www.elpasobuilders.com www.epbuilders.org
Builders
utlook
2013 issue 6
Army Force Structure Realignment: Understanding the impact to local business community From Greater El Paso Chamber of Commerce, edited by Ray Adauto On June 25th General Ray Odierno, Chief of Staff of the Army, announced the results of the Army’s 2020 Force Structure Realignment, which will reduce the Army’s Active Component end-strength from the 570,000 soldiers currently serving to 490,000 by 2017. In January of this year, the El Paso community was made aware of the Army’s Programmatic Environmental Assessment (PEA) which was considering possible cuts and realignments among 23 of the Army’s bases, including Fort Bliss. Since then, the Chamber (led by our strong volunteer leadership), has relentlessly advocated on behalf of Fort Bliss and the regional military community. Through visits to the Pentagon and elected leadership on Capitol Hill, the Chamber has touted the exceptional qualities that make Fort Bliss the premier installation in the Department of Defense. The Chamber was also given the opportunity to host a Listening Session in April, which was attended by Army officials who were charged with assessing each of the 23 installations and their neighboring communities. The Chamber utilized the Listening Session to highlight the billions of dollars of investments made by the community in transportation, education, healthcare, housing, and quality of life to support the growth of Fort Bliss. Thus, after months of waiting General Odierno announced that Fort Bliss was one of ten Army bases in the United States which will have a brigade combat team deactivated by 2019. The Chamber is proud to say that although Fort Bliss will be losing a Brigade Combat Team (3-1 AD) and a net loss of 750 soldiers, it will remain an essential power projection platform for the Army and will be minimally impacted by the overall Force Structure Realignment. In his announcement, General Odierno also warned that the Army’s Force Structure Realignment may only be the first of additional cuts the Army must make in order to meet budget requirements, if sequestration continues into the next fiscal year. Under such fiscally challenging circumstances, it is important for the business community to not only understand how the local economy will be impacted by these changes, but also that our troops need community support now more than ever. Through these challenging times, the Chamber remains committed to Fort Bliss and will continue to support our regional military installations through proactive advocacy and outreach efforts. On June 27 the United States Air Force chose Fort Bliss as a major training center location for security forces that will be deployed around the world. In the announcement USAF will bring between 8,000 to 10,000 airmen through the training that ranges from 10 days to 60 days in duration. At the end of each session graduation will bring in visiting family members as well. The move to Fort Bliss
This image was originally posted to Flickr by DVIDSHUB
was anticipated but other communities, like San Antonio, lost out. Fort Bliss is the premier DOD facility in the world with over $7 billion invested over the last five years.
Fort Bliss housing: good or bad for local builders/developers? A recent meeting with the US Army Garrison Command left questions for the private sector on whether the future of single family and multifamily construction will be positively or negatively impacted. Most of the members in attendance felt that it will be negative given the statistics presented and the need for the Army’s principal contractor, Balfour Beatty, continue to build inside the wire. Joined at the meeting held at the Greater El Paso Chamber of Commerce by the El Paso Apartment Association, commercial real estate companies and Chamber members, attendees listened to Garrison Commander Dayley report on what to expect at Bliss over the next few years. “We continue to look at upgrading the housing for family and single soldiers by constructing housing inside the post,”
Dayley told the audience. “We are particularly interested in west Bliss and modernizing housing along US 54 near the golf course and building new single soldier barracks (apartments) for them near our Freedom Crossing,” he continued. The apartment builders and associates were concerned that statistics being presented on the occupancy rates were old and not accurate. “What we think is that the Army needs to be giving correct numbers, otherwise it looks to outside interests like we are short on apartments, while that is not reality,” said Ray Baca local apartment management member. The presentation says that there is a 93% occupancy rate while the apartment managers present said 88-89% is the reality. “We were told to build for the incoming troops back five years ago, and private sector did that anticipating a return on investment,” Baca continued. “What we are seeing is an oversupply now as troops are transitioning in and out quicker. Now the Army is going to compete with us for the market share and that’s troubling,” he continued. Single family housing also has not taken off with the military as anticipated. In the past the makeup of the troops was different
when the Air Defense School was at Bliss. The troops now coming in are much younger and single, mostly not ready or able to purchase a home while stationed at Fort Bliss. “We are seeing much more sales of rims and big screens than we are of houses,” said Edmundo Dena, President of the association. “The reality is that these younger troops need to partner up in an apartment so they can deploy and return without the cost of a home purchase,” he continued. Even transitional housing for Senior Soldier Unaccompanied Housing (SUH) for E-6 and above will see a new complex with 260 units at market rate rents. This housing is targeting students assigned to SNCO and officers coming to Bliss unaccompanied. In other words apartments for non-family moves to Bliss for training, education (SSgt Major School) or assignment. This will directly impact area apartment rentals, especially those in North East and west of the post. The post plans to add about 800 homes to their current 3600 inventory by end of 2016. They are also planning to sell off 1635 acres of land near Montana Avenue and Loop 375, plus an additional 94 acres near the old Beaumont.
2
Builders Outlook
2013 issue 6
THINK OF US AS PART OF YOUR SALES TEAM. No doubt about it, when you build homes and businesses that are natural gas ready, they’re instantly more attractive to customers. Natural gas furnaces, water heaters and clothes dryers offer greater efficiency and lower operating costs than their electric counterparts, and natural gas kitchens sell themselves. Let us help you use natural gas to turn prospects into buyers. For more information, contact Eduardo Lucero at ealucero@txgas.com or (915) 680-7216.
ONEOK, Inc.
Oklahoma Natural Gas
Kansas Gas Service
ONEOK Partners, L.P.
