Buildersoutlook2015issue2 by Ted Escobedo

Builders

utlook

www.elpasobuilders.com

2015: issue 2

Housing Markets Continue to Make Modest Gains NAHB Markets in 63 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the fourth quarter of 2014, according to the National Association of Home Builders/First American Leading Markets Index (LMI), released today. This represents a year-over-year net gain of 11 markets. The index’s nationwide score moved up slightly to .90, meaning that based on current permit, price and employment data, the nationwide average is running at 90 percent of normal economic and housing activity. Meanwhile, 69 percent of markets have shown an improvement year-over-year. “The markets are improving at a consistent pace,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “A growing economy and rising

consumer confidence should help drive the release of pent-up demand in 2015.” Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.41 – or 41 percent better than its last normal market level. Other major metros leading the list include Austin, Texas; Honolulu; Houston; and Oklahoma City. Rounding out the top 10 are San Jose, Calif.; Los Angeles; Salt Lake City; Charleston; S.C.; and Nashville, Tenn. “The encouraging news is employment, where the number of metros that reached or surpassed their norms rose by 23 in a year,” said NAHB Chief Economist David Crowe. “However, single-family permits are only at 44 percent of normal activity, and remain the sluggish component of the index.” “More than 80 percent of all metros saw their Leading Markets Index increase or hold steady over the quarter, a strong indicator that the

overall housing market is making headway,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which cosponsors the LMI report. Looking at smaller metros, both Midland and Odessa, Texas, have LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also leading the list of smaller metros are Grand Forks, N.D; Bismarck, N.D.; and Casper, Wyo., respectively. The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity. More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period

of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity. Editor’s Note: In calculating the LMI, NAHB utilizes employment data from the Bureau of Labor Statistics, house price appreciation data from Freddie Mac and single-family housing permits from the U.S. Census Bureau. The LMI is published quarterly on the fourth working day of the month, unless that day falls on a Friday -- in which case, it is released on the following Monday. For historical information and charts, please go to nahb.org/lmi.

Spring 2015 Parade of Homes at Rio Valley Get ready for the 2015 Spring Parade of Homes at Rio Valley, a Winton Subdivision located on the beautiful Westside Upper Valley. Six Builders, Palo Verde, BIC, Pointe, Flair, Rio Valley and Mark Winton Homes will present some outstanding homes filled with ideas and love. Preview Party is April 17 (tickets on sale soon) and then we start our two week run on April 18. Open Tuesday to Sunday. For information log onto www.elpasoparadeofhomes.com or contact our office, 915-778-5387

Builders Outlook

2015 issue 2

Builders Outlook

President’s Message Edgar Montiel President, El Paso Association of Builders

Here we are two months in to the year, and boy what a whirlwind. I had heard that being on the Association’s Ladder was busy, but I never imagined we would be doing so much in a short amount of time. Here is an update of happenings and of what we have done so far in 2015 for our members. Our first General Meeting of the year was an overwhelming success. We had more people show up than tables available. This is awesome, because this shows that our members want to be involved. Roberto Coronado from the Federal Reserve Bank of Dallas was gracious enough to be our guest speaker at this event. He provided us with a lot of pertinent local and national economic information including what exactly the Federal Reserve Bank is and does. One of the questions that he answered, that I am sure is on everyone’s mind, was how the falling oil prices were going to impact the economy. Though there may be negatives, overall, the outlook is that the falling oil prices will be a net overall positive for the economy. I would again like to thank Mr. Coronado for taking

2015 already a whirlwind at the Association

time out of his busy schedule to meet with our association. As many of you already know, our Association has been working hard with the City of El Paso to work thorough the adoptions of the 2015 IRC and Energy Code. We were relieved to find out that all new code adoptions have been placed on hold for the moment. This doesn’t mean that our work is done, as we will be calling on a select number of Builder and Associate members to help up review the proposed changes and provide feedback to the city in a timely manner. I would like to personally thank Ron Roth and Victor Morrison Vega for providing us with a summary of all of the codes that are being considered and allowing us to provide them with our industry’s feedback. Our committees continue to impress me with their energy, ideas, and output. Kathy Parry, Ray Adauto, and I have been hard at work increasing our social media footprint on Facebook. In less than a week, we more than doubled the amount of followers we had, and posts are at an all-time high. We will continue working on improving upon our current

content and activity. We invite you to ‘LIKE’ our Facebook Page and to invite friends and family to do the same. I am very excited to have Patrick Tuttle chairing our Membership Committee. He is truly interested in wanting to find out what our members want out of their association. At our first general meeting, he collected a survey that delved in to what our members would like to get out of their membership. One of Patrick’s ideas is to create a series of brown bag lunch presentations/roundtables with topics based on input he received from his survey. We are planning on having a membership drive this year, and could really use volunteers to help us organize and run it (*cough* Mike Santamaria *cough*). Please let us know if this is something that you would be interested in helping us with. I am also pleased that we reinstated our meetings with our Finance Committee, made up of Henry Tinajero, Kathy Carillo, Randall Smith, Ray Adauto, and myself. Who better to have looking at the books that those whose business it is to put together and analyze financial data. The plan is to

