00 AM Lumberyard MeetingDestination Building Center 3:00 PM Board Meeting

11 7:30 AM Green Building Committee

12 11:30 AM Fashion Show Committee

13 14 15 16 17

7:00 AM Lumberyard MeetingAdvanced Building Center

18 12:00 PM Ambassadors Committee 4:30 PM 40 Below Exec Committee

19 7:30 AM Membership Committee

20 21 22 23 11:30 AM Home Show Committee

24 7:00 AM Lumberyard MeetingKruse Lumber 5:00 PM GMM - Hilton

25 3:00 PM Development Services Advisory Committee

26 27 28 29 30 31

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 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

NETWORKING NIGHT DATE AVAILABILE

Interested in hosting a Networking Night in 2023? We currently have February 28th available. If you are interested or would like further information please contact Rebekah.

Thank you to our Big Money Sponsors and to all who attended the Holiday Party Friday evening! There were a lot of laughs thanks to the brave souls who hopped up on stage for our game shows, not knowing what they were getting themselves into!

Congratulations to Bill Anderson with S.E.H. for winning the Ugly Holiday Sweater Contest!

CONCRETE PRICES, VOLATILITY CONTINUE

TORRID PACE ASLUMBERNORMALIZES

BY DAVID LOGAN on DECEMBER 9, 2022

The prices of building materials decreased 0.3% in November (not seasonally adjusted) following 0.5% and 0.1% declines in September and October, respectively, according to the latest Producer Price Index (PPI) report. The index has decreased five of six months for the first time since 2015.

The PPI for goods inputs to residential construction, including energy, fell 0.8% in November. The index was led lower by a 5.3% drop in energy input prices as the PPIs of regular unleaded gasoline and #2 diesel fuel—which make up more than 80% of energy inputs to residential construction—decreased 6.7% and 4.5%, respectively.

It is noteworthy that the prices of some furtherprocessed lumber products have increased substantially over the past two years. For example, millwork prices have climbed 25.9% since January 2021. Meanwhile, softwood lumber prices dropped 24.4% over the same period.

The price index of services inputs to residential construction increased 0.6% in November. It marked the second consecutive monthly increase after six straight months of falling prices.

Prices were propelled higher by large increases in the price of financial and real estate services. The PPI for business loans climbed 14.1% in November and the price of securities brokerage and dealing services soared 24.5%. Trucking and ocean freight costs increased as well.

Softwood Lumber

The PPI for softwood lumber (seasonally adjusted) fell 0.1%, the fourth consecutive monthly decline and seventh decrease in the past eight months. Softwood lumber prices have dropped 42.2% since March.

The magnitude of monthly changes in lumber prices has decreased significantly since July following two and a half years of historic volatility.

Ready-Mix Concrete

The trend of ready-mix concrete (RMC) prices continued its torrid pace as the index increased 1.1% in November. The PPI for RMC has increased 21 of the past 22 months and is up 20.0% over the period. The index has climbed 10.7%, year-to-date, the largest November YTD increase in the series’ 34-year history and four times the pre-pandemic average.

The monthly increase in the national data was entirely driven by a 3.8% price increase in the Midwest. Prices edged up in the Northeast and

West regions while declining in the South. The West has experienced the largest increase since January 2021 (+27.7%) while the smallest increase over the period has been in the Northeast.

Steel Mill Products

Steel mill products prices decreased 3.0 % in November after declining 5.5% in October. Prices have fallen 22.9% since May 2022, posting declines each month. Although the index is at its lowest level since May 2021, the pace of monthly decreases has consistently slowed.

Unlike softwood lumber, volatility continues to be an issue in the RMC market and is just shy of the record high set in the middle of the housing boom.

Transportation of Freight

The price of truck, rail, and ocean transportation of freight each increased in November. Trucking freight prices rose 1.0%, snapping a five-month streak of decreases. The indexes for rail and ocean transportation of freight climbed 0.6% and 1.5%, respectively.

Gypsum Building Materials

The PPI for gypsum building materials moved 0.5% higher in November—more than offsetting the small decline in October. Prices have increased 11.4% YTD, 18.0% over the past year, and 39.3% since January 2021.

However, the rate of increases has slowed in 2022 compared to the same period in 2021 as the average monthly increase this year has been 1.0%. The average in 2021 was 1.6%.

Pictured

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Thank You!

Thank you to our 40 Below members for volunteering with Salvation Army’s Red Kettle Campaign ringing bells at HyVee’s West Circle Drive location. The funds raised as a Salvation Army bell ringer make a year-round impact in our community through social services assistance, homeless shelters, disaster relief, children’s programs, rehabilitation services, anti-human trafficking, and more.

left to right: Dan Horsch, S.E.H.; Adam Giannini, Knutson Construction; Mike Salerno, MN

Thomas Bottema, Premier Bank; Drew Derouin, Haley Comfort Systems

Pictured: Matt Aldrich, Mayo Clinic; Aaron Haley, Haley Comfort Systems

F I N D T H E S C H O L A R S H I P T H A T

F I T S Y O U R C A R E E R P A T H

E a c h y e a r t h e N A W I C F o u n d e r ' s S c h o l a r s h i p F o u n d a t i o n ( N F S F ) i s p l e a s e d t o a w a r d m o r e t h a n $ 2 5 , 0 0 0 t o w o r t h y r e c i p i e n t s i n c o n s t r u c t i o n - r e l a t e d p r o g r a m s .

