May 04 2020
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NAHB to Host Free Virtual Event ‘Remodelers REBOOT: From the Couch’

By Industry News

NAHB’s dynamic virtual event “Remodelers REBOOT: From the Couch,” hosted by industry veteran Vince Butler, CAPS, GMB, GMR, will take place on Wednesday, May 13, from 9:30 a.m.-5 p.m. ET. This virtual gathering is free for NAHB members.

The event will kick off with substantive conversations about the current uncertain business environment, followed by a series of speaker-led sessions:

  • Why the Perfect Remodeling Estimate Isn’t About the Numbers – Tim Faller, senior consultant with Remodelers Advantage, will walk you through a process for an actual effective, profitable remodeling estimate, along with adjustments you must consider as the industry reacts to COVID-19.
  • Well That Budget Won’t Work Now! Budgeting, Markup & Margin During & After COVID-19 – Bob D. Peterson, CAPS, CGP, CGR, GMR, president and founder of Associates in Building & Design, will share best practices for retooling your operating budget when the previous one becomes unrealistic, ways to manage and survive a recession, and strategies for pricing your remodeling projects for success.
  • Critical Hires: How Successful Remodelers Fill Key Positions – In this presentation, Doug Howard, director of consulting at Remodelers Advantage, will share strategies for determining staffing needs, setting hiring priorities and positioning your company as an “employer of choice.”
  • Remodelers’ Common Contract Pitfalls: How to Cover Your Assets – Do you have the proper contract protections to stay out of the courtroom? What additions should you make while bidding and building jobs during the pandemic? In this presentation, Dan Bawden, CAPS, CGP, CGR, GMB, CEO of Legal Eagle Contractors, shares best practices for protecting yourself and your business.

Sessions can be viewed at your own convenience. This virtual event provides NAHB members an opportunity to connect with colleagues and discuss new ideas and solutions. Make sure to join “Beers and Banter,” an informal networking session, at the conclusion of the event.

This one-day online event is sponsored by Service Roundtable. NAHB members can register now for free and NAHB non-members can register to participate for a nominal fee.

May 04 2020
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Affordability Expectations Show No Improvement among Home Buyers

By Housing

While home buyers report slightly more optimistic expectations for future housing availability (see earlier post) in the first quarter of 2020, there is no commensurate improvement in their outlook for affordability. In fact, 78% say they can afford fewer than half the homes available in their markets, the same share as a year earlier. This in turn means that only 23% of buyers can afford half or more of the homes for-sale in their markets, essentially unchanged from a year earlier (22%).

At least 75% of buyers in each of the four generations can afford fewer than half the homes for sale where they live. Geographically, 74% to 80% of buyers in every region of the country say they can afford under half of the homes available in their areas.

The timing of the data collection for this report is highly consequential. The online survey was in the field from March 17 through March 28, the early stage of the COVID-19 crisis in the US. About 12 million people filed for unemployment benefits in the two weeks immediately after data collection closed. For this reason, we assess that responses in this quarter’s report mostly reflect people’s views prior to the full impact of stay-at-home orders and social distancing restrictions imposed by local and state governments.

* The Housing Trends Report is a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are not seasonally adjusted due to the short-time horizon of the series, and therefore only year-over-year comparisons are statistically valid. A description of the poll’s methodology and sample characteristics can be found here. This is the third in a series of five posts highlighting results for the first quarter of 2020. See previous posts on plans to buy and housing availability.

May 01 2020
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What You Need to Know about COVID-19 Multifamily Mortgage Financing and Forbearance

By Industry News

In partnership with the Mortgage Bankers Association, NAHB is presenting a webinar for NAHB members on multifamily mortgage lending and forbearance developments during the COVID-19 pandemic.

This program will be held Thursday, May 7, at 11 a.m. ET, and will include guidance on communicating with mortgage lenders and servicers during these unprecedented times. Representatives from Fannie Mae, Freddie Mac, Wells Fargo and PGIM will explain program guidelines, discuss best practices and offer advice for seeking mortgage forbearance.