meet monthly just before our Executive Board Meeting throughout the year. It was incredible to see just how many associate and builder members showed up at our first Speed Networking Event of 2015. It was by far the best attended Speed Networking event we have had. The feedback from the builders and associates was amazing and you can bet that we will have another event later in the year. Upcoming events include Rally Day in Austin (March 4th), the Spring Golf Tournament (April 10), and the EPAB Spring Parade of Homes (April 18 through May 3rd) at the Rio Valley Subdivision by Scott Winton. In closing, I believe that 2015 will be better, even though new construction closings were down in January, as there is a lot of activity going in to the spring. Investors are starting to leave the market as resale prices are picking up, and 2015 new construction closings are expected to be up about 5%. I believe that the continuing low interest rates, loosened lending requirements, reduction of the MIP, and lower down payment options will lead to a better 2015 for all of us.

Builders Outlook

2015 issue 2

Perspective Ray Adauto, Executive Vice President EPAB

Time to get housing in gear

I’d like to start my column with a huge thanks to our participating Associate and Builder members who came to the Speed Networking event on February 18. It was one of the most interesting mix of returning members mixed with first timers. The two hours were active and busy. Noisy too as more than one participant had to escape to the kitchen to avoid a headache. Sorry, but that’s part of the buzz during one of these and frankly if it was quiet it wouldn’t be good. With the front door open to help cool the building down the noise could be heard out to the sidewalk as attested to by Chuck Gabriel. “It was noisy, and I knew it had to be good,” he told me. Can’t wait to do this again so stay tuned. Read the story in this issue. It’s been an interesting year already. Like all businesses there are ups and downs in the trade association game. First of all the news out of NAHB IBS was mixed and honestly a little encouraging. Markets

seem to want to break out of slow housing, and frankly there’s a real need for this. However we are keenly aware that there are issues with qualifying under the current rules and those rules need changes in order to help jump start the engine. Inaction by the national administration and congress has left the Fed in an uneasy position. They can’t really move on something when they don’t have direction. I have a dire warning for this administration: don’t wait for the 2016 election season to move on housing. It will be too late and too many small to medium size companies will suffer closer or downsizing. It’s a message that seems the Congress and the Administration seem to be ignoring. Our lobby team at NAHB keeps saying this to them but things can get really sticky if they don’t listen. It’s time for you to write to Congressman O’Rourke https://orourke.house.gov/contact/email-me

Our Senators: Ted Cruz http://www.cruz.senate.gov/?p=email_senator

John Cornyn http://www.cornyn.senate.gov/public/index.cfm?p=Contact Form .

I want to also welcome our new intern Ana Guillen from Southwest University. She will be with us for six weeks as part of her graduation requirement. Ana has been busy calling members, updating out listings, and will soon be contacting you for advertising on our new websites. We are putting Ana to work while we have her. By the way she’ll be looking for a permanent job and hopefully you might have something for her. Speaking of which we should have our new www.elpasobuilders.com website up and running by the time you read this. Also we hope that www.neeuhomes.com is up and running as well. We’ve been anxious to get both of these done. I think you’ll appreciate both and visit them often.

2015 issue 2

Builders Outlook

Industry News New Home Sales Hold Steady in January Sales of newly built, single-family homes dropped 0.2 percent in January to a seasonally adjusted annual rate of 481,000 units from an elevated December reading, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. “The fact that January sales numbers maintained the gains we made in December is encouraging news, especially considering harsh weather affecting certain parts of the country,” said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Mo. “In a promising sign, new home sales have been trending at post-recession highs for the past two months,” said NAHB Chief Economist David Crowe. “As the economy strengthens and mortgage rates remain low, we can expect continued upward movement in

the housing market this year.” The inventory of new homes for sale was at 218,000 in January, which is a 5.4-month supply at the current sales pace. Regionally, new home sales rose 19.2 percent in the Midwest and 2.2 percent in the South. Sales dropped 0.8 percent in the West and 51.6 percent in the Northeast, most likely due to adverse weather conditions in that geographic area.

Boomerang Millennials A Promising Sign for Housing A recent study of “Boomerang Millennials” who move out of their parents’ home only to move back in may have important implications for this key demographic and what it means for the housing market. The National Association of Home Builders (NAHB) examined recent research conducted by Judith Dey and

Charles Pierret using data from the National Longitudinal Study of Youth 1997. The examination found higher incidence of “re-launch” for Millennials with a Bachelor’s degree compared to those with a lower education attainment and higher incidence of “re-launch” for Millennials from higher parental income household compared to lower parental income households. A “re-launch” occurs when a young adult moves out, returns to the parental household, and then leaves again. “Understanding the makeup of those who return home could shed light on the timing of the release of what we know is quite a bit of pent-up demand,” said NAHB Chief Economist David Crowe. “The data may indicate that while this age group is delaying what we think of as typical milestones, the combination of resources and education and what we have found about their preferences suggest growing housing demand in the years ahead.” Ninety percent of those born between 1980 and 1984 left home before the age of 27 – but then more than half returned to their parents’ homes. Of that group,

those with a Bachelor’s degree or higher had the highest share of returning to the parental home at 55.5%. Meanwhile, those born between 1980 and 1984 with a high school degree had the lowest share returning to the parental home at 42.1%. When looking at parental income, the research reveals that parents in the top half of the income distribution experienced a higher occurrence of boomerang children than those in the bottom half. Another important difference is gender: Twelve percent of men in this age group never left the parental home, whereas 7.6% of women stayed. And although women are more likely to boomerang, they are also more likely to leave again. Studies continue to show that the desire to own a home remains strong for these Millennials. Despite data showing that the age group is delaying household formation, they remain a key demographic in the housing market, and the pent-up demand is expected to translate into housing growth in the coming years.