ONEOK Energy Services
Texas Gas Service provides natural gas to more than 620,000 customers in the state of Texas, including customers in Austin, El Paso, the Gulf Coast and the Rio Grande Valley. Texas Gas Service is a division of ONEOK, Inc. (NYSE: OKE), a diversified energy company. ONEOK is the general partner and owns 43.4 percent of ONEOK Partners, L.P. (NYSE: OKS), one of the largest publicly traded limited partnerships, which is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. and owns one of the nation’s premier natural gas liquids (NGL) systems, connecting much of the NGL supply in the Mid-Continent with key market centers. ONEOK is among the largest natural gas distributors in the United States, serving more than 2 million customers in Oklahoma, Kansas and Texas. Its energy services operation focuses primarily on marketing natural gas and related services throughout the U.S. ONEOK is a Fortune 500 company. For more information, visit www.texasgasservice.com. © 2013
2013 issue 6
3
Builders Outlook
President’s Message | Edmundo Dena
El Paso Disposal
President, El Paso Association of Builders
I am humbled more times than you can imagine or that I will admit anywhere but here. This time it’s because of the Parade of Homes and the absolutely stunning job done by so many for so many. Personally I walked into our Winton Flair home and thought to myself how really cool the amenities are and I’m trying to figure out how to incorporate them into my Accent Homes. Probably not but at least now I know what to shoot for. All the homes are great and offer El Paso a little diversity in styles and arrangements. They are beautifully built and wonderfully decorated. Thank you to all who have invested so much time, money and effort into this show. My special thanks goes to my Vice President Frank Torres and my Executive Officer Ray Adauto. These two guys work their tails off for the association without asking anything in return. They are always assisted by Isela (Frank’s wife) and Margaret who are equally hard working. Then you add Kathy Parry from HUNT. What can you say about her that hasn’t already been said? I can say this: she is a great person, hardworking board member, and outstanding employee for HUNT. She’s tough love with the builders but in the end it’s because of her push that we even have the parade. To the entire HUNT group thank you on behalf of the EPAB. Justin Chapman is a really positive guy who let us have this. Thank you Justin. We’re busy and we’ve been blessed with a political victory of sorts as well with the election of our Build PAC endorsed candidates. Congratulations to Oscar Leeser, Larry Romero, Carl Robinson, Emma Acosta, and Lilly Limon on their victory. The world has really changed for you and we stand here ready to help you help us house the people of El Paso. Thanks to our Build PAC, Greg Bowling, Bobby Bowling and Randy Bowling, along with the “silent” members who turned out and made history again by backing the winners. To those in our industry who supported candidates with poor or reckless hate for home building we offer our hand and hope you learn from this. A united industry can do many great things. A divided one creates problems for you and for us. Perhaps this is a tough lesson to learn just like we have in the past. Standing up for your industry and convictions is really a whole lot more important than getting invited to a cocktail party. Like we say “better to be AT the table than on it.” Have a great summer!
772-7495
Showroom: 2131 Missouri 915 • 533 • 6045
fax • 533• 6096
Thomas R. Brown, Owner
4
Builders Outlook
Perspective
2013 issue 6
|
Ray Adauto, Executive Vice President EPAB
After a regular election for city representatives and city Mayor the electorate was left with unresolved selections. On June 15 the voters again went to the polls to solidify their selections. In this race candidates were going mano a mano with some interesting results ending the day. Mayoral candidates Oscar Leeser, who nearly won the post outright in the first race where 8 candidates ran, ran against city representative Steve Ortega. This race was a little nastier as Ortega pulled out all the stops to stop Leeser’s momentum. Leeser had decided that he would not debate Ortega, some calling that move as showing Leeser lacking a vision for the city. The Leeser campaign kept their promise and did not debate instead visited neighborhoods and businesses. It must have been a genius move since Leeser won three to one, 74% to 26%. Ouch. That type of shellacking hasn’t been seen since the mid 90’s in
Runoff election sends clear message to politicians: “Don’t mess with my vote” a local election. But that was the exception in this runoff election as the three city reps races were won or lost by as little as 22 votes and as high as 125 votes. Carl Robinson defeated Sam Morgan in District 4, while Lilly Limon won District 7 by less than fifty votes. Larry Romero has been dubbed “Landslide Larry” for his win, defeating Jim Tolbert by 125 votes, the largest margin in the city rep races. So what does this mean for the Builders Association and its members? First of all the clearing out of city representatives who consistently voted against new home construction and implemented costly codes or subdivision and landscaping rules. The group, consisting of Susie Byrd, Beto O’Rourke, Steve Ortega and supported by Ann Morgan Lilly were a block of votes unwilling to include the new home builders in setting policy or implementing change. Instead, this group wound up embracing building and development
codes they dubbed smart even though many times they were dumb and costly. The group also found ways to install city employees who were educated by the gurus of the new urbanism where people are moved closer together, in smaller neighborhoods, and in fact causing the city to social engineer where, how and what people would live like. In this group you find that they want you to live like crowded places like Chicago, New York or Pittsburgh, all places where children live in high rise apartments and play on pavement. While some of the city is more conducive to this the group went too far by demanding that all city land be branded to their version of smart code. Fear mongers said that if you voted for Leeser, Romero, Limon and Robinson that you would lose the momentum of change. The new ball park wouldn’t be built, and we would return to draconian ways. Frankly
their argument was meant to create fear, doubt and continue down the path of government telling private sector what to do. There’s a lot of hope that the new council will be more willing to listen to professionals in new home construction and development than the old guard. I think there’s hope with the leadership that Oscar Leeser will direct. After so many years of being on the downside of votes City Rep Emma Acosta, Eddie Holguin and Carl Robinson will now be listened to. Dr. Noe will surely continue to be fair and in a leadership position to influence the council. What Ann Morgan Lilly and Courtney Nilland will do on tough votes will be interesting to see. No doubt they see that the electorate is tired of spending and forcing private sector into projects or costs they can’t afford. If there’s any doubt ask Rhoberta Leeser. She’ll tell you.
