FOUNDATIONS NEWSLTR JUNE

2024 FEBRUARY MEMBERSHIP REPORT

Membership Total: 405

Retention rate: 94.12%

STAFF

Patrick Sexton

Executive Director

Pat@RochesterAreaBuilders.com

Shelly Bahlmann

Publications & Special Events Director

Shelly@RochesterAreaBuilders.com

Awards, Program, Golf Outing, Sporting Clays, Home Show, Trades & Toys, Newsletter, Showcase Magazine, RAB Update,Website, Member Plus

App & RAB Events App

Amber Luhmann

Planroom Director

Amber@RochesterAreaBuilders.com

Builders Exchange Trustees, Education, Showcase of Homes & Remodelers Tour

BOARD OF DIRECTORS

PRESIDENT

Adam Giannini, Knutson Construction

VICE PRESIDENT

Austin Ryan, Ryan Windows & Siding

SECRETARY

Kelsey Vaszily, Kraus-Anderson Construction

TREASURER

Aaron Thompson, The Design Connection

PAST PRESIDENT

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

MISSION STATEMENT

DIRECTORS

Jeremy Moe, Boldt Company

Jeremy Keller, Keller Homes

Jarett Jones, Merchants Bank

Vanessa Hines, Widseth

Kaleb Stevens, Weis Builders

Chris Hus, RE/MAX Results

Melissa Barbour, TLS Companies, LLC

Joe West, Valor Mechanical

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

BUILDERS EXCHANGE COUNCIL CHAIR

Niki Birkholz, Palmer Soderberg, Inc.

COMMERCIAL BUILDERS COUNCIL CHAIR

Keith Kranz, LVC Companies

DEVELOPMENT COUNCIL CHAIR

Mark Welch, KMain Street Properties

REMODELERS COUNCIL CHAIR

Jen Foerraro, Hamernicks Flooring

40 BELOW CHAIR

Dylan Musgjerd, ISG

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.

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

Rochester Area Builders

As we return from the long weekend, I’d like to acknowledge and honor the brave souls who made the ultimate sacrifice for our freedom. May their courage inspire us to live with purpose and gratitude. Wishing everyone a Memorial Day appreciation for our heroes and I hope you all were able to spend time with those you love.

There is plenty going on at RAB as we approach summer. We have the golf outing right around the corner – registration for teams sold out in just 4 minutes and 30 seconds! We are still looking for door prizes and sponsorship, reach out to Shelly for more information. Hope to see you there. See other updates below:

Remodelers Tour & Fall Showcase Registration is Now Open

This is a fantastic opportunity to showcase your projects and connect with the community. You can find the registration form on the RAB website. Don’t miss out on this chance to showcase your craft and best work at one of the most anticipated events of the year.

Builders, Bags & Brews – Register or Sponsor a Team Today

The 4th Annual Builders, Bags & Brews event, organized by the 40 Below Council, will take place on

Thursday, August 15th, from 1 PM to 5 PM at LTS Brewing Co. Registration opens on June 3rd. Builders, Bags & Brews is one of the few events open to the public, making it a perfect occasion to gather with colleagues, friends, and family. Don’t miss the fun— register or sponsor a team today!

After School Program Update – Playhouse Construction

Our After School Program is making excellent progress! Thanks to all who have helped with this effort, especially John Eischen, Carpet One of Rochester and Jay Burke, Heartwood Homes of Rochester, Peak Remodeling, Paxton Electric, Design Studio B, Merit Contracting, Eagle Rock Bank, and The Design Connection. The playhouse, currently being built in the RAB parking lot, is coming together beautifully. The framing is complete, the roof is on, and students will be finalizing the project by adding the siding and trim boards this week. We encourage you to drive by the RAB office to see the incredible work our students are doing. Once completed the playhouse will be donated to Family Service Rochester and displayed at Rochester Fest and Thursdays Downtown on July 25th! Their dedication and craftsmanship are truly inspiring!

Trades & Toys Event – Sponsorships and Vendor Spaces Available

This event will take place on August 24th and promises to be a fantastic day for motor enthusiasts, tradespeople, and the general public. We still have sponsorship and vendor spaces available—reach out to Shelly for more details. With over 100 cars, trucks, and motorcycles, this event will be a hit. Awards will be given to the top 5 imports, top 5 domestics, top 5 motorcycles and best of show. We need volunteers to help make this event a success. Join us for a day of fun, relaxation, and community building at our 1st annual Trades & Toys event.

We look forward to seeing you at these exciting events! If you have any questions or need further information, please don’t hesitate to reach out.