U n d e r g r a d u a t e S c h o l a r s h i p

F o r f u l l - t i m e s t u d e n t s c u r r e n t l y e n r o l l e d i n a c o n s t r u c t i o n - r e l a t e d d e g r e e p r o g r a m w i t h a t l e a s t o n e t e r m r e m a i n i n g i n a c o u r s e o f s t u d y l e a d i n g t o a d e g r e e o r a n a s s o c i a t e d e g r e e

C o n s t r u c t i o n T r a d e s

S t u d e n t s c u r r e n t l y e n r o l l e d i n a c o n s t r u c t i o n - r e l a t e d t r a i n i n g p r o g r a ma p p r e n t i c e s h i p t r a i n i n g , c o m m u n i t y c o l l e g e , t e c h n i c a l s c h o o l o r e q u i v a l e n t M u s t b e a c o n s t r u c t i o n - r e l a t e d c r a f t o r t r a d e

INFLATION CONTINUES TO COOL IN NOVEMBER

BY FAN-YU KUO on DECEMBER 13, 2022

Consumer prices in November saw the smallest year-over-year gain since December 2021.While still elevated, inflation experienced the second month below an 8% annual growth rate since February 2022. However, the shelter index continued to rise at an accelerated pace and was more than offsetting decreases in energy indexes. Shelter inflation will primarily be cooled in the future via additional housing supply. As inflation appears to have peaked and continues to slow, this may ease some of pressure on the Fed to maintain a more aggressive monetary policy.

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.1% in November on a seasonally adjusted basis, following an increase of 0.4% in October. The price index for a broad set of energy sources fell by 1.6% in November as the gasoline index (-2.0%), the natural gas index (-3.5%) and the electricity index (-0.2%) all declined. Excluding the volatile food and energy components, the “core” CPI increased by 0.2% in November, following an increase of 0.3% in October. This is the smallest monthly increase since August 2021. Meanwhile, the food index increased by 0.5% in November with the food at home index also rising 0.5%.

an increase of 0.8% in October. The indexes for owners’ equivalent rent (OER) increased by 0.7% and rent of primary residence (RPR) increased by 0.8% over the month. Monthly increases in OER have averaged 0.7% over the last three months. More cost increases are coming from this category, which will maintain pressure on inflationary forces in the months ahead. These higher costs are driven by lack of supply and higher development costs. Higher interest rates will not slow these costs, which means the Fed’s tools are limited in addressing shelter inflation.

During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 7.1% in November, following an 7.7% increase in October. The “core” CPI increased by 6.0% over the past twelve months, following a 6.3% increase in October. The food index rose by 10.6% and the energy index climbed by 13.1% over the past twelve months.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

The Real Rent Index rose by 0.6% in November. Over the first eleven months of 2022, the monthly change of the Real Rent Index increased by 0.2%, on average.

Most component indexes continued to increase in October. The indexes for shelter (+0.6%), communication (+1.0%), recreation (+0.5%), motor vehicle insurance (+0.9%), education (+0.3%) as well as personal care (+0.7%) showed sizeable monthly increases in November. Meanwhile, the indexes for used cars and trucks (-2.9%), medical care (-0.5%) and airline fares (-3.0%) declined in November.

The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.6% in November, following

SHARE OF BEDROOMS IN NEW HOMES IN 2021

BY JESSE WADE on DECEMBER 7, 2022

The Census Bureau’s latest Survey of Construction (SOC) shows modest changes in the share of number of bedrooms for new single-family homes in 2021 compared with the previous year. The current estimates indicate the share of new single-family homes with 2 bedrooms or less is 9.2%, 3 bedrooms, the largest share, had a share of 44.5%, 4 bedrooms make up 36.0% of new single-family homes, and 5 bedrooms or more had a share of 10.3% in 2021.

Figure 1 shows the changes in the share of new single-family homes by number of bedrooms dating back to 2011, a ten-year span. For the second straight year, the share of 3 bedroom single-family homes declined while the share of 4 bedroom single-family homes increased. The share of new single-family homes with 5 or more bedrooms was greater than the share of homes with 2 bedrooms or less for the fourth time in the past 10 years, the previous occurrence was in 2017.

As seen in prior years, new single-family homes with less square footage also had fewer bedrooms. New single-family homes between 1,600 – 1,999 square feet had a share of 85.4 % of homes built with 3 bedrooms or less with the remaining 14.6% having 4 bedrooms or more. New homes between 2,000 – 2,399 square feet, 58.6% of them had 3 bedrooms or less while 41.3% had 4 bedrooms or more. This finding is consistent with the trend that homes that are smaller tend to have fewer bedrooms.

Figure 2 below examines the difference between US Census divisions by share of new single-family homes with 4 or more bedrooms. The New England Census division had the lowest share of new-single family homes having 4 or more bedrooms with 30.6%. The highest share of new single-family homes built with 4 or more bedrooms was 52.5% which was in the Middle Atlantic Census division.

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

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

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