2013 issue 6
NEWS New-Home Sales Rise 2.1 Percent Sales of newly built, single-family homes rose for a third consecutive month in May, posting a 2.1 percent gain to a seasonally adjusted annual rate of 476,000 units, according to data released by HUD and the U.S. Census Bureau today. This is the fastest sales pace recorded since July of 2008. “Builders are reporting increased demand for new homes as buyers seek to take advantage of historically low mortgage rates while they remain so favorable,” observed Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. “Consumers in markets nationwide are definitely becoming more confident about making a home purchase as firming prices and tighter inventories provide further
5
Builders Outlook
evidence of the ongoing housing recovery.” “Today’s report confirms that the improvement we have been seeing in housing markets over the past year continues to take place at a gradual and steady pace,” said NAHB Senior Economist Robert Denk. “We expect to see more of this positive momentum in the coming months, tempered by the caution that builders are exercising to avoid getting ahead of demand along with ongoing constraints they face with regard to the availability of credit, materials, lots and labor.” Three out of four regions posted sales gains in May, with double-digit increases of 20.7 percent and 40.7 percent in the Northeast and Midwest, respectively, and a more moderate, 3.6 percent gain in the West. The South posted a 9.0 percent decrease following an unsustainably large gain in the previous month. The inventory of new homes for sale edged up slightly to 161,000 units in May, which is a 4.1-month supply at the current sales pace.
Builders and Lumber Dealers See Shortages of Building Materials Home builders and lumber dealers are reporting significant shortages of key home building materials such as lumber and wall board, according to recent surveys by the National Association of Home Builders (NAHB) and the National Lumber and Building Material Dealers Association (NLBMDA). “Supply constraints are one of the barriers to a more robust recovery,” said NAHB Chief Economist David Crowe. “The shortages and price increases reported by both home builders and lumber dealers are particularly concerning given that the current rate of construction is still far below what would be considered normal or necessary to meet underlying demand.” Among builders, the highest incidence of shortages was for oriented strand board (OSB), with 22 percent of builders reporting shortages, followed by wall board (20 percent), framing lumber (18
percent) and plywood (18 percent). The builder results come from special questions added to the monthly survey that serves as the basis for the NAHB/Wells Fargo Housing Market Index (HMI), which is widely viewed as a key indicator of the overall strength of the home building market. With the exception of wall board, the lumber dealers reported greater shortages of these products than the home builders. Among lumber dealers, 27 to 28 percent reported shortages of OSB and plywood, 36 percent reported shortages of framing lumber and 12 percent reported shortages of wall board. The dealer results come from a special survey of NLBMDA's members, who operate single or multiple lumber yards and component plants and deal in many of the same products that NAHB members purchase. Both the builder and lumber dealer surveys asked about shortages of 24 specific building products and materials. For most of the products, the share of builders reporting a shortage was considerably higher in May of 2013 than in 2011 or 2012. The only exceptions were copper wire, vinyl siding, HVAC equipment, insulation and structural insulated panels. “The shares of reported shortages are not as high now as they were in 2004 or 2005, but the increases since 2012 are quite significant, especially when you take the early stage of the housing recovery into account,” said Crowe. “In 2004 and 2005 the home building industry was producing over 1.8 million new homes a year, while the current rate of new housing starts is still below 1 million.” With the exception of concrete-related products, a larger share of lumber dealers than builders reported price increases in building materials over the past six months. On average, builders reported a 5.17 percent increase in the materials that go into a house over the past six months. Most lumber dealers reported that the prices of the products they handle had increased on average by 10 percent or more over the past six months. “While a nascent housing recovery is underway, as reflected by the modest increase in sales by dealers, it’s clear that the ongoing material shortages and price increases being reported by dealers continue to be a cause for concern as we move into the latter half of 2013,” said Michael O’Brien, NLBMDA president and CEO. www.elpasobuilders.com www.epbuilders.org