Midwest Pushes Housing Starts Down 2 Percent in January

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Nationwide housing starts fell 2 percent to a seasonally adjusted annual rate of 1.065 million units in January, according to newly released data from the U.S. Commerce Department. This drop was mainly due to a 22.2 percent decrease in the Midwest. Single-family housing production fell 6.7 percent to a seasonally adjusted annual rate of 678,000 in January while multifamily starts rose 7.5 percent to 387,000 units. “These numbers are consistent with our recent surveys and are primarily due to severe weather hitting the Midwest and other parts of the country,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “After a strong single-family report in December, it is not surprising to see some pull back in January,” said NAHB Chief Economist David Crowe. “With continued job creation and a growing economy, single-family production should make gains in the year ahead.” Regionally in January, combined single- and multifamily housing production increased 6.5 percent in the South. Total starts fell in the Northeast, Midwest and West, with respective losses of 3.5 percent, 22.2 percent and 3.4 percent. Overall permit issuance was down 0.7 percent in January to a rate of 1.053 million. Single-family permits decreased 3.1 percent to 654,000 units while multifamily permits rose 3.6 percent to a rate of 399,000 units. Regionally, permits were mixed in January. The Northeast and West registered gains of 29.5 percent and 16.8 percent, respectively, while the Midwest and South dropped 16 percent and 8.7 percent, respectively.

Builders Outlook

2015 issue 2

The Economy

Tax Reformless The combination of ongoing weak GDP growth and a steep rise in corporate inversions designed to reduce US corporate tax liabilities has again brought the perennial idea of tax reform to the fore. Done right tax reform is a winner. By closing loopholes and lowering Elliot Eisenberg marginal rates the economy can better perform and GDP growth can be raised. That said, despite the positive rhetoric coming out of Capitol Hill, don’t count on it soon. Moreover, the sharp, and short-lived seven day brawl about scaling back tax breaks for 529 college savings plans is painfully instructive and illustrative as to why. In his State of the Union address, President Obama proposed doing away with the tax-free treatment of capital gains in 529 college savings plans. Instead, he proposed increasing the size of the American Opportunity Tax Credit, available only to families with pretax incomes of less than $180,000, from $1,000/year to $1,500/year and to allow it to be used for five years, up from four. Looked at in isolation, the economics behind this particular policy is pretty solid. First, there is limited evidence that tax breaks designed to increase savings actually do so. Rather, the evidence generally finds that tax breaks reward individuals who would

have saved anyways. Worse, the tax incentives don’t seem to increase the total amount of savings either! Second, most of the tax shelter goes to higher income households. According to the White House, 70% of the benefits from 529 plans go to households with incomes greater than $200,000, while a GAO study from 2010 found that 47% of families with a 529 plan had incomes above $150,000. A recent College Savings Foundation study found that not quite 10% of 529 account holders have household income below $50,000. In short, these plans give tax breaks to wealthier households who already send their kids to college and would have saved as much with or without the plan. By contrast, giving all households with incomes below $180,000 slightly more money for college might raise the percentage of kids from middle- and lower-class households that attend college. More concerning is that be it via 529 plans, the American Opportunity Tax Credit, guaranteed student loans and now increasing student loan forgiveness, government, through the tax code and elsewhere, heavily subsidizes college costs, and in the process dramatically inflates the cost of college tuition. Real tax reform would scrap these inflationary subsidies and implement a more coherent and more focused approach. But here is the rub, taking away the advantageous tax status of 529 plans created an instant coalition of three powerful groups that rolled the administration. The groups included parents with kids bound for college

El Paso Disposal

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fearful they were about to lose a valuable tax break that they “deserved,” higher education that was concerned it was losing a subsidy and the financial industry which feared losing the billions in fees associated with administering a huge $250 billion program. While everyone claims that they want a simpler tax code with lower rates and bereft of deductions, loopholes and credits, taking any of these away creates winners and losers. And while the winners may be numerous, what they stand to gain is nebulous and

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distant. By contrast, losers quickly organize themselves and make themselves heard. If doing away with something as small as this was impossible, good luck with larger tax issues that touch deeper pockets. t rising interest rates. 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

