FOUNDATIONS NEWSLTR JULY

2023 APRIL MEMBERSHIP REPORT

Membership Total: 402

Retention rate: 93.8%

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

J ason Scrimshaw, Kimley-Horn & Associates, Inc.

VICE PRESIDENT

Adam Giannini, Knutson Construction

SECRETARY

Jennifer Mitchenll, Edina Realty

TREASURER

Vanessa Hines, Widseth

PAST PRESIDENT

Becky Holmen, Haley Lighting

MISSION STATEMENT

DIRECTORS

Derrick Chapman, Schmidt Carpentry

Adam Kramer, Kramer Contracting

Jarett Jones, Merchants Bank

Aaron Thompson, The Design Connection

Austin Ryan, Ryan Windows & Siding

Kelsey Vaszily, Kraus-Anderson Construction

Melissa Barbour, TLS Companies, LLC

Joe West, Valor Mechanical

Julie Herrera-Lemler, Rochester Area Economic Development, Inc. (RAEDI) / SBDC

BUILDERS EXCHANGE COUNCIL CHAIR

Katie Reinhart, Kraus-Anderson Construction

COMMERCIAL BUILDERS COUNCIL CHAIR

Keith Kranz, LVC Companies

DEVELOPMENT COUNCIL CHAIR

TBD

REMODELERS COUNCIL CHAIR

Becky Holmen, Haley Lighting

40 BELOW CHAIR

Adam Giannini, Knutson Construction

NATIONAL LIFE DIRECTORS

Steve Buss, Cornerstone Builders & Real Estate, Inc.

NATIONAL DIRECTORS

Dana Hlebichuk, Widseth

Levi Kaiser, Benike Construction (Rep)

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

The Rochester Area Builders, Inc, chartered in 1953, is a professional organization of commercial & residential builders, remodelers, developers and associated businesses dedicated to advancing the building industry in Southeast Minnesota.

We are the trusted voice of the industry, providing leadership, education, networking, and information resources to our members, community and government officials.

FROM THE PRESIDENT

their newly remodeled office and enjoy some food and networking.

The first deadline for the Fall Showcase of Homes is coming up on July 6th, and the first deadline for the Remodeler’s Tour is July 27th. Don’t wait to register!

The 3rd annual Builders, Bags & Brews event is quickly approaching. Team registration is open now, and there are still sponsorship opportunities available, but the deadline is July 6th.

The 2024 Home Show may feel like it’s pretty far in the future, but there are some key dates to be aware of. The right-of-first-refusal registration opened on June 12th and will close on July 14th. Following that, open booth registration will open on July 17th. Be sure to get these dates on your calendar!

Well, summer is definitely flying by. I think the theme du jour is ‘change’ or ‘new beginnings’. As you’re all aware, we’re going through some changes recently with the departures of John and Rebekah. It’s hard to put into words how impactful these two have been – on members, the building industry, and our community throughout their years of service. While change can be difficult, I’m focused on gratitude for the lasting impact they’ve made, and excitement to see them begin new chapters and continue to impact those around them.

Keeping with the topic of change, my wife and I recently welcomed our beautiful baby boy to the world! I think our 3 dogs are still adjusting to the new pecking order, but we’re loving everything this new chapter has brought.

As we look ahead, I want to mention some upcoming events to add to your calendar.

Custom Alarm will be hosting this month’s Networking Night on Tuesday, June 27th, at their office on Greenview Drive SW. Stop by to see

I encourage you all to take full advantage of the many great events and networking opportunities that are organized by RAB. I might be a little early, but I also want to wish everyone a happy Independence Day! I hope you’re able to enjoy some time off with friends and loved ones.

Cheers!

Jason Scrimshaw, P.E. Kimley-Horn 2023 RAB President

JASON SCRIMSHAW President Rochester Area Builders, Inc

JUNE

Rochester Area Builders

2023 Calendar of Events

27 Networking Night @ Custom Alarm

JULY

Builders, Bags & Brews @ LTS Brewing Company

Networking Night @ J.F. Ahern Company

Office Closed – Labor Day

Sporting Clay Youth Shoot

Remodelers Tour & Fall Showcase of Homes

Fall Showcase of Homes

General Membership Meeting @ TBD

Networking Night @ F&M Bank DECEMBER

Holiday Party @ The Hilton

WELCOME NEW MEMBERS

Hamernick’s Flooring Solutions

Erika Trempe Floor Refinishing

507.216.3420

hamernicks.com

Lowe’s Companies, Inc.

Shane Anderson Building Materials

507.328.8920

lowes.com

Queen City Construction and Excavating

John McGuine Excavating

MEMBER & COMMUNITY ENGAGEMENT DIRECTOR

POSITION TITLE: Member & Community Engagement Director REPORTS TO: Executive Director

The Member & Community Engagement Director is responsible for the recruitment and retention of Rochester Area Builders membership, along with community outreach initiatives. The position focuses on member relations and event planning. Duties include attending committee meetings and board meetings within the Association, coordinating volunteers, working with local schools and non-profits, lining up networking events for members, coordinating continuing education classes for licensed building contractors, planning the Association’s annual fashion show, bean bag tournament, holiday party and Remodelers Tour.

