Builders Outlook
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National, State & Local Building Industry News 2016: Issue 4
Single-Family Sector Leads Housing to Higher Ground
Steady job growth, affordable home prices, attractive mortgage interest rates and pent-up demand will help the housing market continue on a gradual upward trajectory in the year ahead, according to economists who participated in yesterday’s National Association of Home Builders (NAHB) Spring Construction Forecast Webinar. However, supply side headwinds led by a shortage of construction lots and labor, along with tight access to acquisition, construction and development (AD&C) loans, continue to hamper a more robust recovery. “Builders remain cautiously optimistic about market conditions,” said NAHB Chief Economist Robert Dietz. “2016 should be the first year since the Great Recession in which the growth rate for single-family production exceeds that of multifamily. And we see singlefamily growth accelerating in 2017 as the supply side chain mends and we can expand production.” Steady job growth has bolstered consumer confidence and rekindled housing demand. Nationally, payroll employment has surpassed its pre-recession peak by a modest margin and only a small number of states lag behind pre-recession levels.
The Forecast Looking at the forecast, singlefamily production is expected to post a 14 percent gain in 2016 to 812,000 units and rise an additional 19 percent to 964,000 units in 2017. Using the 2000-2003 period as a healthy benchmark when singlefamily starts averaged 1.3 million units on an annual basis, NAHB is projecting that single-family production, which bottomed out at an average of 27 percent of normal production in early 2009, will rise to 64 percent of normal by the fourth quarter of this year and climb to 77 percent of normal by the end of 2017. Single-family production currently stands at 58 percent of normal activity. “Consumer surveys suggest the ultimate goal of millennials is to purchase a single-family home in
the suburbs,” said Dietz. “We see growth for single-family looking ahead. The recovery continues and is dictated by demand side conditions and supply side headwinds.” On the multifamily side, production ran at 395,000 units last year, above the 331,000 rate that is considered a normal level of production. Multifamily starts are expected to decline 4 percent to 379,000 units this year and rise 6 percent to 402,000 units in 2017. Residential remodeling activity is expected to increase 3.3 percent in 2016 over last year and rise an additional 1.3 percent in 2017. The Best Year Since 2006 Len Kiefer, deputy chief economist at Freddie Mac, cited several factors that should make this year’s home sales the best in a decade: Household formations are projected to accelerate. Between 2008 and 2014, the slowdown resulted in 5.1 million fewer household formations than normal. Purchase applications show solid home sales that match demographics. More owners are current on their mortgages, with fewer defaults and less foreclosures. Solid job gains include rising salaries and wages. House prices are rising about 6 percent annually and appear roughly in line with incomes and rents. “Demographic tailwinds are
helping to propel the housing market forward,” said Kiefer. Freddie Mac is projecting 5.9 million total home sales this year, the highest level since 2006, and 6.2 million in 2017. Regionally, Kiefer said that house price growth is the strongest in the South and West, with Nevada, Oregon, Washington, Colorado and Florida all posting double-digit statewide house price appreciation between December 2014 and December 2015.
Back to Basics Also looking below the national numbers, NAHB senior economist Robert Denk said that housing market conditions are improving across the nation, but the pace of the recovery continues to vary by state and region. “A common theme has emerged,” said Denk. “The progress of market recovery is no longer a function of the boom and bust cycle marked by price bubbles, excess supply and foreclosures. The key driver of the housing recovery is now back to the underlying housing market fundamentals of population and job growth.” The hardest hit areas during the downturn included the “bubble” states of California, Arizona, Nevada and Florida, where housing market excesses were the greatest, and the industrial Midwest, where the longer-term decline in U.S. manufacturing was exacerbated by the recession. Marked by solid job growth,
housing markets in the bubble states are on the mend while the Midwest continues to languish due to an ongoing sluggish manufacturing base. The states with the strongest housing market recoveries are also among the leaders in payroll employment gains since the end of the recession. The strongest housing recoveries to date are in Montana, North Dakota and Utah, all with robust energy sectors, which helped push them near or beyond full recovery in housing production. The next tier of leaders includes Texas, Oklahoma, Louisiana and Alaska – again, all with prominent energy sectors. While the collapse in oil prices since mid-2014 will undermine the strength of the economies in these states as their energy sectors contract, the extent of the weakening will depend on the diversity of the economy. “The basic principle remains the same,” said Denk. “A strong economy, whether helped, hindered or unaffected by the energy economy, will be a key factor driving housing recoveries going forward.” In another way of looking at the long road back to normal, by the end of 2017, the top 20 percent of states will reach at least 102 percent of normal single-family production levels, compared to the bottom 20 percent, which will still be below 65 percent.