Builders
utlook
2013 issue 3
Growing Labor Shortages Impede Housing and Economic Recovery
308*/( -"#03 4)035"(&4 */ "-'"$&54 0' 5)& 3&4*%&/5*"$0/4536$5*0/ 4&$503 "3& *.1&%*/( 5)& )064*/( "/% &$0/0.*$ 3&$07&3: "$$03%*/( 50 " /&8 4637&: $0/%6$5&% #: 5)& "5*0/"440$*"5*0/ 0' 0.& 6*-%&34 = )& 4637&: 0' 063 .&.#&34 4)084 5)"5 4*/$& 6/& 0' 3&4*%&/5*"- $0/4536$5*0/ '*3.4 "3& 3&1035*/( "/ */$3&"4*/( /6.#&3 0' 4)035"(&4 */ "-- "41&$54 0' 5)& */%6453: < '30. $"31&/5&34 &9$"7"5034 '3".&34 300'&34 "/% 1-6.#&34 50 #3*$,-":&34 #6*-%*/( ."*/5&/"/$& ."/"(&34 "/% 8&"5)&3*;"5*0/ 803,&34 )& 4".& )0-%4 536& '03 46#$0/53"$5034 > 4"*% )*&' $0/0.*45 "7*% 308& )& 4637&: "-40 '06/% 5)"5 .03& 5)"/ )"-' 0' 5)& #6*-%&34 3&1035&% 5)"5 -"#03 4)035"(&4 07&3 5)& 1"45 4*9 .0/5)4 )"7& $"64&% 5)&. 50 1": )*()&3 8"(&4 03 46#$0/53"$503 #*%4 50 4&$63& 130+&$54 "/% $0/4&26&/5-: 50 3"*4& )0.& 13*$&4 03&07&3 1&3$&/5 0' 5)& #6*-%&34 4637&:&% &91&3*&/$&% %&-":4 */ $0.1-&5*/( 130+&$54 0/ 5*.& 1&3$&/5 )"% 50 563/ %08/ 40.& 130+&$54 "/% 1&3$&/5 -045 03 $"/$&--&% 4"-&4 "4 " 3&46-5 0' 3&$&/5 -"#03 4)035"(&4 "35 0' 5)& 3&"40/ '03 5)& -"#03 4)035"(&4 $"/ #& "553*#65&% 50 5)& '"$5 5)"5 ."/: 4,*--&% 3&4*%&/5*"$0/4536$5*0/ 803,&34 8&3& '03$&% 50 4&&, &.1-0:.&/5 &-4&8)&3& %63*/( 5)& 3&$&44*0/ "/% "3& /0 -0/(&3 $633&/5-: "7"*-"#-& =!)"5 64&% 50 #& )*() 1":*/( 4,*--&% +0#4 7"/*4)&% "4 #6*-%&34
"$3044 5)& /"5*0/ 8&/5 065 0' #64*/&44 03 8&3& '03$&% 50 -&5 803,&34 (0 > 4"*% )"*3."/ *$, 6%40/ " )0.& #6*-%&3 '30. )"3-055& )& -044 0' 5&/4 0' 5)064"/%4 0' )064*/( +0#4 .64)300.&% 50 .*--*0/ %63*/( 5)& .03& 5)"/ 1&", 0' 5)& %08/563/ 63*/( 5)*4 1&3*0% ."/: 53"%&4 3&53"*/&% $0/4536$5*0/ 803,&34 "/% 5)&: "3& /05 3&563/*/( 50 5)& 3&4*%&/5*"$0/4536$5*0/ 4&$503 &"/8)*-& " -"$, 0' #6*-%"#-& -054 "/% */$3&"4&% $0454 '03 ."5&3*"-4 "/% -"#03 "3& "-40 $0/53*#65*/( 50 5)& 130#-&. "4 5)& */'3"4536$563& 5)"5 46110354 )0.& #6*-%*/( .07&4 50 3& &45"#-*4) *54&-' '0--08*/( 5)& 80345 )064*/( %08/563/ 4*/$& 5)& 3&"5 &13&44*0/ 308& 4"*% 0 )&-1 .&&5 5)& (308*/( %&."/% '03 4,*--&% -"#03 8*5)*/ 5)& )064*/( 4&$503 5)& 0.& 6*-%&34 /45*565& */ 1"35/&34)*1 8*5) 1307*%&4 $"3&&3 53"*/*/( "/% +0# 1-"$&.&/5 */ 5)& #6*-%*/( */%6453: 0''&34 "/ "33": 0' 1035"#-& 13& "113&/5*$&4)*1 53"*/*/( 130(3".4 */ " 7"3*&5: 0'
4,*--&% 53"%&4 5)"5 $"/ #& $6450.*;&% 50 .&&5 5)& 803,'03$& /&&%4 0' $0..6/*5*&4 "$3044 5)& /"5*0/ 3&(6-"3-: 1-"$&4 "11309*."5&-: 1&3$&/5 0' *54 456%&/5 (3"%6"5&4 */ +0#4 */ 5)& #6*-%*/( 4&$503 =!& "3& 3".1*/( 61 063 &''0354 50 53"*/ %*7&34& 1016-"5*0/4 "/% 1-"$& 5)&. */ +0#4 50 .&&5 5)& (308*/( %&."/% 0' 5)& #6*-%*/( 4&$503 > 4"*% 3&4*%&/5 "/% 0)/ 06340/ = 7&/ */ " 1&3*0% 0' 3&-"5*7&-: )*() 6/&.1-0:.&/5 8& 45*-- /&&% 50 $0.1-&.&/5 063 +0# 53"*/*/( &''0354 #: #3*/(*/( */ '03&*(/ 803,&34 50 .&&5 5)& /&&%4 0' )0.& #6*-%&34 "/% )0.& #6:&34 > "%%&% 6%40/ )& 803,&3 4)035"(&4 "3& /05 0/-: 4-08*/( 5)& )064*/( 3&$07&3: #65 "-40 )635*/( +0# "/% &$0/0.*$ (3085) "5*0/"--: 5)& $0/4536$5*0/ 0' 4*/(-& '".*-: )0.&4 (&/&3"5&4 .03& 5)"/ +0#4 "11309*."5&-: .*--*0/ */ 8"(&4 "/% .03& 5)"/ .*--*0/ */ '&%&3"- 45"5& "/% -0$"- 5"9 3&7&/6&4 )"5 %0&4/?5 &7&/ $06/5
5)& */$3&"4& */ "//6"- 1301&35: 5"9&4 5)"5 -0$"- .6/*$*1"-*5*&4 3&-: 0/ 50 '6/% 4$)00-4 10-*$& "/% '*3&'*()5&34 4 5)& &$0/0.: .&/%4 1&/5 61 %&."/% '03 )064*/( 8*-- $0/5*/6& 50 (308 "4 306()-: .*--*0/ )064&)0-% '03."5*0/4 8&3& %&-":&% "4 " 3&46-5 0' 5)& 3&"5 &$&44*0/ / /03."- &$0/0.*$ 5*.&4 %&."/% '03 /&8 )0.&4 4)06-% #& "#065 .*--*0/ "//6"--: *4 "/5*$*1"5*/( 505")064*/( 45"354 0' 5)*4 :&"3 "/% .*--*0/ */ "4 5)& ."3,&5 $0/5*/6&4 *54 (3"%6"3&#06/% =!& /&&% 50 -00, )0-*45*$"--: "5 5)& )0.& #6*-%*/( */'3"4536$563& 50 .&&5 (308*/( "/% '6563& %&."/% > 4"*% 6%40/ = 0 "70*% " 36/ 61 */ 13*$&4 */ )05 ."3,&54 %6& 50 -"#03 *446&4 8& /&&% 50 $0.1-&.&/5 063 $633&/5 53"*/*/( 130(3".4 8*5) " ."3,&5 #"4&% 7*4" 4:45&. 5)"5 806-% "--08 .03& *..*(3"/54 50 -&("--: &/5&3 5)& $0/4536$5*0/ 803,'03$& &"$) :&"3 8)&/ 5)&3& *4 " %&"35) 0' 803,&34 50 '*-- 5)& +0#4 5)"5 "3& /&&%&% >
Advertise in the
Builders Outlook Call Margaret at the El Paso Association of Builders 915-778-5387
6
Builders Outlook
2013 issue 6
The Economy