Full description can be found HERE

If you think you would make a great team member, please send your resume’ to RAB@RochesterAreaBuilders.com

SEPTEMBER 16 - 17 & 23 - 24, 2023

11 AM - 5 PM

The 2023 Fall Showcase will be here before you know it! Get your latest and greatest homes, townhomes, developments, and townhome communities out in front of the public.

DEADLINES:

1st Deadline: July 6 - $200 discount

2nd Deadline: July 27 - $100 discount

Final Deadline: August 17

Entry information can be found HERE

Now’s your chance to advertise to potential homebuyers throughout our area! Sponsorship now available for Fall Showcase of Homes and Remodelers Tour. Contact Elizabeth at Elizabeth@rochesterareabuilders.com to learn more.

Remodelers

SEPTEMBER 16 - 17, 2023

11 AM - 5 PM

Do you have a remodeling project you would like to have open to the public so they can see the finished results firsthand?

The Remodelers Tour has been created to offer you this great marketing opportunity. It’s an excellent way to gain exposure for your company and your projects.

All remodelers are eligible to participate, including designers, landscape contractors, exterior contractors, and more.

DEADLINES:

1st Discount Deadline: July 27 - $100 discount

Final Deadline: August 17

Entry information can be found HERE

The

MORE GOLF, COMING SOON

Missed the RAB Golf Outing? The Builders Exchange Golf Outing is open to RAB members—even if you aren’t a member of the Exchange!

Enjoy a fantastic day at luxurious Somerby Golf Club, including golf, cart, and a fantastic prime rib dinner.

Registration for RAB members opens July 6, 2023. Go to https://www.bexroch.com/events/golf to learn more and register.

BUILDERS EXCHANGE SUMMER SALE

Bid more and save more with the Builders Exchange Summer Sale! For a limited time, get 10% off a new membership or Plans Online upgrade—up to $85 your first year!

Already a member? Refer a new member to Builders Exchange and get a matching discount when they join.

Ready to start? Go to https://www.bexroch.com/join to download an application!

Hey Batter Batter!

ROCHESTER AREA BUILDERS

SPORTING CLAY SHOOT

INFLATION SLOWS TO LOWEST LEVEL SINCE MARCH 2021

BY FAN-YU KUO on JUNE 13, 2023

In May, the indexes for shelter (+0.4%), used cars and trucks (4.4%) and motor vehicle insurance (2.0%) were the largest contributors to the increase in the headline CPI. Meanwhile, the indexes for household furnishings and operations (-0.6%) and airline fares (-3.0%) declined in May.

Consumer prices in May saw the smallest year-overyear gain since March 2021, mainly driven by lower energy prices. This marked the eleventh consecutive month of deceleration. While this measure aligned with expectations, core inflation remained persistent due to the increase in rent prices. The shelter index (housing inflation) continued to be the largest contributor to both headline and core inflation, accounting for over 60% of the increase in all items excluding food and energy.

The Fed’s ability to address rising housing costs is limited as shelter cost increases are driven by a lack of affordable supply and increasing development costs. Additional housing supply is the primary solution to tame housing inflation. The Fed’s tools for promoting housing supply are at best limited. In fact, further tightening of monetary policy will hurt housing supply by increasing the cost of AD&C financing. This can be seen on the graph below, as shelter costs continue to rise despite Fed policy tightening. Nonetheless, the NAHB forecast expects to see shelter costs decline later in 2023, supported by real-time data from private data providers that indicate a cooling in rent growth.

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.1% in May on a seasonally adjusted basis, following an increase of 0.4% in April. The price index for a broad set of energy sources fell by 3.6% in May as the gasoline index (-5.6%), the natural gas index (-2.6%) and the electricity index (-1.0%) all decreased. Excluding the volatile food and energy components, the “core” CPI rose by 0.4% in May, as it did in April and March. Meanwhile, the food index increased by 0.2% in May with the food at home index rising 0.1%.

The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.6% in May, following an increase of 0.4% in April. Both the indexes for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.5% over the month. Monthly increases in OER have averaged 0.6% over the last five months. These gains have been the largest contributors to headline inflation in recent months.

During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 4.0% in May, following a 4.9% increase in April. This was the slowest annual gain since March 2021. The “core” CPI increased by 5.3% over the past twelve months, following a 5.5% increase in April. The food index rose by 6.7% while the energy index fell by 11.7% 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 0.1% in May.

