Builder's Outlook, December 2010 by Ted Escobedo

www.elpasobuilders.com

Builders Outlook ISSUE 12

Building El Paso’s tomorrow today

Plunging Home Prices Fuel Property Tax Appeals Swamping U.S. Cities, Towns

PRSRT STD U.S. POSTAGE PAID EL PASO TX PERMIT NO. 429

By Jeff Green and Tim Jones – Bloomberg.Net A fiscal flood that threatens to swamp local government budgets across the U.S. overflows from file cabinets in the office of Patty Halm, chair of the Michigan Tax Tribunal. The backlog of cases from taxpayers seeking to lower property-tax bills of more than $100,000 shot up to 14,236 this year from an annual average of about 6,000 during the past decade. The backlog of smaller claims was at 28,558 at the end of September, eight times higher than a decade ago, according to records at the tribunal, a Lansing-based administrative court. From Los Angeles to Atlantic City, the New Jersey gambling resort whose credit rating Moody’s Investors Service cut by three levels last month, property owners are demanding lower taxes after real-estate values plunged. The disputes over billions in dollars come as municipalities are already slashing services such as police and fire protection and may depress revenue further as communities try to recover from the longest recession since the 1930s. In Michigan, Governor-elect Rick Snyder has warned that hundreds of towns face financial crises. “We’re just getting swamped,” said Halm, 54, who was appointed in 2003. “We’re constantly buying new file cabinets to hold all the cases. We even have six surplus file cabinets in the courtroom.” U.S. home prices are 30 percent below their peak of April 2006, according to the

seasonally adjusted S&P/Case-Shiller index of property values in 20 cities. They may drop 10 percent more, Greg Lippmann, a founder of New York-based LibreMax Capital LLC, said Dec. 2 at the Hedge Funds New York Conference hosted by Bloomberg Link. Appeals Upon Appeals Meanwhile, the Moody’s/REAL Commercial Property Price Index of U.S. commercial property is 43 percent below its October 2007 peak. “If we look into the future, assessments will have to reflect the market value, and two years out, property-tax receipts will have to be coming down,” Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago, said in a telephone interview. “If the appeals are largely successful, they will generate a lot more appeals.” In Michigan, seven judges and 15 hearing officers are clearing the backlog. Five additional staff members are crammed into cubicles in hallways and a library space, said Halm, who is also one of the judges. More than a dozen mismatched file cabinets line the hallway outside the tribunal, among about 50 that have been added for the overflow. Amid the Cabinets This week a chief clerk sat surrounded by them on the floor, sorting files to get ready for hearings. Bins held even more folders. Oakland County, the Detroit suburb with Michigan’s second- highest median income, didn’t previously pay much attention to Tax Tribunal cases because any losses were covered by new construction gains, said Robert Daddow, deputy county executive. Now, about $3.9 billion in taxable value, or 5 percent of the county’s tax base, is under review, he said. Cities and towns across Michigan had property-tax collections plunge as much as 20 percent in the past year, the steepest drop since a 1994 rewrite of state levies, forcing scores to decide whether to borrow to pay bills or risk default on bonds. Municipal budgets “tend to lag economic conditions” by 18 months to several years, according to a National League of Cities report in October that Pagano co-wrote. “The full weight of the decline in housing values has yet to hit the budgets of many cities and property tax revenues will likely decline further in 2011 and 2012,” the report said. Already Struggling Douglas Roberts, Michigan’s former treasurer, said in a telephone interview from East Lansing that the impact of property-tax appeals “could be significant” because cities are already struggling with rising pension and health-care costs and declining revenue. Settlements are likely to increase across the state through 2013 as the backlog is worked through, compounding other revenue shortfalls, Daddow said. “In some of these instances, probably

U.S. home prices are 30 percent below their peak of April 2006, according to the seasonally adjusted S&P/Case-Shiller index of property values in 20 cities. They may drop 10 percent more, Greg Lippmann, a founder of New York-based LibreMax Capital LLC, said...