Economic Forecast for 2nd Half 2013: Sunny with Cloudy Periods Looking ahead at the second half of 2013, the economic news is pretty solid. The US economy is on the mend, the labor market is slowly healing and house prices are up about 10% from year-ago levels. In addition, Europe (while in recession) appears to be holding together, Elliot Eisenberg budget DC brinksmanship is fading, car and lighttruck sales along with consumer sentiment are rising, and new home construction continues its steady ascent. The only serious domestic fly in the ointment is the significant fiscal drag from Washington as the result of sequestration and year-end tax increases. The biggest foreign drag is Europe’s recession is hurting US exports. With all this in mind, I expect Q3 GDP to be about 1.75% and Q4 GDP to come
in slightly higher at 2.1%. As for housing starts, in Q3 they should, for the first time in years, exceed a million units (seasonally adjusted and annualized) with single family starts coming in at 675,000 and multifamily starts reaching a pace of about 340,000. In Q4 single family starts should hit to 700,000 with multifamily starts unchanged. Inflation will remain benign. The combination of weak global growth, flat to declining energy and commodity prices, and flat to mildly rising food prices will keep CPI growth well below 2%. Moreover, the combination of tiny rises in import prices, producer prices, consumer prices and anemic wage growth means that personal consumption expenditure inflation, the Feds preferred inflation measure, will barely exceed 1%, giving the Federal Reserve ample room to continue its program of quantitative easing. As for jobs, despite an improving labor market, the unemployment rate at the end of the year will remain above 7%.
And combined with an annual inflation rate of well below 2%, it makes me think Bernanke and the rest of the voting members of the interest rate-setting Federal Open Market Committee will continue purchasing $85 billion/month in Treasuries and mortgage-backed securities at least through October Any tapering of QE3 will 2013. commence in late 2013 and more likely in early 2014. Another reason why QE3 will be maintained in that due to weak wage growth, consumer spending is rising quite slowly and is being fueled, at least in part, by a decline in the personal savings rate which now stands at a scant 2.5%. Of course rising stock prices, improving home values and easing credit market conditions are also aiding the rise in consumer spending. But a sudden rise in interest rates could derail these positive developments and weaken manufacturing, which is currently neither expanding nor contracting. As such, the risk is simply
not worth the return, at least for now. What would change my thinking about QE3 would be consistent monthly nonfarm payroll job growth of greater than 187,000. If we manage to achieve that, the Fed would likely reduce the amount of its monthly bonds purchases and interest rates would rise. However, given a growing economy, the rate rises would not be growth-sapping and I put the chances of a new recession at no more than 10%. In the meantime, I look forward to continued, slow and steady improvement the rest of the year. Have a wonderful summer and see you in August! (Remember, I will not be writing an article for July). 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.
is your retirement plan making every dollar count? The El Paso Association of Builders is proud to now offer an individualized retirement plan created for you.
ThE EPAB MEMBEr rETirEMEnT PlAn Even if you already have a retirement plan in place, it is well worth your time to talk to us about the new options designed for members of the El Paso Association of Builders. We understand that when it comes to retirement planning, saving every dollar can add up. That’s why we have partnered with Employee Benefits of El Paso to offer you the opportunity to create an individualized retirement plan under the umbrella of the El Paso Association of Builders that can help reduce set up fees and other associated expenses. • investments • irA’s • 401K now is the time to start maximizing your plan for the next phase of your life. let your membership with EPAB help you get there.
Call (915) 542-0900 for more information today. Prior to selecting investment options for your plan you should consider the investment objectives, risks, fees and expenses carefully. For this and other important information, you obtain prospectuses for mutual funds, any applicable annuity contract and the annuity's underlying funds, and/or additional disclosure documents from the appropriate retirement plan representative. Read them carefully.There is no guarantee that participation in any retirement plan will result in a profit or that your account will outperform a self-managed portfolio. Please consult with your financial planner, attorney and/or tax adviser as needed.
2013 ISSUE 6
Builders Outlook
Call 778-5387 for more information today.