Warm regards,

Adam Giannini

Knutson Construction

2024 RAB Board President

ADAM GIANNINI President

Rochester Area Builders

Showcase

JUNE 2024

952-380-8532 tbgmn.com The Builders’ Group

Thank You!

Thank you to Cambria, ISG and all the members of 40 Below who participated in the fun leadership training last week. Dave Williams from ISG gave a fun and insightful presentation in the amazing space presentation space Cambria has at their South Broadway showroom. Dylan Musgjerd and the 40 Below exec committee are doing an amazing job and more interesting 40 Below events are coming! Join here!

JOIN US!

JUNE 11, 2024 7:30 - 8:45 AM

Weller Brothers landscape Professionals 4701 N Frontage Road Hwy 14 NW, Rochester

In collaboration with the Rochester Area Builders Association and 40 Below, please join us for a morning ‘lunch &learn’ at Weller Brothers Landscaping.

We look forward to sharing about our team and our industry, learning from you, and chatting over coffee and pastries.

We’d love to meet you!

ROCHESTER AREA BUILDERS

1ST ANNUAL

AUGUST 24TH 10:00 AM 3:00 PM TO

GRAHAM PARK - 112 Arena Dr SE, Rochester

FREE SPECTATOR ADMISSION

REGISTRATION: $20 in advance or $25 at the gate

GATES OPEN: 8:00 AM

AWARDS ANNOUNCED: 2:30 PM

TOP 5 DOMESTIC • TOP 5 IMPORTS • TOP 5 MOTORCYCLES • BEST IN SHOW

FOOD TRUCKS • EMERGENCY VEHICLES • ACTIVITIES FOR KIDS

EVENT SPONSORS:

Silver Sponsors:

Bronze Sponsors:

Benike Construction

Meyer Borgman Johnson, Inc.

Media Sponsor: &SPONSOR VENDOR INFO

More event information at RochesterAreaBuilders.com

RAIN DATE: AUGUST 31ST

THANK YOU!

Thank you Hamernick’s for a wonderful networking night event! Great food, great people.

KELLOGG AFTERSCHOOL PROGRAM

What started with classroom learning activities, ended with the Kellogg Middle School students experiencing every aspect of playhouse construction. May 22nd was their last day on the jobsite and the students made the most of it. Brenda Chilman with Family Service Rochester stopped by to explain the goodwill that came from their hard work. KTTC stopped to see what they where up to and Ava had a fantastic news debut to talk about their work. Once again, the worst injury to the students was only a sliver, so the program was a huge success! (We won’t mention the new scar Eischen has…). Thank you to all the RAB members who helped with the program. You’ll be able to see the completed Comet Cabin at Thursday’s Downtown on July 25, in the Rochesterfest Parade on June 29, and at Rochesterfest!

We’d like to give a special shout out to Jay Burke-Heartwood Homes, John Eischen-Carpet One, and Ryan Jongeling, The Design Connection for the hours they dedicated each week, their patience, and the additional work that helped make this program successful!

We would like to thank the following members for their assistance:

Eagle Rock Bank for underwriting the building materials.

Ryan Windows and Siding for donating the LP siding.

Merit Roofing for donating the metal roofing.

The Design Connection for donating plan services.

Classroom speakers:

Design Studio B

Eagle Rock Bank

Paxton Electric

Peak Remodel & Design Solutions

Rochester Community Development - Building Division

The Design Connection

ONCE UPON A PLAYHOUSE 2024

Join us this summer for Once Upon a Playhouse 2024

Once Upon a Playhouse 2024, in partnership with the Rochester Area Builders, raises funds to support Youth Mental Health services at Family Service Rochester.

You can support our Youth Mental Health services by purchasing raffle tickets to win a one of this year’s playhouses!

• Raffle tickets are $20 each or 3 for $50 or 7 for $100.

• Raffle tickets can be purchased at both of our Family Service Rochester locations or at our Once Upon a Playhouse 2024 displays at Thursdays Downtown and Rochesterfest.

• Winning raffle tickets will be drawn August 15, 2024 at Thursday Downtown. You do not need to be present to win.

• Or support our mental health services with a donation

Come see us at:

Rochesterfest: June 26th and 27th

Rochesterfest Parade: June 29th

Thursdays Downtown: June 13th, July 25th, and August 15th

To learn more about sponsorship opportunities, contact Brenda Chilman

AT 2022 RATES, 10 MILLION MORE HOUSEHOLDS COULD AFFORD A NEW HOME

BY PAUL EMRATH on MAY

8, 2024

According to the latest press release from Freddie Mac, the average rate on a 30-year fixed-rate mortgage has now risen to approximately 7.25%. As the data posted on NAHB’s pricedout web page shows, at this rate only about 27.5 million (out of a total of 134.7 million) U.S. households could afford to buy a median-priced new home, based on their incomes and standard underwriting criteria.