most of them, local governmental units have not been setting money aside for this,” Daddow said. “That will be huge. That will be another big headache coming down the pike.” In many states, property-tax appeals are handled primarily at the local level. Clark County, Nevada, which includes Las Vegas, had 8,300 appeals last year, an increase from 6,000 the year before and 1,900 in 2008, according to Rocky Steele, assistant director of assessment services. “It was a big year, the biggest we’ve ever had,” Steele said in a telephone interview. Losing Hand Clark County’s taxable real-estate value fell to $184 billion for the 2010-11 fiscal year from $263 billion the prior year and the record $320 billion in 2008-09, according to Steele. The one-year reduction will cost the county a projected $514 million in lost taxes. Almost all the hotel casinos and major property owners received reductions, Steele said. In Atlantic City, where 11 casinos account for 74 percent of the property-tax base, the city has exhausted a reserve for tax appeals that in 2006 held $26 million, according to a Nov. 4 Moody’s report on the rating cut. The company reduced the credit to Baa1, three levels above speculative grade, from A1. All Atlantic City casinos have pending property-tax appeals, Moody’s said. Since their valuation is based on gambling revenue, which has declined more than 11 percent this year, appeals may continue, the rating company said. Resort Under Pressure “The city’s negative fund balance position, outstanding tax casino credits and the significant number of remaining unsettled casino tax appeals will continue to pressure the city’s financial position,” Moody’s said in the report. New Jersey homeowners filed 18,147 property-tax appeals in Tax Court during the fiscal year ending June 30, up from 10,067 in fiscal 2007, according to a report by the state judiciary. Moody’s today cited continuing tax appeals when it lowered the rating on about

$3.7 million in outstanding debt for the Borough of Roseland, New Jersey, to fourthhighest Aa3 from Aa2. A reserve fund for tax appeals in the town about 20 miles (32 kilometers) east of New York City may fall to $600,000 this year from $3.5 million in 2007, and the borough may issue bonds to handle future appeals, Moody’s said in the report. ‘Overloaded’ in L.A. Across the country, the situation is similar. “We’re just overloaded,” said Khanh Nguyen, chief of assessment appeals in Los Angeles County, whose more than 10 million residents make it the nation’s largest. The county expects “a few thousand” more than the 42,000 applications last year, Nguyen said. That’s quadruple the 9,353 in 2007, she said. The appeals are rising as the overall tax rolls declined by $18.5 billion, or 1.67 percent, to $1.089 trillion in 2010. The phenomenon is not universal. In Miami-Dade County, which is Florida’s largest municipal borrower, 2010 tax appeals, due in September, dropped 27 percent from 2009, to about 105,000, said Robert Alfaro, Value Adjustment Board manager. In Illinois, pleas for relief arrive every week on the desk of Louis Apostol, executive director of the state Property Tax Appeal Board. ‘Heart-Wrenching’ “These letters are heart-wrenching. I’ve got drawers and drawers of them,” Apostol said in a telephone interview from his office in Des Plaines. Illinois may have 19,350 property appeals this year, 10 percent more than in 2009, he said. The backlog is about 35,000, to be processed by a staff of 21. Fifty-four people handled roughly half the workload in 2003, he said. More than 80 percent come from homeowners and the board approves an average of 30 percent of them, he said. Determining the impact could take two years, he said. In the meantime, Apostol will continue receiving letters of complaint forwarded by Governor Pat Quinn. “I respond directly,” Apostol said. “I also include my phone number and tell them how they can appeal their taxes.”

2 DECEMBER 2010

Builders Outlook

President’s Message Greg Bowling President, El Paso Association of Builders

The end of the year is coming and with it comes the busiest time of year for all of us personally, as well as for your Association. Your Executive Officer Ray Adauto and his staff have been working hard to prepare for the December 14th Installation dinner at the Camino Real. We’ll be installing your new EPAB leadership as well as handing out our yearly awards to our members that have gone of above and beyond in their commitment to our industry. It should be a fun night and I hope everyone can attend. Also on December 4th your EPAB Board members held a long range planning retreat at the Inn of the Mountain Gods in Ruidoso, New Mexico. Kristi Sutterfield, former Executive Officer of TAB, and former NAHB Executive Officer of the year agreed to come in and put on this event for us. At this planning session we discussed the Association’s mission statement, strategic plan, and bylaws. We also had open discussions on setting a path for EPAB over the next 2 to 3 years, where we want to spend our energy as an Association, and how we will be in sync with the outside world. On the home building front remember starting January 1, 2011 the 2009 International Residential Code comes into effect for all residential construction in the