7
Builders
utlook on the scene |
2013 Parade of Homes The 2013 Parade of Homes kicked off with a preview party on June 21. Nearly 1300 visitors entered the Parade site that night and enjoyed beautiful weather and great food and drink. The Parade of Homes is located on the Westside of El Paso in a HUNT community named the Falls at Cimarron. This planned community features spectacular views of the upper valley and the Franklin Mountains. Homes in the Parade range from the high $200’s to the mid $400K depending on who built it and the amenities they present. “We offered the El Paso Association of Builders a really beautiful area to hold the Parade of Homes,” said Kathy Parry, Director of Builder Relations Southwest Community Development for HUNT. “The builders have done a great job getting these homes ready to show and sell and as you can see from the throngs of visitors we have a real pent up demand for this,” she continued. “I am just blown away with all the different homes and the detail that was put into each one of them,” said Edmundo Dena, President of the El Paso Association of Builders (EPAB). “We can’t thank the builders and HUNT enough for the work they have done to get us this show,” he continued. Thirteen builders joined in the effort and each one built their home in steps that were something to see. “If you would have told me that all these homes would have been done on time I would have said you’re crazy,” said Frank Torres, chairman for this year’s Parade. “As a builder myself I know the stress that comes with doing a show like this, and it can be a real problem as the time gets shorter. I think these builders did an outstanding job all the way around,” Torres continued. The 2013 POH features these custom builders: Palo Verde Homes, Punto Living, Pointe Homes, Icon Custom Homes, Winton/Flair, Phillips Homes, Joseph Homes, Trinity Homes, Quality Craft Homes, Crown Heritage Homes, RC Baeza, Bella Vista Custom Homes, and M
RC Baeza
Quality Craft Homes
Punto Living
Philips Homes A Homes. Each is different with a personality designed to fit a variety of wants. With a Parade Home the buyer gets additional value because vendors and suppliers are more apt to showcase the latest wares and provide a good price point to the builder. Parade homes resale values often are higher according to agents and so the value continues long after the initial purchase. As for the preview party the interest was high on the homes, but it was about seeing old friends and making new ones as well. “I can tell you that I think this is the best preview party in thirty years,” said past President Mark Dyer. “I know because I haven’t missed any since that time,” he went on. As the party wound down one thing remained clear: this was long overdue. “I am so appreciative of the HUNT community and all the builders, volunteers and suppliers,” said Ray Adauto, Executive Vice President EPAB. “I want to single out Frank Torres, Isela Torres, and Margaret Adauto for their hard work at the preview,” he continued. “Frank deserves a huge thank you from every member for the unselfish way he put this together,” Adauto continued. The POH continues until July 7 with hours of presentation Monday-Friday 3-7 pm, Saturday and Sunday 11-7. Entry is $5 for anyone over the age of 12.
Palo Verde Homes
Icon Homes
Flair Homes
2013 issue 6
Crown Heritage
Bella Vista
Pointe Homes
MA Homes
Joseph Homes
+
Trinity Homes
TM
of Texas
www.elpasobuilders.com
10 Trends: Home Builders Building Homes that Young Buyers Want During National Homeownership Month in June, the National Association of Home Builders (NAHB) is telling young people that the time is right to buy a home, and the nation’s builders are building the homes they want. “As the economy recovers and young people who had to live at home with their parents move forward with their lives and achieve their dreams of homeownership, home builders are delivering homes that cater to the floor plans, features and affordability that this generation desires,” said NAHB Chairman Rick Judson, a home builder and developer from Charlotte, N.C. More than 80 percent of Generation Y home buyers—people born in 1977 or later—said in NAHB’s 2012 consumer preference survey they prefer a highly energy efficient home that results in lower utility bills during the home’s lifetime over a lower-priced home without energy efficient features. Today’s new homes feature ENERGY STAR-rated appliances; windows, doors and insulation that better control the home’s interior climate; and other modern components such as tankless water heaters and HVAC systems that save costs on utility bills. And cost-conscious young buyers will be happy to hear that a new home actually costs less to maintain than an older home. An NAHB study found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241. Plus, mortgage rates are still very low, bolstering affordability for home buyers. Generation Y buyers favor media and game rooms more than any other specialty rooms for their next home. New homes today not only contain these spaces, they are outfitted with the state-of-the-art electronic and wiring components that can accommodate highdefinition televisions, full-house sound systems, hard-wired fire and security alarms and more. Young buyers can check out many of the outstanding designs and features being included in homes built by NAHB members at our social media communities facebook.com/homebuildrs, pinterest.com/nahbhome and google.com/+nahb. They can also access home buying and home building information and resources on NAHB’s website at nahb.org/forconsumers. The time has never been better for young people to become home owners, whether it be a new home or existing,” said Judson. “There are outstanding opportunities in the current market, with near record low interest rates, competitive prices and new homes being built that include open layouts, energy efficient components and other features that cater to young buyers.”
Builders Outlook
2013 issue 6
More than 80 percent of Generation Y home buyers—people born in 1977 or later—said in NAHB’s 2012 consumer preference survey they prefer a highly energy efficient home that results in lower utility bills during the home’s lifetime over a lower-priced home without energy efficient features
2013 issue 6
11
Builders Outlook
The options builders asked for are right here. Developed with the backing of the strongest insurance carriers serving the Texas building industry, the exclusive TAB endorsed insurance program offers new flexible options and rates that are more competitive than ever before.
Give your customers the â&#x20AC;&#x2DC;option of the sunâ&#x20AC;&#x2122; Now more than ever, El Paso home buyers are planning for the future.
Program Highlights t i"w SBUFE BENJUUFE JOTVSBODF DPNQBOJFT TFWFSBM PQUJPOT BWBJMBCMF t (- PĂŞFSJOH DPWFSBHF GPS QSPQFSUZ EBNBHF UIBU SFTVMUT GSPN GBVMUZ defective, or poor workmanship in your work t (- MJNJUT PG VQ UP NJMMJPO BOE IJHIFS BWBJMBCMF t &YQBOEFE QPMJDZ GPSN GPS DPNNFSDJBM QSPKFDUT t #VJMEFS T 3JTL NBTUFS QPMJDJFT NPOUIMZ SFQPSUJOH BOOVBM BOE POF TIPUT t 8PSLFST $PNQ UXP IJHIMZ DPTU FĂŞFDUJWF QSPHSBNT t &YDFTT -JBCJMJUZ GPS DPNNFSDJBM HFOFSBM DPOUSBDUPST t $PNNFSDJBM 6NCSFMMB
Contact your local approved agent today! El Paso, Permian Basin and Surrounding Area )6# *OUFSOBUJPOBM *OTVSBODF 4FSWJDFT -BODF 7BO %FNBO $-$4 www.builderagentnetwork.com www.hubinternational.com
Border Solar can help you oďŹ&#x20AC;er your customers solar power as a sensible alternative.
Crossing to Clean Energy
The future starts today.