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Builders Outlook
STAY SAFE. CALL 811 BEFORE YOU DIG. If you have digging or excavation work to do, remember to call 811 at least two business days in advance. Natural gas and other utility lines may be buried beneath the surface. By calling 811, utility crews can mark locations of underground lines at no charge. The markings are done in paint and will eventually wash away. Marking line locations can help prevent you from accidentally damaging a natural gas line or another utility line. Always call 811 before you dig. It can help keep you and your construction crew safe, and failing to do so can result in a fine.* * Texas Utilities Code 251.201 Civil Penalties
2016 issue 4
2016 issue 4
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Builders Outlook
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President’s Message
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Carlos Villalobos
President, El Paso Association of Builders
El Paso, Permian Basin and Surrounding Area
El Paso market looking good We had a great meeting this month with Guest Speaker Mayor Oscar Leeser, who shared some very encouraging news about El Paso. First and foremost he informed us that El Paso has created around 8,800 jobs in the last year dropping the unemployment rate to around 4.4% in February, well below the national unemployment rate of 4.9%. Mayor Leeser said that his administration has been very focused on bringing new jobs to the El Paso through an active courting of different large corporations. He has teamed up with Juarez Mayor Enrique Serrano and they have gone to visit businesses in several states and invited them to visit our great city. “We are looking for long term partners, not just businesses trying to create a job today” said Mayor Leeser. This strategy has proven quite successful as businesses such as ADP are investing heavily in El Paso to the tune of $82M and 2,400 new, high paying jobs. This is exactly what we need. I’ll leave you with a quick analysis of a report prepared by our friends at GEPAR prepared for the month of March 2016: 1. Active Listings down from 4,761 a year ago to 3,910: This represents an 18% decrease in active listed inventory, this is very positive since it means less inventory
and less downward pressure on home prices. 2. Average Listing price up to $191K from $184K a year ago: Another positive measure, average listing price up 3.8%, which might have a little (or a lot) to do with home inventories being down. 3. Months of inventory down to 9 months from 12 months a year ago: No explanation needed here. 4. Average Listing price per square foot up to $99 / SF from $92 a year ago: This is very important information. Last year about 4,250 used homes were sold in El Paso, since we’re not building any more “old homes”, the inventory is fixed and limited. It is natural that the homes in better condition and priced correctly will move quicker, making today’s used home inventory less attractive and less affordable than a year ago. It is way easier for new homes to compete with $99/SF than with $92/SF. So all of this is good news for our industry as we breeze through the spring season. Last but not least, don’t forget to mark your calendars for June 24, 2016 for our own Parade of Homes at Enchanted Hills. Thank you to our members for all of your support,
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2016 Issue 4
Executive’s Message Ray Adauto, Executive Vice President EPAB I’d like to take time to thank the partners we had on our spring golf outing. We quit calling it a tournament when the scores being turned in were new course records, so instead we adopted the name “Pachanga” or party in Spanish slang. Much more appropriate and frankly a lot more fun. Our title partner once again was StrucSure Home warranty and our friend Scott Whisenant who put it all together for us. Our host club was Painted Dunes, a special thanks to Anthony and his crew. Great job overall. More on the golf Pachanga in pictures a few pages down. If you’re a builder or supplier and aren’t aware of the new IECC energy Codes for 2015 you may be in for a shocker. The Texas Association of Builders sponsored a training on April 28 and it was great. The City of El Paso will be enforcing the new codes in September, so if you haven’t been
Spring brings more growth to El Paso thinking about them you should. As anyone building in California or Florida will tell you these are codes that have been in effect there for a couple of decades but now the whole country is required under the international energy code council. Get up to speed or find yourself with an unsellable house because unless you do the new code you won’t pass inspection. The association will be working to bring another training so that we can cover more of you. Keep looking in your email for notices of upcoming training. I’m really glad that we are going to finally see Alamo Drafthouse open. I’ve been going to them in the Austin area forever and could not wait to have them come to El Paso. What I’m really waiting to see is those habitually late movie goers get a shock when the Alamo tells them they can’t be seated after the movie starts. I also can’t wait to see them kick out