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2015 ISSUE 2

Builders

Builders Outlook

utlook on the scene | Business gets done at EPAB Speed Networking By Ray Adauto, EPAB The setting was the same but the vibe was different. It was something that is unusual in this day and age of electronic everything, a throwback if you will. The room was buzzing because our first Speed Networking event of the year was about to kick off. It was buzzing because many of the participants didn’t know what to expect and that added to heightened anticipation. The sold out event even had a waiting list, something that left some previous attendees waiting in the wings unable to get a table. For some of our builder members this too was a first, not sure what to expect but hoping that they made a good decision to come and find out. All those doubts were immediately erased as the room was electrified by the sound of business. If you’ve not heard that sound in a while then you missed this event. It was loud and it was an experience. Most of all it was good business done in a quick friendly way. Comments from our Associate members were very positive, even from those who’ve been participating for years. “We got a chance to see and visit with builders we hadn’t had an opportunity to for whatever reason,” said Sam Shallenberger, chairman of the Associates council. “It was fun, and it was awesome,” said one of our newest members Montez Love of Love Engineering. “I didn’t know what to expect but this was a great way to start my membership, a real plus,” he to the Builders Outlook. From the builder side the same theme carried out. “We didn’t know what to expect but it was great to find some new vendors, or at least find out what’s out there,” said Chris Hakes of Hakes Brothers. Hakes came in from Las Cruces not knowing what to expect but finding that this event is a great time saver, an opportunity that makes business sense. “You won’t believe this but I got to see some vendors that I rarely get to simply because we are moving around town so much it’s hard for them to visit me,” said Rudy Guel, Guel Construction, an NAHB Certified Remodeler. This event reminded the participants what can be done in a couple of hours of concentrated business can accomplish. Simply put this is a great starting point to introduce your business and get an appointment. There’s just enough time for that as the two hours go by quickly. We’re already making plans for the next Speed Networking event, but fair warning: There’s only 20 tables for show and it will sell out quickly. Stay tuned for information regarding that and other events where members do business with members. Thanks to the following Associates for participating: Haskins Electric; Acme Brick; Goodman Group; Builders Source; First National Bank; StrucSure; Love Engineering; Sarabias Porta Jons; Morrison Supply; Interceramic; Sherwin Williams; Home of Texas; HUB International; Mechanical Technologies; Morrison Bath & Fixtures; Labor Max; EP Mass Media; Patrick Tuttle RE/Max; Reverse Funding; and ADT Security. Our Builder members who came out: BIC Homes; Dawco Builders; Tropicana Homes; Palo Verde Homes; Accent Homes; Mountain Vista Builders; GMF Homes; Cisco Homes; Basiq IDIQ; Carefree Homes; Pointe Homes; D. R. Horton; Rassette Homes; Hakes Brothers; Santana Custom Homes; Custom Dream Homes; Guel Construction; R. C. Baeza and Edwards Homes. Thank you one and all.

Builders Outlook

2015 issue 2

Mortgage Notes Borrowers, who have steady income and good credit, but not much money in the bank, will find that it recently became easier to buy a home. By Mark Fahey @CNNMoney Down payment requirements, which rose after the subprime mortgage crisis, are easing again as lenders and mortgage backers try to draw in new buyers. "It's one of the things that's inhibiting first-time homebuyers," said Rob Chrane, president of Down Payment Resource. "There are a lot more people who can qualify for a home that don't realize that they can." FHA cuts insurance costs The Federal Housing Administration has long backed loans for borrowers with lower credit scores and with down payments as low as 3.5%, but until this year it also required hefty insurance payments. FHA annual insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of LoanDepot, one of the largest FHA lenders in the country. "We're starting to get back to what's reasonable," said Hsieh. "The crisis has shaken the market so much that there is no doubt there was an overreaction." Fannie and Freddie Fannie Mae and Freddie Mac guarantee more than half the country's mortgages. At the end of 2014, the two government-backed companies announced plans to slash minimum down payments from 5% to 3%. The new program from Fannie Mae went into effect in December, and the one from Freddie Mac will begin in March. Both are for first-time homebuyers or those refinancing their mortgage, and the Freddie Mac program is restricted to low-income borrowers. Loans backed by the two mortgage giants still require private mortgage insurance for down payments below 20%. And just because Fannie and Freddie are willing to buy loans with looser requirements doesn't mean the lenders themselves will change their standards. "It's a phenomenon of the postrecession where lenders learned their lesson," said David Stevens, president of the Mortgage Bankers Association. "They learned that simply because the investor will allow it, the lender may still not feel comfortable doing it." "Rural" and VA loans Other types of low-down payment loans have also become far more popular since the recession. Despite its name, loans from the Department of Agriculture are available to borrowers in many locations that are hardly rural, and they include no-moneydown financing. To be eligible for USDA loans, a borrower must have dependable income and decent credit, and can't already own a home, exceed certain area median income thresholds or live within certain urban areas.

Department of Veteran Affairs loans are also booming, coming close to outnumbering FHA loans. Although not available to the average American homebuyer, VA mortgage backing allows veterans and surviving spouses to purchase property with no money down, no outside insurance and limited closing costs. Average VA interest rates are lower, and credit and income requirements are also more flexible than conventional loans. A return to easier credit The shift toward loans with lower down payments has drawn criticism

from some politicians -- after all, easy loans with little money down contributed to the crisis that led to the Great Recession. Stevens said that new rules for qualified mortgage loans and more diligent underwriting by lenders will protect the lending market. "Down payment has become the single largest barrier to home ownership," said Stevens. "Quite frankly, it's going to be a lot safer and sounder this time than it was in the past."