city of El Paso. This code will be phased in throughout the year with the schedule that the code inspectors agreed to. EPAB has already held a Saturday training session in conjunction with the City of El Paso Building Services Department to discuss some of the changes that will come into play. Another one of these training sessions is scheduled for Saturday December 10, but check with the office to confirm. We had over 40 attend our first session so if you would like to attend the second one, make sure to schedule with Ray Adauto as soon as possible because space is limited. Also look forward for more training sessions in 2011 for the different trades that will be affected such as electrical, plumbing, and HVAC. Lastly, I’d like to wish everyone Happy Holidays and give a special thank you to all you who’ve volunteered your time, resources, and energy to EPAB and the Home Building industry as a whole throughout 2010. I’d like to name each person individually, but due to the fact that we are so fortunate as an association to have so many give so much-I’m afraid there isn’t room! I look forward to serving you as your Association President for 2011 and I hope for your continued support of EPAB.

4 DECEMBER 2010

Builders Outlook

Perspective Ray Adauto, Executive Vice President EPAB

I believe, I really do. I am often asked if the Christmas season is my favorite time of year and my answer sometimes is met with a strange response. The Christmas that I love is the one of my childhood, the one where I personally didn’t have to worry about presents, ornaments, trees, lights, visitors or the weather. Nope it was those times when nothing mattered more to me than to go up to the Santa at Sears and proudly announce my wish list, always remembering to ask for that battery powered something or another, or later on asking for that Cushman scooter in the Sears catalog. Nothing gave me more joy than to see the mailman drop off that huge Sears catalog. I mean it was like reading the best novel, or enjoying a movie over and over again as I looked at all the neat stuff in that book. Yep that book would be tattered and dog-eared by the time I was done with it, and it was missing a few pages because I’d torn them out to make sure my mom and dad knew the exact item I wanted. Yes sir I was not willing to

Christmas past, present, and future take chances that they would end up over at the Winn’s five and dime instead of going to Sears for the official gift. It was also a time when we would ride the bus downtown to see the wonderful winter scenes at the Popular, The White House, or go round and round the Kress toy section. Nothing will ever replace those days for me. They were happy days. It will be eleven years this Christmas Day that my dad passed away and eleven years this New Years Day that my mom died. Yes both died a week apart. For me as a kid it was the fact that my parents loved the season so much, taking time to decorate the house, string lights, and have parties. No one could party better than my mom and dad. They had learned to really enjoy life while living through the depression and a couple of wars. Not only did they survive those times they prospered and never went for wanting, or at least that’s the story they told. They never felt like they needed something since they enjoyed the closeness of family and friends. Their friends during those dark days remained friends through the “golden years”, even though dad would say getting old wasn’t goldenjust painful. But God has a strange way of reminding you what this season should be about. With my two grandchildren how can it ever be otherwise. I see them with sugar

‘Nothing gave me more joy than to see the mailman drop off that huge Sears catalog. I mean it was like reading the best novel, or enjoying a movie over and over again as I looked at all the neat stuff in that book. That book would be tattered and dog-eared by the time I was done with it...’

plums and dreams, of trains and dolls, and wii’s and laptops and give thanks for reminding me why I should love this time also. But frankly it just isn’t what it used to be. I am older and starting to get into the painful years. I’m finding out I’m not a kid anymore. I don’t like to say it’s a “holiday season”; I rather call it what it is, Christmas. That’s what it is and always will be for me. I’m neither ashamed nor

willing to say otherwise, so pardon my frankness if I insist on saying it. It wouldn’t be any special time of year if it weren’t for a time of rejoicing and proclaiming. My family understands my sentimental bag about the time of year. I hope that you will also. But always know that because of my most precious gifts of family and friends I still believe in Santa Claus. I believe and always will. Merry Christmas and Happy New Year!

Builders Outlook

Guest Perspective

Chente Quintanilla State Representative Some of you may have read an article about a bill that I filed relating to manifiestos. Manifiesto is a document which is used to refund sales taxes in Texas paid by foreign nationals. The United States Constitution prohibits state and local entities from collecting taxes on items which are exported. It is key to remember that a product is not exported unless it has reached its destination country.

