Remodeler Views Membership Among His Biggest Assets

By Industry News

Becoming a great remodeler requires being service-oriented, passionate and skilled, among other key qualities. But April’s NAHB Remodeler of the Month also attributes his NAHB membership as what elevates his business to the next level.

Alan Archuleta is the NAHB Remodeler of the Month for April.

Alan Archuleta of Archuleta Builders in Morristown, N.J. is an active member of his local chapter, the Metropolitan Builders & Contractors Association of New Jersey (MBCNJ). While he highly regards the education he obtains through the chapter, he considers the relationships he’s built through the MBCNJ and NAHB to be even more valuable.

“After becoming a member, I quickly realized that I will always be able to continue learning more about this industry and how I can improve my own business,” Archuleta said. “We often forget that we are not alone and that there are many resources that NAHB has set up for us small businesses in the home building industry.”

Despite MBCNJ not having a local remodelers council, Archuleta has been able to maximize his member benefits as an at-large member of NAHB Remodelers.

“I have always enjoyed [NAHB Remodelers] for its resources, but also for the amazing bond it facilitates between the members,” he said. “In a world that is full of competition for everything, it is nice to be able to lean on the expertise of others who work in the same industry and who can offer answers, ideas and help when you need it.”

In a Q&A with Qualified Remodeler, Archuleta further described his simple-yet-effective approach to business growth: “As someone who was not the best student and might not be the smartest one in school, I have learned to be among the best in my field through hard work, honesty and leaning on the right people.”

Know a professional remodeler who takes remodeling to the next level? Nominate him or her for NAHB Remodeler of the Month.

Homeownership Rate Up in the First Quarter 2020

By Housing

According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate reaches 65.3% in the first quarter 2020. This is 1.1 percentage points higher than the rate of 64.2% in the first quarter of 2019, but not statistically different from the previous quarter reading of 65.1%. Strong owner household formation with around 2.7 million homeowners added in the first quarter has driven up the homeownership rate, especially under the decreasing mortgage interest rates and strong new home sales and existing home sales in the first two months before the COVID-19 pandemic hit the economy.

The HVS provides a timely measure of household formations – the key driver of housing demand. Although it is not perfectly consistent with other Census Bureau surveys (Current Population Survey’s March ASEC, American Community Survey, and Decennial Census), the HVS remains a useful source of relatively real-time data. The housing stock-based HVS revealed that the number of households increased to 124.4 million in the first quarter of 2020, 2.0 million higher than a year ago. The gains are largely attributable to strong owner household formation. Specifically, the number of homeowners increased by 2.6 million, while the number of renter households declined by 0.6 million. Indeed, the number of homeowner households has been climbing since the third quarter of 2015, while the number of renter households has been on a downward trend. This implies that the transition from renting to owning has been a powerful driver of the net increase in households.

The homeownership rates among all age group increased in the first quarter 2020. Households under 35, mostly first-time homebuyers, registered the largest gains, with the homeownership rate up 1.9 percentage points from a year ago. Households ages 35-44 experienced a 1.2 percentage points gain, followed by the 55-64 age group (a 0.9 percentage point increase), the 45-54 age group (a 0.8 percentage point gain), and the 65+ group age (up by 0.2 percentage point).

 

 

The nonseasonally adjusted homeowner vacancy rate declined to a record low of 1.1% in the first quarter, signaling a supply-constrained housing market, while the rental vacancy rate increased to 6.6% from 6.4% in the last quarter of 2019.

 

Home Price Appreciation Continues in February

By Housing

In February, national home price appreciation continued prior to COVID-19 shutdown.  All 20 metro areas had positive home price growth rates. However, price growth will certainly decline in the coming months as nonessential businesses shut down and jobless claims soar.

The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, rose at a seasonally adjusted annual growth rate of 6.0% in February, the highest rate in the past two years. On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 4.2% annual gain in February, up from 3.9% in January. It marked the highest annual growth rate since January 2019. Due to the impact of the COVID-19 pandemic, existing home sales tumbled in March and home prices are expected to increase at a slower pace in the coming months.

Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), rose at a seasonally adjusted annual rate of 9.2% in February, following a 5.8% increase in January. On a year-over-year basis, the FHFA Home Price NSA Index rose by 5.8% in February, after an increase of 5.4% in January.

In addition to tracking home price changes nationwide, S&P also reported home price indexes across 20 metro areas. In February, all 20 metro areas reported positive annual growth rates ranged from 0.6% to 16.3%. Among the 20 metro areas, nine metro areas exceeded the national average of 6.0%. Minneapolis, Tampa and Cleveland had the highest home price appreciation in February. Minneapolis led the way with a 16.3% increase, followed by Tampa with a 12.3% increase and Cleveland with a 11.1% increase.

Banking Agency Issues Guidance on Flood Insurance

By Industry News

As NAHBNow previously reported, the Federal Emergency Management Agency (FEMA) extended the grace period for renewing flood insurance policies from 30 days to 120 days because of the COVID-19 pandemic. The extension of the grace period applies to policies expiring between Feb. 13, 2020, to June 15, 2020.

On April 15, 2020, the Office of the Comptroller of the Currency (OCC) issued a statement in response to the FEMA extension to provide guidance to the financial institutions it regulates, and address conflicts between the FEMA rule and banking agency flood insurance rules.

The guidance specifically addresses how financial institutions can address requirements under OCC’s flood insurance force placement regulations. When a bank determines that a designated loan is not covered by flood insurance or is not covered by a sufficient amount of flood insurance, it must notify the borrower that they should obtain sufficient flood insurance at the borrower’s expense for the remaining term of the loan. If the borrower does not provide evidence of sufficient coverage within 45 days after notification, the bank must force placement of flood insurance in an amount that will satisfy the regulatory requirements.

In recognition of the serious impact the COVID-19 emergency may have on consumers, OCC’s statement indicates that it will not take enforcement or supervisory action against banks for “reasonable delays in complying with” the OCC’s force placement of flood insurance regulations. OCC further states that banks could provide notification to borrowers 45 days prior to the end of the 120-day extended grace period concerning the need for sufficient coverage. Additionally, banks are reminded that if flood insurance is force placed during the extended grace period, the banks must refund the cost of the overlapping coverage to the borrower.

Without OCC’s clarification, the extension of the NFIP grace period could have resulted in a borrower being forced placed during the grace period when the borrower is fully covered by flood insurance. OCC is one of several financial regulating agencies, and additional guidance will be need from those agencies to fully address the issue.

For more information, contact Tamra Spielvogel at 800-368-5242 x8327.

Last Few Hold Out States are Starting to Allow Construction Activity to Resume

By Industry News

Thanks to efforts by NAHB and state home builder associations, the few remaining states that have halted residential construction activity due the COVID-19 pandemic — Michigan, New York, Pennsylvania, Washington and Vermont — are taking steps to allow home building to resume production.

In a critical win for NAHB and the residential construction sector, the Department of Homeland Security (DHS) on March 28 designated construction of single-family and multifamily housing as an “Essential Infrastructure Business.” Although this designation was not binding for individual states, most states followed the federal guidelines.

To keep workers safe on the job site, NAHB and other members of the Construction Industry Safety Coalition put together a Coronavirus Preparedness and Response Plan for Construction that outlines the steps every employer and employee should take to reduce the risk of exposure to and transmission of COVID-19. It describes how to prevent worker exposure to coronavirus, protective measures to be taken on the job site, personal protective equipment and work practice controls to be used, cleaning and disinfecting procedures, and what to do if a worker becomes sick. The plan served as the basis for materials provided for the COVID-19 Job Site Safety Stand Down held April 16.

While it was clearly demonstrated that residential construction could continue in a safe manner as long as workers were cautious and altered their normal behavior to comply with these new safety guidelines, five states refused to designate home building as an essential business. NAHB and the state home builders associations remained in contact with the five governors and state officials and now that is changing. Here is the latest update:

Michigan: Gov. Gretchen Whitmer (D) said in an April 27 news conference that she may soon allow construction to restart in the state if the trajectory of coronavirus hospitalizations goes down and testing goes up. She told Politico that “low-risk” work such as construction and other “outdoor enterprises” could reopen in the next phase.