EPAB hires first intern We would like to welcome Ana Guillen from Southwest University as our first official intern. Ana came highly recommended by the University as outgoing, business savvy and ready to work. Her time with the Association is to allow her to complete the requirements of her studies. She will graduate upon completion of this internship, or externship as the University calls it. She is assigned to the EPAB for only six weeks at which time she will need full time employment. We encourage members to get to know Ana and look to see if you have a position for her upon her completion with us. If youâ&#x20AC;&#x2122;d like to schedule a visit simply contact Ray at the office, 7785387.

2015 issue 2

Builders Outlook

Housing News Black Applicants More Than Twice as Likely as Whites to be Denied Home Loans

Latest Zillow analysis shows minority groups struggle to access credit, and home values in minority neighborhoods were disproportionately affected in housing boom and bust - In 2013, 27.6 percent of blacks and 21.9 percent of Hispanics who applied for a conventional mortgage were denied, while only 10.4 percent of white applicants were denied. - Nationwide, home values in predominantly Hispanic neighborhoods fell an average of 46.3 percent from the pre-recession peak to the bottom of the market. Over the same period of time, home values fell by 32.1 percent in largely black communities, by 23.6 percent in largely white areas, and by 19.2 percent in mostly Asian areas. - Home values in both black and Hispanic communities nationwide also have farther to climb before getting back to peak levels, while home values in white and Asian neighborhoods have returned or nearly returned to their peak levels. -- Black and Hispanic homeowners have a harder time securing a home loan[i] and face a steeper climb to a full housing recovery than white and Asian homeowners[ii], according to Zillow's latest analysis of race and homeownership data. Zillow's updated analysis of housing value[iii] and federal mortgage denial data by race reveals persistent housing performance and access-to-credit issues for racial and ethnic minorities across the country. For the first time, Zillow studied this important data on a metro level. "While many of the disparities between the experiences of white communities and minority communities during the housing boom and bust can be explained by plain differences in finances and geography, it's clear that the housing playing field remains strikingly unequal in this country," said Zillow Chief Economist Stan Humphries. "Black and Hispanic applicants for conventional home loans make roughly $20,000 less per year than white applicants, resulting in much

higher denial rates. Similarly, black and Hispanic communities are clustered in areas that saw huge run-ups in home values prior to the recession, and even larger drops during the crash. But there are some reasons for optimism. Home values in black and Hispanic communities are expected to rise faster over the coming year, and the data shows that Federal Housing Administration-backed loans have proven to be a viable and critical source of financing in minority communities." The discrepancy is most intense in some of the nation's most volatile markets. Home values in both black and Hispanic communities in the Los Angeles area remain more than 20 percent below their pre-recession peaks, while homes in L.A.'s Asian communities have appreciated beyond those peaks and homes in white neighborhoods are almost at peak levels. Some of the patterns revealed in the data can be explained by geography. For example, many Asian neighborhoods are on the West coast, in some of the country's hottest housing markets, which can help explain why home values in Asian communities have risen faster and further than in other neighborhoods. Similarly, many Hispanic-dominated communities are located in volatile housing markets in the Southwest and Southern California, which can explain their rapid appreciation during the boom and steep fall during the bust. The disparity in loan approvals is likely tied to a number of factors, including income. Applicants who belong to racial minority groups fare better when they apply for governmentbacked FHA loans than conventional loans. The homeownership rate in the U.S. is 63.5 percent overall[iv]. The rate among whites is 71.1 percent; Asians, 57.8 percent; blacks, 41.9 percent; and Hispanics, 45.2 percent.

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Builders Outlook

2015 issue 2

National News Majority of U.S. Homes Qualify For Down Payment Help Irvine, Calif.—According to its newly released report, RealtyTrac found that 87 percent of all U.S. single-family homes and condos would qualify for a local down payment program based on the maximum price requirements for those programs and the estimated value of the properties. For this joint analysis with Down Payment Resource RealtyTrac looked at 2,290 down payment programs from Down Payment Resource’s Homeownership Program Index. At least one down payment program is available in all 3,143 U.S. counties, and more than 2,000 counties have more than 10 down payment programs available to prospective home buyers. Down payment assistance amounts across all counties averaged at $11,565. “Many homebuyers, especially Millennials, haven’t fully investigated their home financing options because they are pessimistic about qualifying for a mortgage. Our Homeownership Program Index highlights the wide range and availability of down payment programs available to today’s

homebuyers. In fact, 91 percent of the 2,290 programs in our registry have funds available to lend to eligible buyers. Plus, income limits vary depending on the market and programs extend beyond just first-time homebuyers,” said Rob Chrane, president and chief executive officer of Down Payment Resource. “It’s important for buyers to research down payment programs as part of their loan shopping process.” Fifty-four percent of programs are Community Seconds, a second mortgage issued by an HFA or nonprofit organization with a very low or no interest rate. The payment on the second mortgage may be deferred or forgiven incrementally for each year the buyer remains in the home. In a typical scenario this could reduce the amount of cash needed to close from $20,000 to $200. “Historically low homeownership rates across nearly every age demographic have led to a public policy push to lower the barrier to homeownership through down payments as low as 3 percent, but the fact is that the barrier to homeownership is often much lower than even that 3 percent for borrowers who take advantage of one of the myriad down payment help programs available across the country,” said Daren Blomquist, vice president at