those who ruin the movie experience by texting during the show. Oh yeah, they’ll be gone as well. Frankly I’m a movie going buff and nothing spoils the atmosphere more than people who are rude. We went to see The Jungle Book recently at Bassett Place and dang if a couple of people walked in halfway through the movie and then wouldn’t shut up. They of course sat right in front of me, so I reached down and told them to be quiet. Like two year olds they didn’t, and since one or both of them were hard of hearing the talking kept going. That shouldn’t happen at Alamo, and maybe that will give the other movieplexes “permission” to do what’s right and remove rude people from the theater. Yeah, sure. I better get a yearly pass to Alamo. Those wonderful changes keep coming. The new 22 story hotelapartment complex to be built behind Coronado Tower is really important
for the city. While the NIMBYS will try to stop it the association stands firmly behind its construction. When investors are willing to drop millions into a project like this it’s no time for the citizens to get all up in arms. Think of it this way: the empty lot is not generating much tax revenue and it isn’t getting any jobs. Like all growth but particular commercial growth this investment is critical to the progress of making El Paso a “big” city again. Our congratulations to the Myers Group for such forward thinking, and to the city leaders who are open to the complex. This will create long term jobs in the city, construction jobs and supplier jobs. And that creates the other jobs like the grocery jobs, day care, retail and restaurants plus many more to mention. Join us in the support of the project. Like we say, “Building tomorrow today!”
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National Builder News Remodeling Market Index Dips in First Quarter
“Remodelers were solidly booked for jobs in the first quarter of 2016 but calls and appointments for work slowed down in comparison to the end of 2015,”
n The National Association of Home
Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 54 in the first quarter of 2016, dipping four points below the previous quarter but remaining in positive territory above 50. An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity. “Remodelers were solidly booked for jobs in the first quarter of 2016 but calls and appointments for work slowed down in comparison to the end of 2015,” said 2016 NAHB Remodelers Chair Tim Shigley, CAPS, CGP, GMB, GMR, a remodeler from Wichita, Kan. “Volatility in the financial markets during the first quarter may have impacted consumers’ readiness to commit to projects.” The RMI’s current market conditions index stands at 55, decreasing by a single point from the previous quarter. Among its components, major additions and alterations continued gains from the previous quarter, rising to 55 from 54. The smaller remodeling projects component decreased two points to 54, and the home maintenance and repair component of the RMI decreased two points to 56.
At 53, the RMI’s future market conditions index decreased six points from the previous quarter. Among its four components, calls for bids decreased to 51 from 58, the amount of work committed fell to 52 from 57 and appointments for proposals dropped to 52 from 60. Meanwhile, the backlog of remodeling jobs decreased only three points to 58 from the previous quarter’s reading and high-water mark of 61. “Minor declines in the small additions and maintenance categories coupled with a slight uptick in major additions resulted in a flat outcome for current market conditions,” said NAHB Chief Economist Robert Dietz. “While the future market conditions of the index dipped slightly, we still anticipate modest growth in the remodeling industry over the course of 2016.”
BUILDING
New Home Sales Relatively Unchanged
n Sales of newly built, single-family homes fell 1.5 percent in March from an upwardly revised February reading to a seasonally adjusted annual rate of 511,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. “Builders are slowly raising inventory as they remain cautious about the housing recovery,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “Though sales were flat this month, they are running modestly higher on a yearover-year basis,” said NAHB Chief Economist Robert Dietz. “We expect the sales pace to rise through 2016, given ongoing low mortgage interest rates and healthy job creation.”
El Pa aso
The inventory of new homes for sale rose to 246,000 in March, which is a 5.8month supply at the current sales pace. The median sales price of new houses sold in March was $288,000.
Regionally, new home sales rose 18.5 percent in the Midwest and 5 percent in the South. Sales were unchanged in the Northeast and fell 23.6 percent in the West.