DECEMBER 2010

New bill limits sales taxes from being improperly refunded There is no question that the sales taxes on items, whether wholesale or retail, that are taken to a foreign destination cannot be legally collected by local governments. Our current laws leave a gaping loophole allowing the sales tax to be refunded but without the product being taken outside of the United States. Currently, any foreign national, including our friends in Mexico, can purchase items, pay the sales tax but collect the refund on the tax before returning to their home. Texas is the only state in the union that allows such an arrangement. There is no requirement by state law that these international travelers must prove the items purchased reached a foreign destination. In place instead is a law which requires a purchaser to "state the foreign county destination" and to "state the date and time the property is expected to arrive in the foreign country destination." That is quite the honor system if you ask

me. This system has seen the State of Texas refund over $500 million in sales taxes during the period between 2004 and 2009. Locally, the average amount of city sales taxes over that time is over $1.2 million per year; the county taxes averages out to $688,000 per year. While the entire $1.2 million of tax refunds may not have been refunded improperly, any amount that was costs you and me more in the long run. Since the city collects 1% on the retail price of merchandise sold, it would take $120 million in sales to produce the $1.2 million. This is a ton of money refunded based on an honor system. Can we implement a similar honor system where local property owners state their own appraisals? I am certain from anecdotal comments that there is abuse in the system. There is no way to know how much because the only thing a customs broker has as evidence that the item has been exported is the good faith statement.

I believe it is a fiscally responsible action to have definite proof the item has been exported. That is the intent of the bill I filed. You can read the bill by Google-ing HB 344 by Quintanilla. I am certain the actual bill which is heard in committee will be different from this initial draft. My office continues to research the best means by which we prevent sales taxes from being improperly refunded. It is not my intention to harm commerce. But, it is not the responsibility of Texas taxpayers to subsidize any commerce. It is the responsibility of lawmakers, including myself, to bolster the confidence of taxpayers that sales taxes refunded to foreign nationals are confirmed to be for products "exported" outside the United States.

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Builders Outlook

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Builders Outlook

DECEMBER 2010

Big deficit of new single-family homes will need to be addressed as economy improves Annual single-family housing production in 2008 and 2009 fell about one million units short of the housing that would be needed in a normally functioning economy, suggesting that builders will have a lot of catching up to do as the economy improves and household formations return to trend levels, according to a special study by economists at the National Association of Home Builders. The report, "Extent of Underbuilding in the Single-Family Housing Market," finds that there was an excessive amount of single-family building from 2003 through 2005, but overbuilding largely ended by 2006 and the subsequent downturn was severe enough to more than offset those annual surpluses. This year is likely to add to the growing deficit of single-family homes by another one million units, the report finds. "The single-family housing market in the U.S. currently finds itself in a significantly underbuilt state," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "Pent-up demand for housing will at some point need to be worked off, pushing single-family production in a positive direction. In the meantime, the deficit continues to grow as builders remain cut off from the credit they need to begin developing and building new housing." The analysis compares levels of singlefamily permits in recent years with the longterm trend that would be seen if housing, labor and credit markets were functioning normally and generating a normal rate of household formations. Permits were used instead of housing starts because they are based on a much larger sample and provide more geographic detail, which enabled the study to be extended to the state level. (A building or zoning permit represents housing units that are authorized to be built. According to the Census Bureau, all but a small percentage of permits become starts. A start is when ground is first broken for the foundation of the building.) Single-family permits plunged to a trough of 441,000 in 2009, their lowest level since World War II. The previous post-war low occurred in 1981, when 550,000 singlefamily permits were recorded. Adding to the magnitude of the recent downturn, multifamily starts and permits last year fell below 150,000 units, an historic low, compared to about 400,000 units annually during the early 1980s. "Moreover, the population and stock of housing in the U.S. have continued to expand," the report says. "In 1980, there were roughly 226 million people and 88