RealtyTrac. “Prospective buyers—or their agents—willing to put in a few minutes of time to find out what programs are available to them will put themselves in a much better position to successfully purchase a home.” By Robin Nathanson, Associate Editor, multifamlyhousing.com

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As NAHB reported in 2014, new energy-efficiency standards are going into effect for residential water heaters produced after April 15. The changes will affect nearly all types of water heaters being produced. Smaller water heaters of 55 gallons and less, the most common capacity water heaters, will see an increase in size to account for more insulation necessary to make the higher efficiency. That means many suppliers will introduce new models, some with diameters that are 2 inches wider and some that may be 2 inches taller. These increased dimensions may require additional installation clearances and may be a problem for closet installation replacements. The standards will have their biggest impact on the design and installation of gas and electric heaters larger than 55 gallons in capacity – about 10% of the residential water heater market. For these larger units, electric water heaters must use a heat-pump design and gas water heaters will need to be a condensing combustion type to meet the new efficiency requirements. Here’s a more detailed explanation.

Most manufacturers including A.O. Smith, Rheem, Bradford White and State Water Heaters are getting the word out on the impending changes.

Fewer dollars up the chimney with DOE’s proposal for gas fireplaces

Proposed new standards for gas fireplaces may make a cozy night in front of the fire a little cheaper. For decorative hearth products, the little blue flame that stands ready to light your gas fireplace at a moment’s notice can account for about 40% of the total annual energy consumed. Standing pilots lights are on 24/7, continuously burning small amounts of gas and sending dollars needlessly up your chimney. A proposed rule issued by the Department of Energy (DOE) yesterday would eliminate this waste with new energy-saving standards. ¬¬But don’t fret—with the energysaving technology, you’ll still be able start up your romantic, cozy, or moodsetting fireplace with the press of a button or turn of a knob. DOE estimates that the proposed standards would net the average consumer $165 in savings over the life of the product. On a national level, hearth products meeting the new standards sold over 30 years would reduce natural gas consumption by about 7 billion therms, which is equivalent to the annual natural gas consumption of 10 million US households, and net consumers up to $3 billion in savings. Over the same period, the standards would reduce CO2 emissions by 37 million metric tons, an amount equal to the annual emissions of more than 3 million US homes The proposed standards, the first for hearth products, apply to all vented or ventless hearth products including space heating hearth products, decorative products, gas logs, gas stoves, and outdoor hearth products. The standards would require manufacturers to eliminate the continuously burning pilot light. Many products already use electronic ignition—similar to what is used on gas ranges and ovens—eliminating the need for wasteful pilot lights. A final rule is expected in December 2015 with an expected effective date five years later. By Marianne DiMascio, Outreach Director, Appliance Standards Awareness Project (ASAP)

2015 Issue 2

Builders Outlook

www.elpasobuilders.com www.epbuilders.org

Membership News UPCOMING EVENTS | APRIL 8 BOARD MEETING 11:00 GENERAL MEETING 12 NOON EL PASO CLUB CHASE BANK BLDG. DOWNTOWN

APRIL 10 SPRING GOLF TOURNAMENT SHOTGUN AT 10:00 AM HORIZON GOLF CENTER

APRIL 18 – MAY 3 PARADE OF HOMES RIO VALLEY SUBDIVISION

HOMES BY DESIGN THE HERITAGE GROUP SU CASA MAGAZINE

C & L PLUMBING PERFORMANCE GLASS & ALUMINIUM MAJESTIC REALTORS

PELLA WINDOWS METRIE INTER NATIONAL BANK

GIL’S SYSTEMS CONTACT: CARLOS GIL 250 QUINELLA SUNLAND PARK, NM 88063 915-820-9254

HARRIS REAL ESTATE GROUP CONTACT: LANE HARRIS 7100 WESTWIND, STE. 260 EL PASO, TX 79912 915-443-8423

SUN WEST WINDOWS & GLASS CONTACT: ERNIE HERNANDEZ 15089 GLENDIVE DR. EL PASO, TX 79928 915-383-2201

ALL PRO GRANITE & MARBLE CONTACT: MANUEL LOPEZ & JOE CORONA 3625 GATEWAY WEST EL PASO, TX 79903 915-307-8833

G & C MECHANICAL, LLC CONTACT: PABLO GOMEZ 720 HERMOSA DR. CHAPARRAL, NM 88081 575-824-407

RE/MAX REAL ESTATE GROUP/TTi PROPERTY MANAGEMENT CONTACT: PATRICK TUTTLE 5915 SILVER SPRINGS, BLDG. 5 EL PASO, TEXAS 79912 915-231-9994

SMART HOME SOLUTIONS CONTACT: GUSTAVO GONZALEZ 13917 DESERT SONG EL PASO, TX 79928 915-256-6651

MARCH 11 BOARD MEETING 12 NOON EPAB OFFICE

RENEWALS | CASTILLO ELECTRIC CEMEX CASTLE & COOKE MORTGAGE, LLC

NEW MEMBERS |

BEASLEY, MITCHELL& CO., LLP CONTACT: BRAD BEASLEY, CPA 509 S. MAIN, STE. A LAS CRUCES, NM 88001 575-528-6700

VELASCO BROS. ELECTRICAL CONTRACTORS CONTACT: DAVID VELASCO 14004 SANDY POINT EL PASO, TX 79938 915-204-1240

CONDOLENCES | Our deepest condolences to Gregg Davis from first light federal credit union on the loss of his wife, Marian Davis.