SINCE 1950
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Builders Outlook
Financial Perspective
Elliot Eisenberg Economic & Policy Blog
There exists concern among many that should another recession come soon, the government will have few, if any, tools to bring the economy back towards growth and prosperity because interest rates are already near rock bottom. As a result, it is feared that our economy could quite possibly remain in the doldrums for some time. Fortunately, this is simply not true. There remain numerous tools at the disposal of the Fed and of the Congress. Below are some ideas that are surely being considered should more intervention become necessary. To begin, the central bank could once again ramp up its purchases of
U.S. services sector expands strongly as orders, employment rise
2016 Issue 4
Policies can jump start economy Treasuries and mortgage-backed securities (MBS) through another round of quantitative easing. But rather than sticking to just Treasuries and MBS, this time the Fed could buy a much broader range of assets, including high-yield bonds, stocks, and even real estate to get asset prices up and markets out of the doldrums. Another step the Fed could take is to push interest rates into negative territory, meaning it would start charging, yes charging, banks to keep money on deposit rather than paying them the current rate of 0.5%. While this seems preposterous, at present central banks in Denmark, Japan, Sweden and Switzerland, along with the European Central Bank are doing precisely this. The aim would be to encourage banks to lend by penalizing them to hold cash. In a similar vein, the Fed could alternatively pay banks to lend money to borrowers. This policy is less harmful than using negative interest rates, as it does not reduce bank profits nor does it
encourage banks to charge their depositors to keep deposits on hand to recoup the money paid to the Fed. Paying banks is akin to using a carrot, lower rates; a stick. In addition to the above, the Fed could also promise to keep mortgage rates at or below a certain level for an extended period of time with the explicit aim being to boost lending activity by enabling more people to qualify for a mortgage. This would boost home sales and residential construction activity. Another way to boost spending and inflation is for the government to announce a tax cut and issue bonds to finance it. But, rather than selling the bonds to private investors (which takes money out of circulation), the Fed would buy the bonds. This “Helicopter money� (HM) named in honor of Milton Friedman and which fuses fiscal and monetary policy, is as close as you can get to raining cash from the clear blue sky like manna down on households. While HM is not to be rushed into, in a
The vast U.S. services sector expanded in April as new orders and employment accelerated, bolstering views that economic growth would rebound after almost stalling in the first quarter. The growth outlook was, however, dimmed by other data on Wednesday showing private employers hired the fewest number of workers in three years in April. The Institute for Supply Management said its nonmanufacturing index rose 1.2 percentage points to a reading of 55.7 in April. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of the U.S. economy. Services industry activity was last month buoyed by a 3.2
percentage point surge in new orders. A gauge of services sector employment rose to 53.0 last month from a reading of 50.3 in March. That strong increase should offset concerns about the labor market, which had been stoked by the ADP National Employment Report showing private payrolls increased 156,000 last month, the smallest gain since April 2013, after rising 194,000 in March. The ADP report, which is jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment report for April due on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 202,000 jobs in April after rising 215,000 in March. The
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deep recession or global crisis, it might well make sense. And, if it were coordinated by a group of rich countries, all the better. Lastly, the Congress could surprise us and use fiscal policy and pass structural reforms. Fiscal policy such as large tax cuts or spending on large infrastructure projects would give private sector firms more confidence about future demand and thus make a recovery more likely. Structural reforms could include tax reform and increased deregulation. In short, the government is far from being out of policies that could be employed to jump-start the economy in the event of a recession in the near future. While some policies will undoubtedly work better than others, the key will be to implement a number of them at once. 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.
unemployment rate is forecast holding steady at 5.0 percent. The labor market has so far weathered the sluggish economy, which has been slammed by weak exports as a result of a strong dollar and tepid global demand. Growth has also been eroded by relentless aggressive spending cuts in the energy sector in the aftermath of last year's plunge in oil prices, as well as efforts by businesses to reduce an inventory overhang. The economy slowed to an annual growth pace of 0.5 percent in the first quarter after expanding at a 1.4 percent rate in the fourth quarter. The ADP report showed employment in the goods-producing sector dropped by 11,000 jobs in April, with manufacturing payrolls declining by 13,000 positions. The construction industry added 14,000 jobs last month. Services industry employment increased by 166,000 jobs in April, down from 189,000 in March. The dollar rose against a basket of currencies on the reports. Prices for U.S. government debt fell. In a second report, the Commerce Department said the trade deficit fell 13.9 percent to $40.4 billion in March, the smallest since February 2015 as imports of goods plunged to their lowest level since 2010. Goods exports also fell. The lingering impact of the dollar's past rally and soft global demand have hampered exports, but there are signs that some of the drag is starting to fade. The Institute for Supply Management reported on Monday that a gauge of export orders received by U.S. manufacturers rose in April for a second straight month, reaching its highest level since November 2014. WASHINGTON | By Lucia Mutikani REUTERS
2016 ISSUE 4
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Builders Outlook
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Buildeers Outlook On the Scene
Fore!