million housing units in the country. By 2009, these numbers had increased to 307 million people and 130 million housing units, so in that year the U.S. added a record low number of new housing units to a population and housing base that was larger than it had ever been before." From 1988 through 2003, the U.S. population was growing at a fairly steady average annual rate of 1.15 percent and varied only between 0.90 percent and 1.35 percent. During the recession, household formations slowed markedly below this pace, delaying two million household formations. The deficit in new single-family homes can continue as long as household formations remain depressed. Over the 1988-2003 period — which goes right up to the housing boom years of 2004 and 2005 and can be considered a fairly normal one for housing — the number of single-family permits issued was increasing at an average of about 36,000 per year, consistent with a growing population that needs housing and an expanding inventory of older homes that need to be replaced. Projecting that trend past 2003, singlefamily permits should have hit 1.4 million by 2005, 1.5 million by 2008 and around 1.56 million in 2009, the report finds. Instead, permits were well over 1.4 million in 2003 and pushed past 1.6 million in both 2004 and 2005, "a period of serious overbuilding." Subsequently, however, permits dropped to under 1.4 million by 2006 — already slightly below trend — and continued to fall through last year. Single-family surpluses occurred from 2002 to 2006 and they were well over 200,000 annually in 2004 and 2005. Deficits, which began to materialize after 2005, reached about a half a million units in 2007 and one million every year since then as single-family permits dropped below 500,000 — more than a million units per year below trend. Accumulating annual surpluses peaked at 493,000 single-family units in 2005, and that was worked off entirely by the end of 2007. Depressed levels of single-family housing production resulted in a cumulative deficit of 2.17 million units by 2009 and will likely grow to 3.28 million by the end of this year. The study also found that there are now single-family housing deficits in most of the states. This includes the states that had the hottest markets during the boom: Arizona, with a deficit of 144,500; California, 49,500; Florida, 112,600; and Nevada, 75,600.

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EPAB ON THE SCENE November Board of Directors Meeting November Board meeting draws good attendance. A full house greeted interim President Greg Bowling as the group met for the first time since the change in leadership. Topics discussed included the upcoming events and a report from several committees. The next scheduled Board Meeting will be held after the International Builders Show in January. Please note the new time for the Board Meeting as listed in the calendar of events in this issue.

City Code Training City brings code training to packed house. Saturday’s are normally a day when nothing goes on at the association, but on this particular day the house was full of supervisors and city staff. This was the first presentation on the upcoming International Building Codes version 2009 that the City of El Paso will be enforcing. Presenting the City side was Albert Melgar who along with Ron Roth gave those in attendance a comprehensive three hours of information. The next code seminar is scheduled for Saturday, December 18 at 9 a.m. at the EPAB offices. Seating is limited.

Realtor Association Installation The Greater El Paso Association of Builders recently held their installation dinner and awards banquet at the El Paso Country Club. A good crowd was on hand to celebrate the accomplishments of GEPAR over the last year. While many realtors did go through difficult times clearly the theme at the installation was one of optimism and hope. Installed as President for 2011 was Linda Bastraw. Our new rep will be Angela Ochoa from Success Realty. Dan Olivas added commentary and swore in the new directors. Leading the EPAB delegation was President Greg Bowling.

Risk Management Class Risk Management class just not about steel toes. Builder Agent Network in association with the Texas Association of Builders and the Bush Firm, Attorneyâ&#x20AC;&#x2122;s and Councilors from Fort Worth, presented a risk management course to a group of association builders. The 90 minute seminar revolved around ensuring that builders clearly define the roles each subcontractor plays in the building of a house. Using the correct terms and having signatures on the contracts was demonstrated by Attorney James Rudnicki from the Bush Firm. Joining James in the presentation was Kacey Birley from the Builder Agent Network. Hosting them was Bruce Meyer from JDW Insurance. Our thanks to all three companies for providing this informational to our members.

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10 DECEMBERâ&#x20AC;&#x2C6;2010 NAHBâ&#x20AC;&#x2C6;NEWS Housing Remains Highly Affordable For Seventh Consecutive Quarter Housing affordability remained near its highest level nationwide for the seventh consecutive quarter as interest rates dipped below 5 percent for the first time since the series was first compiled nearly two decades ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today. The HOI indicated that 72.1 percent of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5 percent set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent. "With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years,," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward." Indianapolis-Carmel, Ind., was the most affordable major housing market in the country, regaining the top ranking it held for nearly five years after being edged out by Syracuse, N.Y., last quarter. In Indianapolis, 93.3 percent of all homes sold were affordable to households earning the area's median family income of $68,700. Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; and Dayton, Ohio, and Wichita, Kan. Among smaller housing markets, the most affordable was Kokomo, Ind., where 96.1 percent of homes sold during the third quarter of 2010 were affordable to families earning a median-income of $61,400. Other smaller housing markets near the top of the index included Mansfield, Ohio; Lima, Ohio; Monroe, Mich.; and Bay City, Mich., respectively. New York-White Plains-Wayne, N.Y.N.J., continued to lead the nation as the least affordable major housing market during the third quarter of 2010. In New York, 22.6 percent of all homes sold during the quarter were affordable to those earning the area's median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan division has occupied this position. The other major metro areas near the bottom of the affordability scale included San Francisco; Bridgeport-StamfordNorwalk, Conn.; Los Angeles-Long Beach-Glendale, Calif.; and Santa AnaAnaheim-Irvine, Calif., respectively. Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; Ocean City, N.J; and Napa, Calif.