Jaime’s Courier Service,Inc.

BASIC IDIQ, INC. CONTACT: EDDIE LINSS 1100 MONTANA, STE 213 EL PASO, TX 79902 915-757-6875

USA GENERAL CONTRACTORS, INC. CONTACT: JAVIER OLMOS 1302 GAIL BORDON PL., STE. A-1 EL PASO, TX 79935 915-633-3339 LOVE ENGINEERING, INC. CONTACT: MONTEZ LOVE 11708 MONTANA AVE. EL PASO, TX 79938 702-658-2587

SODA SPONSOR

Thanks to our FEBRUARY SODA SPONSOR: GMF HOMES

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Great Sponorship Opportunities Still Available. Call 778-5387 for info. today!

Builders Outlook

2015 issue 2

Associates Council

Sam Shallenberger Morrison Supply

Builders

As you know the Associates make up a majority of the membership at our organization. That was clear with the overwhelming response to our recent Speed Networking event where 20 of our lucky Associate members participated in the best Speed Net of the year. I would venture to say that a lot of business got done, is going to be done because of the event. Thanks goes out to our builder members, a lot of them who had never been to the Speed Networking event. From talking with them the whole deal was super.

Thanks to Ray and Margaret for the hard work. I would also like to welcome our new intern Ana Guillen. She comes from Southwest University the school across the street from my office. I’m seeing them grow and grow and with some more growth coming soon. Ray say’s the process has been easier than he thought it would be but it’s nice to see us associated with Southwest University. Some notes on the Spring Golf Tournament sponsored by Haskins Electric. We need you to fill out a team

utlook on the scene |

February General Membership Meeting The first General meeting of the year took place at the Marriott El Paso on February 11 with our special guest Roberto Coronado from the El Paso branch of the Dallas Fed. Over 70 members and guests were in attendance. The meeting was the first for our new president Edgar Montiel and for the newly installed board of directors. At the meeting the crowd listened intently to what Mr. Coronado was speaking on. Coronado is assistant vice president in charge and senior economist at the El Paso Branch of the Federal Reserve Bank of Dallas. In this capacity, Coronado serves as the Dallas Fed lead officer and regional economist for West Texas and Southern New Mexico. Coronado works closely with the branch’s board of directors and provides leadership and oversight for the operating and administrative functions of the El Paso office. He oversees the branch’s outreach activities through publications, presentations and speeches, public conferences and economic education. His research focuses on issues pertaining to the Mexican economy, the U.S.–Mexico border economy, and the maquiladora industry. Coronado has written articles for various Federal Reserve publications and academic journals in both the United States and Mexico. “I think that so long as we have a strong dollar the Borderplex will continue to prosper from the manufacturing standpoint. I also know that a strong dollar will not be good for the retailers since it will cost more for the Mexican buyer to buy in the United States,” he told the group. Coronado also told the audience that the El Paso economy has been good over the last few years, growing while not extending itself too far out there. “I always warn my audience that the one thing that always is a concern is that government employs nearly one out of four in our region, so any loss of funding has a significant impact on the local economy,” he continued. Coronado currently serves as the president of the Rio Grande Economics Association, the El Paso chapter of the National Association for Business Economics. He is also a clinical assistant professor at the University of Texas at El Paso, where he teaches in the Master of Science in economics program. He obtained his PhD in economics from the University of Houston and holds a BBA in accounting and economics and an MS in economics from the University of Texas at El Paso. The next general meeting will take place April 8 and more information on the site of the meeting will be posted as we near the date.

entry and or at least sponsor a tee box. The tournament will sell out as we have only about 9 spots left and a month and a half to go. Don’t wait. I’ll also be asking our Associate members to help us with the Parade of Homes that starts on April 18. If you would like to volunteer to take tickets call Margaret at the office. Thanks to all and see you soon.

Builders

utlook

www.elpasobuilders.com www.epbuilders.org 6046 Surety Dr. El Paso, TX 79905 915-778-5387 â&#x20AC;˘ Fax: 915-772-3038 â&#x2013; execuTive oFFicerS edgarâ&#x20AC;&#x2C6;montiel,â&#x20AC;&#x2C6;President Palo Verde Homes carlosâ&#x20AC;&#x2C6;villalobos,â&#x20AC;&#x2C6;viceâ&#x20AC;&#x2C6;President Pointe Homes Donâ&#x20AC;&#x2C6;rassette,â&#x20AC;&#x2C6;Secretary/Treasurer Rassette Homes Samâ&#x20AC;&#x2C6;Shallenberger,â&#x20AC;&#x2C6;Associatesâ&#x20AC;&#x2C6;chair Morrison Supply