Spring golf tourney another success
The Spring Golf Pachanga took place at Painted Dunes Desert Golf Course on April 8. The forecasters were calling for significant rain including thunder showers, high wind and just overall poor playing conditions. We were waiting for good news but even up to the morning weather reports the news didn’t look good. Now I’m not sure but I think that Sam, John Chaney and myself must have said a few dozen prayers and they were answered. The skies broke out of the clouds, the rain went north of us, and the wind was gentle at the time the shotgun start went off. Conditions turned out beautiful and once again we had a terrific golf tournament. Twenty two teams took to the course and enjoyed breakfast burritos compliments of Morrison Supply, and began play. The course had plenty of water, soda and beer compliments of HUNT. When the playing stopped we were fed a delicious steak dinner sponsored by Haskins Electric. There were plenty of gifts and our tournament Title Partner StrucSure Home Warranty provided very nice Titleist caps to all the participants. Painted Dunes supplied golf balls and many of our members contributed to the goody bag. The day was beautiful and the game went well. Compliments poured in throughout the tournament on the fun time and quality of the tournament. Our thanks goes to Scott Whisenant of StrucSure Home Warranty; Sam Shallenberger the tournament chairman emeritus; Gina Avila from Morrison, Sandra from Builders Source and Margaret Adauto for putting the bags together and taking them out to the course. Both Sandra and Gina along with Lorraine Huit and Terry Martin helped with registration. Our photographer was Patrick Tuttle from Legacy Real Estate, and man did those pictures come out great. Thanks to all of our partners and tee box advertisers. We couldn’t do this without your support.
Issue 4
Thanks to our Spring Golf Tournament sponsors: StrucSure Home Warranty Hunt Companies Dorney Security Delta Faucets
Pointe Homes
HUB International GECU
Cullers Homes
Southwest Land Development Services Mark Winton,Inc.
food by:
Haskins Electric Morrison Supply
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Builders Outlook
2016 issue 4
Lending Mortgage costly if spouse has low FICO score Another thing to keep in mind is that when you're not on the mortgage and the borrower makes a late payment, your credit won't take a hit. Do a credit checkup Before you decide to jointly apply for a mortgage with someone else, review your credit reports. Get a free credit report today at myBankrate. "Having knowledge of your base report, even without a score, is extremely beneficial," Leyrer says. Take that information to a mortgage professional and get some guidance on how to move forward. Additionally, be sure to find out what your coborrower's credit scores are. "Know the importance of adding somebody to a mortgage with a potentially lower score," Stearns says.
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When you and your significant other have made a commitment, you may think you're ready to share everything - including a mortgage. It's a romantic notion that can collide with this cold financial reality: Applying for a mortgage with another person can be risky, especially if one of you has a notably lower credit score. Wait, what? When you apply for a mortgage with one or more other borrowers, the lender will pull 3 credit scores -- based on credit reports from each of the 3 major credit reporting bureaus -- and base the loan application on the lowest middle score among the applicants. Let's say you and your spouse jointly apply for a mortgage, and let's say your own credit scores stand at: 685 699 705 But your spouse's scores are: 701 717 725 The lender would look at the 2 middle scores -- 699 and 717 -- and tie the mortgage terms to the lower of those: 699. The rule may not be common knowledge to many consumers, but it's been around for decades, says Pava Leyrer, chief operating officer at Northern Mortgage Services in Grandville, Michigan. "There aren't very many constants in our business, but that's a constant," she says. Risk is a key factor You might be wondering: Why wouldn't a lender go with the higher middle score? Seems fair, right? It's all comes down to risk, says John Stearns, senior mortgage banker at American Fidelity Mortgage Services in Milwaukee. "If you're going to look at the overall risk, the safest thing to do would be to take the lower middle score," Stearns says. The good news is that there's room for a lower credit score to improve. "When they start making payments on time their score should go up, because your mortgage is your biggest monthly payment," he says. Is a joint application necessary? In a Bankrate survey, nearly 4 in 10 Americans said knowing someone's credit score might make them think twice about dating that person. But you don't have to be quite so exclusive to avoid a higher-cost mortgage. The easiest way to get around the rule when you're in a relationship is to have one person apply for a mortgage, though that person would need to have a strong enough application that would allow them to qualify alone. But as a recent Washington Post article points out, there are couples who have sentimental reasons for applying jointly. Even if your name isn't on the mortgage, you can still be named on the title policy, Stearns explains. "That gives you equal ownership with the person who has the loan," he says.