7365 Remcon Circle El Paso, TX 79912 (915) 613â&#x20AC;˘4168
follow us on twitter and facebook: BorderSolar
www.bordersolar.com
Weâ&#x20AC;&#x2122;ll Get You
Home Your Stewart Westside home team.
me o H w e N r u Yo va
e u N a s a C u S e e best tim NOW is th w e n ur to buy yo l Paso! home in E
el Ahora es ra p o tiemp a r ra p m o c ueva una casa n ! en El Paso
Reserve your advertising space in the 2013 edition of Your New Home/Su Casa Nueva The most complete home buying guide in both English & Spanish Experience the service and synergy of our Westside team. Everyone works together to make your closing efficient, accurate and downright enjoyable. WEST ŕ Ž 5500 North Desert, Suite A-2 ŕ Ž (915) 225-8300 stewart.com/el-paso
â&#x20AC;˘ Unmatched distribution and circulation â&#x20AC;˘ Unique dual language layout â&#x20AC;˘ Great advertising opportunity Call Margaret today at 778-5387
12
Builders Outlook
2013 issue 6
Expert Advice
Affordable Care Act: 10 things to consider
Joe Bernal Employee Benefits of El Paso With just three months left until the health insurance exchanges open and six months until the Affordable Care Act (ACA) goes into full effect, employers have a lot to do. Some points to keep in mind as you review your health plans and make coverage determinations for 2014: 1. The ACA’s shared responsibility requirements, otherwise known as “play or pay,” apply only to employers with 50+ fulltime equivalent employees. For specifics on counting employees, please see our February issue. 2. These “large employers” must offer “adequate” and “affordable” health coverage to at least 95 percent of their fulltime employees and their dependents or face the possibility of a penalty. 3. Dependents include children up to age 26, regardless of their marital or student status, but not spouses. 4. Adequate” plans must pay for at least 60 percent of expected medical expenses for a standard population. 5. “Affordable” plans can cost no more than 9.5 percent of an employee’s annual household income for his/her share of premiums. Since employers realistically cannot know an employee’s household income, the IRS has created a “safe harbor” that
exempts employers from assessments if coverage offered to an employee is affordable based on the employee’s Form W-2 wages. If an employer offers multiple healthcare options, the affordability test applies to the lowest-cost option that meets the minimum value requirement. Employer contributions to health savings accounts (HSAs) do not affect affordability, since HSA funds generally cannot be used to pay health insurance premiums. Under the ACA, health reimbursement arrangements (HRAs) can only supplement a health plan, and also cannot be used in affordability calculations. The affordability standard applies to single-only coverage. 6. Penalties differ for employers that offer inadequate or unaffordable health coverage and those that offer no health coverage. Employers whose coverage fails to meet adequacy and affordability standards face a possible monthly penalty of onetwelfth of $3,000 per employee for any applicable month ($250). The total penalty cannot exceed the total number of the firm’s full-time employees minus 30, multiplied by one-twelfth of $2,000 for any applicable month. Employers lacking coverage face a possible monthly penalty of one-twelfth of $2,000 ($166.67) per full-time employee, after the first 30 full-time employees. The annual penalty will be $2,000 per full-time employee beyond the first 30 (penalties are waived for the first 30 workers). After 2014, a premium adjustment percentage will apply to penalty amounts. 7. Penalties will apply only if at least one full-time employee obtains coverage
through an exchange and receives a premium tax credit. Is a possible penalty preferable to the certainty of paying for employee health benefits? Factors to consider: The overwhelming majority of your large employer competitors will be offering health benefits. Only 2 percent of large employers surveyed in April 2013 by the International Foundation of Employee Benefit Plans said they “definitely won’t” or “are very unlikely” to continue providing health coverage after the ACA becomes effective. Will you be able to recruit and retain qualified employees without health benefits? Employers can deduct the costs of providing health coverage—whether premiums for a fully insured plan or selfinsurance costs—as a business expense. Shared responsibility payments are taxes and not deductible. As a result, a $2,000 penalty would end up costing an employer in the 40 percent tax bracket (combined federal and state) approximately $3,300. 8. Grandfathered health plans (those in effect continuously since March 23, 2010 or before) do not have to meet several of the ACA’s requirements, including the requirement that plans cover specified preventive health services at no cost to insureds. Making “substantive” changes in your plan could cause it to lose grandfathered standards. “Substantive changes” include reducing covered benefits or increasing deductibles, co-payments or the share of premiums employees pay. You can increase employees’ premiums without losing grandfathered status if your premium costs increase and employees continue to pay the same percentage of total premiums.
9. Nondiscrimination provisions that previously applied to self-insured health plans will also apply to fully insured plans when the ACA becomes fully effective on January 1. Plans that provide richer benefits to executives and other highly compensated individuals will be subject to penalties. Penalties could add up quickly: an excise tax of $100 per individual per day of coverage will apply to a discriminatory plan. 10. Your employees are probably more confused about the ACA—and health benefits in general—than you are. The third annual Aflac WorkForces Report, released in April, found 76 percent of workers thought their employers would educate them about changes to their health coverage resulting from the ACA. However, only 13 percent of employers said educating employees about healthcare reform was important to their organization. The success of consumer-driven health plans depends on employees taking an active role in their health care decisions, yet 72 percent of employees surveyed had never even heard the phrase “consumerdriven health care.” Education can help employees select the best health coverage options and make more informed health spending decisions. An experienced health insurance broker can help you select and implement education programs. For more information on how the Affordable Care Act will affect your organization’s health benefits, please contact our office.