Builders Outlook

NOVEMBER 2010 Estimates of the 71 economists surveyed by Bloomberg ranged from 3.85 million to 4.7 million. In July, sales ran at a 3.84 million annual rate, the weakest in a decade’s worth of record- keeping by the Realtors group.

INDUSTRY HEADLINES

More Growth

From Bloomberg Financial News

Existing Home Sales Fall Sales of existing homes fell more than forecast in October as foreclosure moratoriums and a lack of credit disrupted the U.S. housing market. Purchases decreased 2.2 percent to a 4.43 million annual rate from 4.53 million in September, the National Association of Realtors said today in Washington. Economists projected sales would decline to a 4.48 million pace, according to the median forecast in a Bloomberg News survey. The median price fell 0.9 percent from a year earlier. An overhang of distressed properties and an unemployment rate hovering near 10 percent may restrain home sales, while concerns over faulty foreclosure proceedings threaten to further delay the mending process. At the same time, mortgage rates near record lows may help limit the damage. “There are still going to be quite a bit of homes up for sales that have come from foreclosures,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York. “There is little improvement.”

Another report showed the U.S. economy grew at a 2.5 percent annual rate in the third quarter, more than previously calculated, as consumer spending and business investment grew. The revised increase in gross domestic product compares with a 2 percent estimate issued last month and a 1.7 percent rise in the second quarter, figures from the Commerce Department. Corporate profits grew last quarter at a slower pace and an increase in employee wages in the prior three months was almost twice as much as initially reported. Stocks held earlier losses on mounting tensions between North Korea and South Korea, and concern grew Europe’s debt crisis will spread. The Standard & Poor’s 500 Index fell 1.2 percent to 1,183.04 at 10:18 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.74 percent from 2.80 percent late yesterday. Compared with a year earlier, existing home sales were down 28 percent before adjusting for seasonal patterns.

Regional Breakdown Sales last month fell in all four regions, today’s report showed, led by a 3.4 percent drop in the South. The median price decreased to $170,500 last month from $172,000 in October 2009. Purchases of single-family homes fell 2 percent to a 3.89 million annual rate in October from a month earlier, the group said. The number of previously owned homes on the market fell 3.4 percent to 3.86 million. At the current sales pace, it would take 10.5 months to sell those houses, compared with 10.6 months in September.

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Month’s supply would need to drop to around eight months in order to stabilize home prices, the group has said in the past. Distressed sales, which include foreclosures and short- sales in which the bank agrees to take less than the full amount of the mortgage, accounted for 34 percent of total sales, about the same as in prior months. The drop in sales last month “may be partly due” to the temporary foreclosure moratoriums, NAR Chief Economist Lawrence Yun said in a press conference. A lack of mortgage lending is also preventing buyers from entering the market, offsetting any benefit from lower borrowing costs, Yun said. The Fed’s second round of quantitative easing will probably be “not that meaningful” in pushing interest rates down much more, he said.

Foreclosure Moratoriums Foreclosure moratoria at JPMorgan Chase & Co. and other banks, along with government investigations into faulty paperwork, threaten to further delay a recovery as houses slated for repossession take longer to come to market.