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2016 issue 4
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Builders Outlook
El Paso Development News
'The Substation' Brings Village Style Retail Center to Westside
An upcoming commercial project will add a "village-style" retail center to West El Paso and will include shops and restaurants in a "heavily landscaped" atmosphere. That's according to plans for The Substation which will be built at the corner of Doniphan Drive and Sunset Road near El Paso's Upper Valley, south of North Mesa Street. The center will include 24,000 square feet of total space for both restaurants and retail uses amid
"heavy landscaping" and outdoor seating areas. According to the site plan and renderings of the site, buildings will be clustered at slight angles along Doniphan and Sunset, with the majority of parking placed behind the buildings. There will also be street parking along Sunset. A "landmark tower" will add architectural interest to the intersection, with a small pedestrian mall and seating area behind it.
Builders Outlook 2016 Issue4 www.elpasodevnews.com
One of the main features at The Substation retail center in West El Paso will be a pedestrian mall and meeting area, shown in this rendering. (EP Riverbend Development)
The retail center has been in the works for a few years with EP Riverbend Development spearheading the project. "The Substation concept brings a unique approach to retail and dining in a 'village' approach on a site long overdue for redevelopment," the developer states on the project website. "The project will incorporate a vintage look and feel through uncommon 'nostalgic' design
elements within the facades and building materials. The village will be heavily landscaped and utilize connected walkpaths, a pedestrian A page at the site lists two tenants so far, 2Ten Coffee Roasters and The Old Yellow Bus, a children's boutique. According to the website, plans are to open the center in summer of 2016. For more information, visit www.substationep.com.
New Cinemark Theater to Anchor 'Eastlake Marketplace' near Horizon The Far East El Paso area is getting yet another Cinemark movie theater as part of a large shopping center development at the corner of Eastlake Boulevard and Gateway West. It will be the theater chain's fourth location in the East El Paso area. The Cinemark theater will anchor a new shopping center named Eastlake Marketplace in an area just outside of El Paso's city limits, west of Horizon City. A site plan for the development shows the theater located along Gateway West with the majority of retailers on the northern side. Another large anchor is shown on the site plan, listed at nearly 190,000 square feet. It shows a possible related fuel island. The East Side of El Paso alone has
three Cinemark locations already, at Cielo Vista Mall, at Las Palmas Marketplace, and on Montana Avenue at Rich Beem Boulevard. The West Side locations are at Sunland Park Mall and at Remcon Circle. Smaller shops and restaurants will be located nearer to Gateway West and Eastlake Boulevard, similar to what is seen in the plans for West Towne Marketplace. Few other details are available regarding Eastlake Marketplace, which is being developed by River Oaks Properties of El Paso. No official announcement has been made for the new Cinemark, which has been made public by a sign at the development. A construction completion date has not been disclosed.
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Builders Outlook
Larger Remodeling Projects Trending Up
Whole house remodels and additions are regaining market share according to a survey of remodelers released by NAHB Remodelers, the remodeling arm of the National Association of Home Builders (NAHB). The survey, released today to kick off National Home Remodeling Month in May, revealed the most common remodeling projects in 2016, compared to historical results of the survey. “While bathroom and kitchen remodels remain the most common renovations, basements, whole house remodels and both large and small scale additions are returning to levels not seen since prior to the downturn,” said 2016 NAHB Remodelers Chair Tim Shigley, CAPS, CGP, GMB, GMR, a remodeler from Wichita, Kan. “Clients want to add more space, but remodeling a significant portion of the home is no easy feat. That’s why it is important to work with a professional remodeler who has the integrity and expertise to take on these large remodeling jobs.”