For context, consider that the last time the average mortgage rate was under 6.25% was in mid-February of 2023. If that interest rate prevailed now, 4.5 million more households (for a total of 32.0 million) could afford the median new home. A year further back, prior to mid-February of 2022, the average mortgage rate was consistently under 5.00%. At a rate of 5.00%, 37.7 million households could afford the median new home. In short,10.2 million U.S. households are currently being priced out of the market by the average mortgage rate sitting 225 basis points higher than it was in February 2022.

A recent post, How Rising Costs Affect Home Affordability, showed how many households are priced out of the market by a $1,000 increase in the price of the median new home. The analysis is based on the standard underwriting criterion that the sum of mortgage payments (principal and interest), property taxes, homeowners and private mortgage insurance premiums (PITI) during the first year should be no more than 28 percent of the home buyer’s income. The advantage of this methodology is that it requires only a starting house price, household income distribution, and characteristics of the typical mortgage. A household income distribution is available for virtually any part of the country from the Census Bureau’s American Community Survey. Typical mortgage characteristics and other details are discussed both in NAHB’s April 1 Special Study and on the priced-out web page.

This same methodology can be used to determine the number of U.S. household priced out of the market by a change in interest rates, rather than house prices. Results of these calculations are reproduced from the special study and web page in the table below:

Finding the impact of a change in the mortgage rate (in either direction) from this table is relatively straightforward. For example, the 7.25%-mortgage-rate row shows approximately 27.5 million households able to afford the median-priced new home. If the rate fell back to 6.25%, the table shows an additional 4.5 million (for a total of approximately 32.0 million) households would be priced into the market.

This change is particularly relevant, as NAHB is currently projecting that the average mortgage rate will be near 6.25% by the end of 2024—although there is considerable uncertainty around this number, due largely to uncertainty about what monetary policy the Federal Reserve will find necessary to contain inflation. Readers can refer back to the above table to track the impact actual changes in mortgage rates are having on affordability of new homes over the rest of the year.

As many analysts have noted, interest rates and house prices interact with each other to determine new home affordability. For example, if the costs of producing homes and the resulting prices to buyers were reduced (for instance, by adopting some of the measures in NAHB’s 10-point plan to lower shelter inflation), more than 4.5 million households would be priced into the market by reducing interest rates from 7.25% to 6.25%.

Similarly, if interest rates were lower, a larger number of households would be priced into the market by a given reduction in house prices. This occurs because at lower prices or interest rates, the starting point is in a denser part of the U.S. income distribution, where there are more households to be priced into (or out of) the market. This point will be illustrated graphically in a forthcoming post on NAHB’s 2024 housing affordability pyramid.

REGISTRATION NOW OPEN

BIG WEEKENDS

OSEPTEMBER 21-22 & 28-29 11:00AM TO 5:00PM

FREE ADMISSION

Showcase of Remodelers

SEPTEMBER 21-22

11:00AM TO 5:00PM

PRESENTED BY EVENT SPONSOR

A STRONG QUARTER FOR TOWNHOUSE CONSTRUCTION

BY ROBERT DIETZ

on MAY 16, 2024

Year-over-year gains for townhouse construction continued at the start of 2024 as demand for medium-density housing continues to be strong.

According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, during the first quarter of 2024, single-family attached starts totaled 42,000, which is 45% higher than the first quarter of 2023. Over the last four quarters, townhouse construction starts totaled a strong 171,000 homes, which is 21% higher than the prior four-quarter period (141,000). Townhouses made up almost 18% of singlefamily housing starts for the first quarter of the year.

Using a one-year moving average, the market share of newly-built townhouses stood at 17.2% of all singlefamily starts for the first quarter. With recent gains, the four-quarter moving average market share is the highest on record, for data going back to 1985.

Prior to the current cycle, 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. This high point was set after a fairly consistent increase in the share beginning in the early 1990s.

The long-run prospects for townhouse construction are positive given growing numbers of homebuyers looking for medium-density residential neighborhoods, such as urban villages that offer walkable environments and other amenities. Where it can be zoned, it can be built.

CONTRACTORS ENCOURAGED TO SUBMIT BIDS FOR AFFORDABLE HOUSING PROJECT

NEWS/MAY 30, 2024

The Olmsted County Housing and Redevelopment Authority (HRA) Board is now accepting construction bids for the development of 10 affordable, single-family homes on Red Hawk Drive in southeast Rochester. Interested contractors have until June 14, 2024, to submit their bids online.