Foreclosures are mounting as out-of-work Americans can’t meet monthly payments while growing numbers of homeowners, seeing their home prices slide to less than their mortgage values, also default. Unemployment forecast to average 9.3 percent in 2011 is another reason why any recovery in housing may take years to evolve, even with mortgage rates near record lows. Housing starts declined in October for a second consecutive month and were 77 percent below the three-decade peak of 2.27 million reached in January 2006. D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, expects 2011 to be “challenging” for the industry as consumer confidence and employment remain weak, Chief Executive Officer Donald Tomnitz said on a Nov. 12 earnings conference call. The spring selling season, the strongest for builders, may fail to bring the traditional boost in demand, he said. By Timothy R. Homan in Washington at thoman1@bloomberg.net

12DECEMBER 2010

Builders Outlook

DECEMBER 2010

Membership News UPCOMING EVENTS December 14 EPAB Installation and Awards Banquet Camino Real Hotel

January 12-14 NAHB Winter Board Meetings and International Builder’s Show Orlando, Florida

January 5 Associates Council Meeting TTBD EPAB Office

January 21-23 Spring Home Show El Paso Convention Center

January 19 Board Orientation 3:00 Board Meeting 3:30 EPAB Office

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Beto Loya Trim Co. Contact: Roberto A. Loya 107 Chalk Mountain Ct. Santa Teresa, NM 88008 915-820-1680

The El Paso Police Department on behalf of Chief Greg Allen would like to wish all our citizens and visitors a Happy Thanksgiving and Holiday Season. The following are some holiday safety tips we would like the public to remember.

At Home: Alon Brands Contact: Sonja Scanlan 2002 N. Piedras El Paso, Texas 79930 915-342-0099

RENEWALS AVX Wholesale

Patriot Mortgage

Circle H Homes, LP

Rocky Mountain Mortgage

Del Rio Engineering, Inc.

Company

El Paso Times

Saratoga Homes, Inc.

EPT Land Communities

The Taft Company

Foxworth Galbraith Lumber

Zacour and Company

Massey Johnson Associates New Home Showcase Thanks to our DECEMBER SODA SPONSOR: Builder’s Source

SODA SPONSOR

Jaime’s

Courier Service, Inc. 915-549-4533

915-478-2404

Bonded, insured for your peace of mind.

• NEVER LEAVE YOUR CHILDREN ALONE • Be sure to lock your doors and windows when you leave your home. • Do not display holiday gifts where they can be seen from a window or doorway. • Leave some lights on • Leave a radio on • Leave drapes/curtains in a normal position • Mark your valuables with your driver’s license number • Pickup mail and newspapers • Never give information about your home over the telephone •Always call police to report any suspicious activity

While Shopping: • Always keep your children close to you • Do not shop alone • Never take more money than you need to make your purchases • Do not flash your money when paying for items • Pay with a check card or credit card • Be aware of you surroundings • Do not leave any purchases or purses unattended • Do not overburden yourself with packages • Carry your purse close to your body

Your car: • Lock your vehicle • Use any antitheft devices • Do not leave any packages or values inside the vehicle • Approach you vehicle with your keys out and ready • Park in well lighted areas • Keep your vehicle in proper working order • If something seems wrong, get help from security or call the police

14 DECMBER 2010

Builders Outlook

www.elpasobuilders.com 6046 Surety Dr. El Paso, TX 79905 915-778-5387 • Fax: 915-772-3038

Council Reports

■ execuTive officerS Greg Bowling, President Tropicana Homes Del Huit, vice President Cardel Design Group

Land Use Council

eric Lowenberg, Associates council Emser Tile

■ TAB STATe DirecTorS ALTerNATeS (A) Doug Borrett, Karam Co. Randy Bowling, Tropicana Homes Frank Torres, GMF Homes (A) ■ NATioNAL DirecTorS Bobby Bowling IV. Randy O’Leary Greg Bowling

Linda Troncoso

Sal Masoud

Kelly Sorenson, immediate Past President Dakota Homes, Inc. ray Adauto, executive vice President El Paso Association of Builders ■ couNciL/commiTTee cHAirS

By Linda Troncoso The Land Use Council is actively inThe City of El Paso continues to peak the attention of the Land Use Council. A few weeks ago, the City Manager and City Council of El Paso discussed the possible implementation of Smart Code within the City and possibly the ETJ. Council gave staff direction to begin a study to evaluate the means and ability to implement the Smart Code. This is based upon the City of El Paso’s continued quest towards “New Urbanism.” Currently City Planning and Engineering staff are in the process of receiving training and certification in new urbanism development methodology. The basis of their certification includes the book New Urbanism: Best Practices Guide, Fourth Edition which includes alternative roadway sections, density requirements, setbacks, water harvesting methods, etc. This is a valuable reference tool for all developers dealing with the City of El Paso in order to understand the basis of some of

the City’s recent requests on development projects. In addition, this month, City Council also took action revise the zoning conditions placed on property along Transmountain Road east of I-10, which is scheduled to be effective in March 2011, pending the receipt of environmental documents. This change should clear the way to begin the Transmountain Road widening and reconstruction project, which is scheduled to receive approximately $80 million in State funding. This is important because as the availability of state funding continues to dwindle, if this construction project does not move forward, funding might not be available at a later date. The Land Use Council would like to wish everyone a happy and safe holiday season, and we look forward to everyone’s participation Land Use Council Meetings at the start of a new year. Happy Holidays!