In the survey, remodelers reported that the following projects were more common than in 2013: • Whole house remodels increased by 10 percent • Room additions increased by 12 percent • Finished basements increased by 8 percent Bathroom additions increased by 7 percent Bathrooms topped the list of most common remodeling projects for the fifth time since 2010. Eighty-one percent of remodelers reported that bathrooms were a common remodeling job for their company while 79 percent of remodelers reported the same for kitchen remodels. Window and door replacements decreased to 36 percent from 45 percent in 2014.
2016 issue 4
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2016 Issue 4
Association News & Events
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Builders Outlook
If you have an event or meeting that you would like to share with EPAB members, please submit your information to: margaret1@elpasobuilders.com
SODA SPONSOR UPCOMING EVENTS MAY 11 BOARD MEETING 12:00 NOON EPAB OFFICE MAY 26 SPEED NETWORKING 2:00-4:00 EPAB OFFICE JUNE 8 BOARD MEETING 11:00 GENERAL MEETING 12 NOON MARRIOTT HOTEL
NEW MEMBERS EL PASO J. A.G., INC. CONTACT: PATRICIA CASTRO 230 CHELSEA STREET EL PASO, TEXAS 79905 915-533-8607 DIAMOND HOMES, LLC. CONTACT: VALERIE BAQUERA 373 ESCALANTE EL PASO, TX 79927 915-448-9044
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Connect to the El Paso Association of Builders: www.elpasobuilders.com
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Builders Outlook
Expert Advice
2016 issue 4
It’s Time for a 401(k) Tune-Up
Joe Bernal
Employer Benefits of El Paso
Give your 401(k) plan a little routine care and maintenance to avoid compliance problems! A compliance review will help you catch any plan errors or overlooked updates that might affect the retirement income of one or more of your company’s employees or subject your company to regulatory penalties. Here’s a quick run-down of how to check under the hood of your organization’s 401(k) plan: • Laws related to retirement plans change quite frequently, and the IRS generally establishes firm deadlines for adopting these changes. Update your calendar tickler to remind you when amendments must be completed. Maintain regular contact with the company that sold you the plan to ensure you’re getting the latest updates. • Perform a review of compensation definitions and provide training for the person or people in charge of determining employee/participant compensation. This will help you make sure your plan’s definitions of compensation are correct for deferrals and allocations. • To ensure you make employer matching contributions correctly for all eligible employees, review your plan document to determine the correct matching contribution formula and compare that to what’s being used. Ensure that your plan administrator has adequate and sufficient employment and payroll records to make the calculations. • Initiate an independent review to determine if highly compensated and non-highly compensated employees are properly classified. This will help you satisfy the actual deferral percentage (ADP) and actual
contribution percentage (ACP) nondiscrimination tests. • Review payroll records to extract the total number of employees, birth dates, hire dates, hours worked and other pertinent information to ensure all eligible employees identified are given the opportunity to make an elective deferral. Also inspect W-2 and state unemployment tax documents to see if employee counts are accurate. If an employee was not provided the opportunity to make an elective deferral, make a qualified non-elective contribution (QNEC) to the plan on the employee’s behalf. • Provide your plan administrator with sufficient payroll information and inspect deferral amounts for plan participants to make sure elective deferral distributions do not exceed amounts allowed under IRC section 402(g) for the calendar year ($18,000 in 2015 and 2016, plus an additional $6,000 if the employee is age 50 or older). • To ensure timely deposits of employee elective deferrals, coordinate closely with your payroll provider to determine the earliest date the deferral deposits can reasonably be segregated from general assets, then set up procedures to ensure deposits are made by that date. • If your 401(k) plan is determined to be “top-heavy,” make employer contributions of up to three percent on behalf of all non-key employees still employed on the last day of the plan year. A plan is top-heavy when, as of