FOR BUILDERS, LOT SHORTAGE EASES BUT IS STILL A PROBLEM

BY PAUL EMRATH on JUNE 9, 2023

Obtaining lots to build on remains a challenge for many of NAHB’s builders, although the shortages are not quite as widespread as they were in 2021. Responding to special questions on the May 2023 survey for the NAHB/Wells Fargo Housing Market Index (HMI), 42 percent of single-family builders characterized the supply of lots simply as low, and another 25 percent said the supply was very low, for a total of 67 percent of builders reporting some type of shortage. Although this is down from 76 percent the last time NAHB asked the question (in September 2021), it is nevertheless the second highest incidence of lot shortages on record since NAHB began collecting the information in 1997.

The current 67 percent of builders reporting a shortage of lots is particularly high relative to the current level of production. Over the past six months, total housing starts have been hovering around an annual rate of 1.4 million. In comparison, in 2005 when total housing starts peaked at over 2.0 million, “only” 53 percent of builders were reporting lot shortages.

In addition to the overall supply, since 2013 the HMI survey has also asked builders to rate the supply of A, B and C lots in the areas where they build. As usual, shortages tended to be most acute among lots in the most desirable, or “A,” locations in 2023. In the May 2023 survey, 67 percent of builders said that the supply of “A” lots was low or very low, compared to 58 percent for “B” lots and 52 percent for “C” lots. All three percentages are down from all-time highs posted in 2021. For A lots, however, the current shortage percentage is about the same as it was in the immediate pre-Covid period of 2016-2019, while for B lots it is lower, and for C lots it is higher.

Why are lots still in such short supply?

One factor is availability of credit for developers. As discussed in a recent post, loans to develop new residential lots were becoming both harder to obtain and more expensive over the prior year. Another factor is the effect of government regulation, which can lengthen and complicate the lot development process, as well as add to its cost. As shown in a recent NAHB study, government regulation is responsible for roughly 42 percent of the cost of a lot for the average new single-family home.

ROCHESTER BUILDING PERMITS

MAY 2023

YEAR TO DATE STATISTICS

TCPA BUILDING PERMITS

OLMSTED COUNTY PERMITS YTD

OLMSTED COUNTY PERMITS

PINE ISLAND BUILDING PERMITS

AGE DISTRIBUTION OF THE CONSTRUCTION LABOR FORCE

BY NA ZHAO on JUNE 7, 2023

The latest labor force statistics from the 2021 American Community Survey show that the construction industry continues to struggle to attract younger workers. While workers under the age of 25 comprised 13.6% of the US labor force, their share in the construction industry reached only 10.0% in 2021. Meanwhile, the share of older construction workers ages 55+ increased from less than 19.3% in 2015 to almost 22.3% in 2021.

An earlier post showed that the median age of the construction workforce is 42. Compared to the workforce in all industries, construction has a relatively smaller share of younger workers, but a larger proportion of workers in their prime-working age. The chart above shows that, as of 2021, only about 10% of construction workers were 16-24 years old, less than the employment share of this age group in all industries. Around 67.7% of the construction workforce were in the prime working years of 25-54, compared to 63.5% in overall workforce. The relative greater share of workers in construction in the 35-55 age group, mostly Gen X-ers, reveals the current challenge. Gen X is a smaller generational group that the Baby Boomers. The share of workers ages 55 and older was 22.3% in construction, implying that a substantial portion of workforce would retire in near future. Attracting more skilled labor remains the primary long-term goal for the construction industry.

Analysis of the age distribution of construction workers over time reveals that the construction workforce is aging, with the share of older workers ages 55+ rising from 19.3% in 2015 to 22.3% in 2021. At the same time, the proportion of workers ages 25 to 54 declined from 71.9% to 67.7%.

This change in age composition of construction labor force is largely because the last elements of the Baby Boomer generation are entering the 55+ age group. The share of younger construction workers ages 25 under edged up to 9% from 10%.

Exclusive Incentives on your next vehicle available for NAHB Members

This full-line fleet just went corporate.

The Nissan Business Advantage is a one-stop fleet shop for all your corporate needs. With America’s only full-line fleet import brand,* it’s the perfect addition to help your business reach its goals. Get ready to handle all your fleet needs from vans to sedans.

nahb.org/nissan

WEBSITE PROFILE ENHANCEMENTS

Company Name, Address and Phone Number

Links to Website, Address, and Phone

5 Categories

Medium Placement in Search Results

Link to Profile Page

12 Categories

Company Description (200 Characters)

Keywords (240 Characters)

Hours of Operation

Driving Directions

Higher Placement in Search Results

Company Description (1600 Characters)

Keywords (Unlimited Characters)

200 Characters on Search Results

Bulleted List with Hyperlinks

Logo on Profile Page Can Be Added

Search Results Summary (200 Characters)

Profile Page Header Can Be Added

Gold Map Pin

Logo On Search Results Can Be Added

Social Networks Can Be Added

Photo Gallery Can Be Added

YouTube Video Can Be Added

Contact Elizabeth for more information

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

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.

RETURN TO: ROCHESTER AREA BUILDERS

Shelly Bahlmann

Shelly@RochesterAreaBuilders.com

108 Elton Hills Ln NW

Rochester, MN 55901

507-282-7698