Questions may be submitted ahead of the webinar when registering or by emailing multifamily@nahb.org. NAHB members can register today.

NAHB continues to advocate for multifamily resources during this crisis, including recent comment letters to HUD, Fannie Mae and Freddie Mac to draw attention to specific multifamily mortgage programs. Information on these efforts, as well as additional resources, are available on nahb.org.

May 01 2020
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Private Residential Spending Rises in March

By Housing

NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $550.3 billion in March. It was up 2.3% in March, after decreasing 4.8% in February. On a year-over-year basis, total private construction spending rose 8.8%.

The monthly gains are largely attributed to the growth of spending on improvements and multifamily construction. Private residential improvements, which include spending on remodeling, major replacement, and additions to owner-occupied housing units, increased to $189.0 billion annual pace in March, up 10.2% over the February estimates. Multifamily construction spending inched up 2% in March, following an increase of 1.2% in February. Spending on single-family construction slipped 2.0% in March, the first dip since July 2019, due to the virus impacts.

The NAHB construction spending index, which is shown in the graph below (the base is January 2000), illustrates the solid growth in single-family construction and home improvement from the second half of 2019 to February 2020, before the COVID-19 hit the U.S. economy. New multifamily construction spending slowed down since August 2019, after the strong growth from 2010 to 2016 and a surge from the late 2018 to early 2019.

 

Spending on private nonresidential construction declined 1.8 percent over the year to a seasonally adjusted annual rate of $462.3 billion. The annual nonresidential spending decline was mainly due to less spending on the class of lodging ($4.3 billion), followed by educational category ($3.6 billion), and amusement and recreation ($2.3 billion).

May 01 2020
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IRS: Expenses Paid with Forgiven PPP Loans are Not Tax Deductible

By Industry News

The Internal Revenue Service on April 30 issued guidance that states that employers who received loans through the Paycheck Protection Program (PPP) will not be eligible for tax deductions on expenses if payment of those expenses funded by the loan results in the loan being forgiven.

Specifically, IRS Notice 2020-32 provides guidance regarding the deductibility for federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a loan pursuant to the PPP.

The notice clarifies that no deduction is allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of the loan.

In general, the tax rules for a business-related loan are:

  • Wages/health care/rent/utilities are a deductible expense
  • Debt forgiven is taxable income

For businesses with a PPP loan that is forgiven, these rules generally reverse themselves:

  • PPP debt forgiven is not taxable income
  • Wages/health care/rent/utilities paid via the forgiven debt are not

For PPP loans forgiven pursuant to the CARES Act, the IRS will disallow any otherwise allowable deduction under any provision of the tax code to the extent of the resulting PPP loan forgiveness (up to the aggregate amount forgiven).  In the view of the IRS, this treatment prevents a double tax benefit.

NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question. 

May 01 2020
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Absorption Rate for Apartments Remained Stable in Q3 2019

By Housing

Data from the U.S. Census Bureau’s Survey of Market Absorption (SOMA) show that the absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) remained essentially flat at 58 percent in the third quarter of 2019 (from 57 percent in the third quarter of 2018) (Figure 1).

The number of apartments completed in the third quarter of 2019 totaled to 69,890, a drop from the amount completed in the third quarter of 2018 (75,870). The median asking rent price for apartments completed in the third quarter was $1,654, only 1 percent higher than the median asking price of $1,634 in the third quarter of 2018.

The SOMA also has data on condominium completions and absorption rates (Figure 2). Condominium completions were significantly higher in the third quarter of 2019 (9,169) than they were in the third quarter of 2018 (4,957). But the absorption rate of condominiums fell slightly, going from 68 percent in the third quarter of 2018 to 64 percent in the third quarter of 2019.

The median asking sales price of condominiums was $465,300 in the third quarter, about 15 percent lower than the asking sales price of $545,800 in the third quarter of 2018.

The SOMA data show that the absorption rate for apartments was solid and stable in the third quarter of 2019, while the absorption rate for condominiums dropped only slightly. It is important to note that this data precede the outbreak of COVID-19 pandemic and future SOMA releases won’t show its impact for some time.