AssociatesCouncil Eric Lowenberg, Emser Tile

Just a short message to all the El Paso Association of Builders Associate members: Thank you! Thank you all so much for your participation and involvement in our great association. We have seen our share of ups and downs this year, but I think we can be a stronger association because of it. We wish the best to those who have left us, and offer our support to those coming to join us. As we look to a new year, the Associates Council is pushing hard for

maximum participation from our members. We will be very active in the goings on of the EPAB and will do all we can to succeed in all that we do. I urge all of you to participate in our meetings, join our committees, take part in our networking activities and jump into a leadership role where ever you think you feel comfortable. Merry Christmas and Happy Holidays to you all as we look forward to a prosperous 2011!

Affordable Builders Council Greg Bowling Associates Council Eric Lowenberg Build PAC El Paso Bobby Bowling IV Desert Green Building Council Javier Ruiz Government Affairs Council Pat Woods Industry Promotions Kelly Sorenson Land Use Council Linda Troncoso Sal Masoud Golf Committee Kathy Carrillo Eric Lowenberg Young Designer Award John Chaney ■ ADviSorY To THe BoArD Tony Guel, El Paso Electric Company J. Crawford Kerr, Attorney, Firth, Johnson & Martinez Alfred Moreno, Texas Gas Service ■ BoArD of DirecTorS Danny Andrus, Trinity Homes John Arranda, Southwest Securities Bank, FSB Joe Bernal, Joe Bernal Insurance Cindy Bilbe, Stewart Title David Bogas, EPT Communities John Chaney, Passage Supply Justin Chapman, Hunt Communities Sergio Cuartas, BIC Homes Edmundo Dena, Accent Homes Ted Escobedo, Snappy Publishing Art Garcia, El Paso Door Juanita Garcia, ICON Custom Home Builder,LLC Danny Gerard, Desert Agave Builders, LLC Nathan Gordon, Dunn –Edwards Wellborn Paints Miguel Herrera, Simply the Best Custom Homes Lorraine Huit, Cardel Homes Bob Kotarski, City Bank of El Paso Walter Lujan, Dawco Home Builders Yolie Melendez-Estrada, Teacher’s FC Union Robert Najera, Joseph Homes Kelly O’Leary, Desert View Construction Jose Ortiz, Foxworth-Galbraith Lumber Kathy Parry, Hunt Communities Bob Paschich, Oeste Homes Donald Rasette, Rassette Homes Ruben Rivera, the Taft Company Kathy Rose, Builders Source David Samaniego, Ferguson Regina Sanchez, Compass Bank Sam Shallenberger, Western Wholesale Frank Spencer, Aztec Contractors Frank Torres, GMF Homes Linda Troncoso, Gray-Jansing & Associates Javier Veloz, Zia Homes Lorraine Wardy, El Paso Sanitation Systems Paul Zacour, Zacour & Associates

NATioNAL ASSociATioN of Home BuiLDerS (800) 368-5242

TexAS ASSociATioN of BuiLDerS (800)252-3625

2009 Builder member of The Year Jim Sorenson Classic American Homes 2009 Pat cox Award Doug Borrett The Karam Company 2009 Associate of The Year Kathy Carillo Pioneer Bank

Honorary Life members Wayne Grinnell Don Henderson Chester Lovelady Cliff C. Anthes Anna Gill Past Presidents committed to Serve

Mark Dyer Mike Santamaria John Cullers Randy Bowling Doug Schwartz Del Huit Herschel Stringfield Robert Baeza

Bobby Bowling, IV Rudy Guel Anna Gill Bradley Roe Bob Bowling, III Pat Woods EH Baeza

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 homes of excellence and value The El Paso Association of Builders is a 501C(6) trade organization.

915-778-5387