â&#x2013; TABâ&#x20AC;&#x2C6;STATeâ&#x20AC;&#x2C6;DirecTorSâ&#x20AC;&#x2C6;â&#x20AC;&#x2C6; Randy Bowling Greg Bowling Sam Shallenberger â&#x2013; NATioNALâ&#x20AC;&#x2C6;DirecTorS Bobby Bowling IV. Demetrio Jimenez NATioNALâ&#x20AC;&#x2C6;ASSociATioNâ&#x20AC;&#x2C6;oFâ&#x20AC;&#x2C6; Homeâ&#x20AC;&#x2C6;BuiLDerS (800) 368-5242

Frankâ&#x20AC;&#x2C6;Torres,â&#x20AC;&#x2C6;immediateâ&#x20AC;&#x2C6;Pastâ&#x20AC;&#x2C6;President GMf Homes TexASâ&#x20AC;&#x2C6;ASSociATioNâ&#x20AC;&#x2C6;oF rayâ&#x20AC;&#x2C6;Adauto,â&#x20AC;&#x2C6;executiveâ&#x20AC;&#x2C6;viceâ&#x20AC;&#x2C6;President Executive Vice President Jayâ&#x20AC;&#x2C6;Kerrâ&#x20AC;&#x2C6;-Attorneyâ&#x20AC;&#x2C6;ofâ&#x20AC;&#x2C6;record Firth, Johnston, Bunn & Kerr â&#x2013; couNciL/commiTTeeâ&#x20AC;&#x2C6;cHAirS Associatesâ&#x20AC;&#x2C6;council Sam Shallenberger Buildâ&#x20AC;&#x2C6;Pac Randy Bowling Landâ&#x20AC;&#x2C6;useâ&#x20AC;&#x2C6;council Linda Troncoso Youngâ&#x20AC;&#x2C6;Designerâ&#x20AC;&#x2C6;Award John Chaney remodelersâ&#x20AC;&#x2C6;council Rudy Guel membershipâ&#x20AC;&#x2C6;retentiion Patrick Tuttle Financeâ&#x20AC;&#x2C6;committee Kathy Carrillo Henry Tinajero

â&#x2013; ADviSorYâ&#x20AC;&#x2C6;Toâ&#x20AC;&#x2C6;THeâ&#x20AC;&#x2C6;BoArD Jay Kerr, Firth, Johnston, Bunn & Kerr James Martinez, Law Office of James Martinez

BuiLDerS (800)252-3625

2014â&#x20AC;&#x2C6;Builderâ&#x20AC;&#x2C6;memberâ&#x20AC;&#x2C6;ofâ&#x20AC;&#x2C6;Theâ&#x20AC;&#x2C6;Year Frankâ&#x20AC;&#x2C6;Torres GMf Homes 2014â&#x20AC;&#x2C6;Patâ&#x20AC;&#x2C6;coxâ&#x20AC;&#x2C6;Award Bretâ&#x20AC;&#x2C6;Thompson foxworth Galbraith Lumber 2014â&#x20AC;&#x2C6;Associatedâ&#x20AC;&#x2C6;ofâ&#x20AC;&#x2C6;Theâ&#x20AC;&#x2C6;Year Joeâ&#x20AC;&#x2C6;Bernal Employee Benefits Of El Paso 2014â&#x20AC;&#x2C6;Johnâ&#x20AC;&#x2C6;Shatzmanâ&#x20AC;&#x2C6;Award Cindy Bilbe, Stewart Title Honoraryâ&#x20AC;&#x2C6;Lifeâ&#x20AC;&#x2C6;members Mark Dyer Wayne Grinnell Don Henderson Chester Lovelady Cliff C. Anthes Anna Gill Brad Roe Rudy Guel E H Baeza Pastâ&#x20AC;&#x2C6;Presidents committedâ&#x20AC;&#x2C6;toâ&#x20AC;&#x2C6;Serve Greg Bowling Bobby Bowling, IV Kelly Sorenson Rudy Guel Mark Dyer Anna Gil Mike Santamaria Bradley Roe John Cullers Bob Bowling, III Randy Bowling Edmundo Dena Doug Schwartz Hershel Stringfield Robert Baeza Pat Woods

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Antonio Cervantes, BIC Homes Beverly Clevenger, Automated Div. 6 Builders Bret Thompson, foxworth Galbraith Lumber Bud foster, Southwest Land Development Servises Dan Ruth, Millienium Homes Henry Tinajero, West Star Bank Joe Bernal, Employee Benefits Of El Paso John Chaney, Passage Supply

ePABâ&#x20AC;&#x2C6;missionâ&#x20AC;&#x2C6;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.

John Dorney, Dorney Security Kathy Carrillo, Pioneer Bank Kathy Parry, Hunt Companies Leti Navarette, Custom Dream Homes Linda Troncoso, TRE & Associates Robert Najera, Joseph Homes Ruben Orquiz, MTI Ready Mix Walter Lujan, Dawco Builders

ÂŠ 2015 Builderâ&#x20AC;&#x2122;s Outlook is published and distributed for the El Paso Association of Builders by Ted Escobedo, Snappy Publishing ted@snappypublishing.com El Paso â&#x20AC;˘ Texas â&#x20AC;˘ 915-820-2800

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