This project is made possible by $680,000 in funding from the American Rescue Plan Act, which allowed the HRA Board to acquire 10 residential lots for this initiative.

“The American Rescue Plan Act funding has provided us with opportunities to address the need for affordable housing in our community,” said Olmsted County Housing and Planning Director Dave Dunn. “We are excited to work with experienced contractors to make homeownership more accessible for families in Olmsted County.”

To be eligible to submit a bid, contractors must meet the following qualifications:

Provide documentation of a valid contractor’s license in Minnesota.

Demonstrate experience in building single-family homes per applicable codes and standards:

Include three client references with contact information. Show proof of constructing at least 10 residential homes within 30 minutes of Olmsted County.

List all single-family homes built in 2022, 2023, and 2024, including address, size, construction price, completion date, and sales price/fair market value (if known).

The contract will be awarded to the lowest bid that meets the project standards. The winning bid will be announced during the Olmsted County HRA Board meeting on June 25, 2024.

Questions?

If contractors have questions, please email Olmsted County Purchasing at Purchasing@ olmstedcounty.gov.

JOIN NAWIC TODAY!

B e p a r t o f a n e t w o r k o f

l i k e - m i n d e d w o m e n

L e a r n a b o u t t e c h n i c a l &

l e a d e r s h i p s k i l l s

H

A s s i s t a n t s

E s t i m a t o r s

Friday, August 16

Willow Creek Golf Course

Registration & Sponsorships available in June!

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

Newsletter Display Ad Dimensions 1/2

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

ROCHESTER BUILDING PERMITS

TCPA BUILDING PERMITS

OLMSTED COUNTY PERMITS YTD

PINE ISLAND BUILDING PERMITS

HIGHER INTEREST RATES KEEP SINGLEFAMILY HOUSING STARTS FLAT IN APRIL

BY ROBERT DIETZ on MAY 16, 2024

Single-family starts remained flat in April as mortgage interest rates moved above 7% last month and builders continued to face tight lending conditions.

Overall housing starts increased 5.7% in April to a seasonally adjusted annual rate of 1.36 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The April reading of 1.36 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 0.4% to a 1.03 million seasonally adjusted annual rate. However, this pace is 17.7% higher than a year ago. On a year-to-date basis, single-family starts are up 25.7%, totaling 335,600. Despite higher interest rates, demand for new single-family housing continues to be supported by low levels of resale inventory. Lower interest rates will provide additional support for single-family home building by reducing rates on construction and development loans, when the Fed begins its eventual easing cycle.

The multifamily sector, which includes apartment buildings and condos, increased on a monthly basis 30.6% to an annualized 329,000 pace. However, this is 32% lower than a year ago. Moving forward, the multifamily market will see additional declines for construction volume, while the pace of completions remains elevated. This additional rental supply will help lower shelter inflation, which is the last leg of the inflation policy challenge.

April marked the fifth consecutive month for which the seasonally adjusted rate of multifamily completions was above 500,000. The ongoing reversal within multifamily construction – from an accelerated pace of starts to an accelerated pace of completions – can be seen on the chart below. At the end of 2020, the rate of multifamily construction starts was roughly equal to the rate of completions. For all quarters after this period until the third quarter of 2023, apartment construction starts exceeded the rate of completions. With the third quarter of 2023, this

reversed and since September 2023, there have been more multifamily completions than starts, thus reducing the total number of multifamily units under construction. For April 2024, the ratio of multifamily completions to starts was 1.8 on a three-month moving average.

After peaking in July 2023 at 1.02 million apartments under construction, active multifamily units under construction declined to 934,000 in April. This is 4.2% lower than a year ago. In April, there were 674,000 single-family homes under construction, the highest count since November 2023 and down just 2.1% year-over-year.

On a regional and year-to-date basis, combined single-family and multifamily starts are 24.5% lower in the Northeast, 11.0% higher in the Midwest, 1.8% higher in the South and 8.4% higher in the West.

Overall permits decreased 3.0% to a 1.44 million unit annualized rate in April. Single-family permits decreased 0.8% to a 976,000 unit rate; this is the lowest pace since August 2023. Multifamily permits decreased 7.4% to an annualized 464,000 pace.

Looking at regional data on a year-to-date basis, permits are 9.3% higher in the Northeast, 8.5% higher in the Midwest, 2.8% higher in the South and 0.2% higher in the West.

An important technical note: Census and HUD provided revisions for the construction data this month, some ranging back to 2017.

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

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!

Contact Rochester Area Builders Shelly@RochesterAreaBuilders.com or 507-282-7698

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: Shelly@rochesterareabuilders.com for more information.

•

•

•