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the last day of the preceding plan year, the aggregate value of the plan accounts of key employees exceeds 60 percent of the aggregate value of the plan accounts for all employees under the plan. • Reacquaint yourself and plan administrators with hardship provisions designed to help employees who are facing immediate or heavy financial need. Share information between plan administrators and payroll offices regarding hardship distributions made from the plan. • Ensure timely filing of Form 5500 (Annual Return/Report of Employee Benefit Plan) ERISA, and Summary Annual Report (SAR) to all plan participants annually. Don’t assume someone else is filing these forms. Each plan may have a number of individuals providing service to the plan, including your CPA, the TPA,
benefits attorney, auditor, inside auditor, human resource employees, banker, and financial advisor. The plan administrator should have the responsibility for making certain the return is properly filed. Finally, if you have any questions or concerns, opt for an independent review of your plan administration. Then develop communications protocols to make all relevant parties aware of changes on a timely and accurate basis. For more information on 401(k) plan administration or setup, please contact us. For a review of your financial situation and assistance in developing your financial plan, please contact us. Employer Benefits of El Paso (915) 542-0900 joe@employeebenefitsep.com w.employeebenefitsofelpaso.com
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Builders Outlook
15
2016 Issue 4
6046 Surety Dr. El Paso, TX 79905 915-778-5387 • Fax: 915-772-3038
■ EXECUTIVE OFFICERS
PRESIDENT
Carlos Villalobos
VICE PRESIDENT
NATIONAL ASSOCIATION OF HOME BUILDERS
(800) 368-5242
Don Rassette
SECRETARY/TREASURER
TEXAS ASSOCIATION OF
Kathy Parry
BUILDERS
(800)252-3625
ASSOCIATES CHAIR John Dorney
ECECUTIVE VICE PRESIDENT Ray Adauto
PAST PRESIDENT Edgar Montiel
Membership Retentiion Patrick Tuttle
Finance Committee Kathy Carrillo
Henry Tinajero
■ ADVISORY TO THE BOARD
Jay Kerr, Firth, Johnston, Bunn & Kerr
James Martinez, Law Office of James Martinez
2015 Builder Member Of The Year Edgar Montiel
Palo Verde Homes 2015 Associate Of The Year Interceramic Tile
Mark Dyer
Wayne Grinnell
Don Henderson
Chester Lovelady Cliff C. Anthes Anna Gill
Brad Roe
Walter Lujan, Dawco Home Builders
Samira Gonzalez, ICON Custom Homes Sal Masoud, DRE Development
Joe Bernal, Employer Benefits Of El Paso Linda Troncoso, TRE & Associates
Bret Thompson, Foxworth Galbraith Lumber Ted Escobedo, Snappy Publishing, LLC Patrick Tuttle, Legacy Real Estate Sam Trimble, Lone Star Title
Luis Rosas, HUB International Gilbert Pedregon, GECU
Gregg Davis, First Light FCU ■ TAB STATE DIRECTORS
Randy Bowling Greg Bowling
Sam Shallenberger ■ NATIONAL DIRECTORS
Bobby Bowling IV.
Demetrio Jimenez
Now more than ever, El Paso home buyers are planning for the future.
E H Baeza
Bud Foster, Southwest Land Development Services
Jason Cullers, Cullers Homes
Give your customers the ‘option of the sun’
Rudy Guel
Robert Najera, Joseph Custom Homes
Mark Winton, Mark Winton Homes, Inc.
915-208-9313 602-708-7560
Honorary Life Members
Leti Navarrete, Dream Homes/Bella Homes
Edgar Garcia, Bella Vista Cutom Homes
Total Customer Satisfaction
Bradley Roe
Antonio Cervantes, BIC Homes
Leslie Driggers-Hoard, Homes By Design
Residential Specialists Tract Homes • Custom Homes
2015 John Shatzman Award
■ BOARD OF DIRECTORS
Fernando Torres, CTU Metro Homes
For All Your Electrical Needs
Past Presidents
Committed to Serve
Greg Bowling
Kelly Sorenson Mark Dyer
Mike Santamaria
Bobby Bowling, IV Rudy Guel Anna Gil
Bradley Roe
John Cullers
Bob Bowling, III
Doug Schwartz
Hershel Stringfield
Randy Bowling Robert Baeza
Edmundo Dena Pat Woods
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. © 2015 Builder’s Outlook is published and distributed for the El Paso Association of Builders by Ted Escobedo, Snappy Publishing, LLC ted@snappypublishing.com El Paso • Texas • 915-820-2800
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