2013 Issue 6
13
Builders Outlook
www.elpasobuilders.com www.epbuilders.org
Membership News UPCOMING EVENTS | JULY 10 BOWLING EVENT 12:00 NOON BOWL EL PASO
JULY 11 BOARD MEETING 12:00 NOON EPAB OFFICE
AUGUST 5 ASSOCIATES MEETING 3:00 PM EPAB OFFICE
AUGUST 8 BOARD MEETING 11:00 GENERAL MEETING 12:00 NOON EL PASO CLUB CHASE BLDG. DOWNTOWN
RENEWALS | Area Iron & Steel Works Atrium Homes Bain Construction Classic Granite & Marble Franklin Door & Trim GAF Home of Texas Lawyers Title Pacifica Homes Porter Homes
SODA SPONSOR | Thanks to our JUNE SODA SPONSOR: El Paso Building Materials
Jaime’s Courier Service,Inc. 915-549-4533 or 915-478-2404 11395 James Watt, Suite A-11 79936 915-633-8002
Bonded, insured for your peace of mind.
14
Builders Outlook
Associates Council
Sam Shallenberger Western Wholesale Supply
Summer is officially here and the heat proves it. After so much activity over the last few months many of our associate members are now working with the Parade of Homes builders, getting them ready and hopping for some really good things from that. I know that we look forward to doing the Parade but it’s a lot of work. I would like to thank many of you who will be manning the ticket booth and helping the association with your efforts. Our next official event is coming up July 10 as we go out to Bowl El Paso for some indoor fun. Teams
are forming and it’s easy to get going with a four person team, or perhaps you’d like to be a KING Pin and get a team plus do some advertising with us. Anyway, we’re looking forward to it. We won’t have a meeting in July but I am calling for one August 5, so put the date on your calendar. Again if you’re going out on vacation or taking a short trip somewhere around here be careful and enjoy yourself.
2013 issue 6
Builders
utlook
www.elpasobuilders.com www.epbuilders.org 6046 Surety Dr. El Paso, TX 79905 915-778-5387 • Fax: 915-772-3038 ■ execuTive oFFicerS edmundo Dena – President Accent Homes Frank Torres – vice President GMF Custom Homes edgar montiel – Secretary/Treasurer Palo Verde Homes Sam Shallenberger – Associates chair Western Wholesale Frank Arroyos- immediate Past President Cisco Homes ray Adauto – executive vice President El Paso Association of Builders
■ TAB STATe DirecTorS Doug Borrett, Karam Co., Life Director Randy Bowling, Tropicana Homes ■ NATioNAL DirecTorS Bobby Bowling IV. Demetrio Jimenez NATioNAL ASSociATioN oF Home BuiLDerS (800) 368-5242
TexAS ASSociATioN oF ■ couNciL/commiTTee cHAirS Associates council Sam Shallenberger Build PAc Randy Bowling Desert Green Building council Javier Ruiz Land use council Sal Masoud Young Designer Award John Chaney remodelers council Rudy Guel membership retention Mike Santamaria, Greg Bowling Finance committee Edgar Montiel Women’s council Lorraine Huit ■ ADviSorY To THe BoArD J. Crawford Kerr, Attorney, Firth, Johnston & Martinez ■ BoArD oF DirecTorS Juanita Garcia, Icon Custom Builders Samira Gonzalez, Edwards Homes Walter Lujan, Dawco Construction Carlos Villalobos, Pointe Homes Don Rassette, Rassette Homes Beverly Clevenger, Automated Division 6 Builders Frank Spencer, Aztec Contractors Kathy Parry, Hunt Communities Sal Masoud, Del Rio Engineering Robert L. Foster, Southwest Land Development Services Leti Navarette, Custom Dream Homes Linda Troncoso, TR-Engineering Lance VanDeman, Hub International John Chaney, Passage Supply Joe Bernal, El Paso Employee Benefits Ken Wade, El Paso Building Materials Ruben Orquiz, MTI Ready Mix Kathy Carrillo, Pioneer Bank Henry Tinajero, West Star Bank Paul Zacour, Zacour & Associates Chuck Gabriel, Carpets West Ted Escobedo, Snappy Publishing Lorraine Huit, Cardel Design Javier Ruiz, Border Solar & Senercon
BuiLDerS (800)252-3625
2012 Builder member of The Year Frank Arroyos Cisco Homes 2012 Pat cox Award Mike Santamaria Mountain Vista Homes 2012 Associate of The Year Sam Shallenberger Western Wholesale Supply John Schatzman Award Hunt Companies
Honorary Life members Rudy Guel Brad Roe Cliff Anthes Wayne Grinnell Chester Lovelady Don Henderson Anna Gil
Past Presidents committed to Serve Greg Bowling Kelly Sorenson Mark Dyer Mike Santamaria John Cullers Randy Bowling Doug Schwartz Robert Baeza
Bobby Bowling, IV Rudy Guel Anna Gil Bradley Roe Bob Bowling, III E. H. Baeza Hershel Stringfield
ePAB mission Statement: The El Paso Association of Builders is a federated professional organization representing the home building industry, committed to enhancing the quality of life in our community by providing affordable homes of excellence and value. The El Paso Association of Builders is a 501C(6) trade organization. © 2013 Builder’s Outlook is published and distributed for the El Paso Association of Builders by Snappy Publishing 240 Thunderbird • Suite C El Paso • Texas • 79912 915-820-2800
DEVELOPING DREAMS. IN EAST AND WEST EL PASO.
Hunt is developing family focused neighborhoods in both east and west El Paso. Our communities feature amenities such as neighborhood parks, walking trails, bike paths, and landscaped roadways. Only in a community by Hunt will you find home options for everyone â&#x20AC;&#x201C; from the first-time buyer to those searching for their ultimate dream home.
EAST Horizon Mesa
Eastlake Boulevard to Horizon Mesa Boulevard
Emerald Estates
Eastlake Boulevard to Emerald Park Drive
Emerald Pass
Eastlake Boulevard to Emerald Sands Drive
Mission Ridge www.liveatmissionridge.com I-10 and Eastlake Boulevard
WEST Cimarron www.liveatcimarron.com Helen of Troy at Redd Road
www.huntcompanies.com