New York: Gov. Andrew Cuomo (D) has announced plans to reopen regions of the state in coordinated phases, starting with construction and manufacturing, in mid-May. The Empire State’s number of cases and death rate from the coronavirus is the highest in the nation.

Pennsylvania: Gov. Tom Wolf (D) announced that all businesses in the construction industry are permitted to resume in-person operations beginning on Friday, May 1, as long as mandatory safety protocols are in place. The order says that operations can resume “pursuant to the Governor’s and Secretary of Health’s April 20, 2020 amendments to the Business Closure Orders so long as their activities strictly adhere to this guidance.” View more details here.

Washington: Gov. Jay Inslee (D) announced the first phase of construction openings in his state on April 24. Reps. Dan Newhouse (R) and Cathy McMorris Rodgers (R) also contributed to this effort. More details on the construction openings can be found hereBuilding Industry Association of Washington Executive Vice President Greg Lane was part of the working group that developed the safety guidance to allow construction to begin in the state.

Vermont: As of April 27, Gov. Phil Scott (R) allowed outdoor home building activities to resume with a maximum of five total workers per job site. Interior construction may occur in uninhabited structures, adhering to social distancing standards, with no more than five workers maintaining social distance between them whenever possible.

Access NAHB’s updated map showing where construction can continue and all of the safety resources to help employers and workers remain safe on the job site.

Supreme Court Decision a Win for Builders in County of Maui v. Hawaii Wildlife Fund

By Industry News

In a victory for NAHB and home builders, the U.S. Supreme Court on April 3 rendered a 6-3 decision in County of Maui v. Hawaii Wildlife Fund. The case concerns whether pollutants that enter groundwater — and then reach navigable waters — are regulated under the Clean Water Act.

Specifically, the County of Maui pumped effluent from its sewage treatment plant (through a pipe) into underground wells. From there, the pollutants leached into the groundwater and flowed into a nearby bay. There was no dispute that the county added the pollutants to the groundwater or that the pollutants entered the bay. It was also undisputed that the county did not have a permit to pollute the bay.

The Clean Water Act requires a person to have a permit if it adds pollutants “from any point source” to a navigable water. A “point source” is a discrete conveyance such as a pipe or ditch.

Maui argued that it did not need a permit because the pollutants came “from” the groundwater to the bay, as the groundwater was the last mode of delivery of the pollutants.

The environmental groups argued the opposite — that is, the pollutants came from the pipe (a point source) that Maui used to pump them into the groundwater. And because the pollutants came from a point source and entered a navigable water (the bay), the environmental groups argued a permit was necessary.

The Ninth Circuit Court of Appeals agreed with the environmental groups. If the pollutants were “fairly traceable” from the point source to the navigable water, it explained, then a permit was required.

The Supreme Court disagreed with the Ninth Circuit’s “fairly traceable” test, but also disagreed with Maui’s “last mode of delivery test.”

The Supreme Court essentially created its own test. It held that a Clean Water Act permit is required “when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.” The Supreme Court remanded the case to determine whether the discharge in the Maui case is “functionally equivalent” to a direct discharge.

Why This Case is Important to Our Members

NAHB filed an amicus brief in this case that focused on septic systems. We did not want the court to issue a decision that would require Clean Water Act permits for every septic system.

NAHB believes that there is a strong argument that most septic systems, if not all of them, would not be considered “functionally equivalent” (i.e., no permit required). The reasoning is that when effluent leaves the pipes in a septic system, it contains many pollutants (pathogens, nitrogen, phosphorous, etc.). Thus, if that effluent were to be discharged directly to a waterbody, all those pollutants would enter the waterbody.

However, in a properly operating septic system, the effluent leaches through the soil before reaching groundwater. The soil treats the effluent by removing the pathogens and nutrients.  Therefore, the effluent that would reach a waterbody is not “functionally equivalent” to a direct discharge.

We suspect that Maui and the environmentalists will find a way to settle this case once the Ninth Circuit remands it down to the District Court. Further, the Environmental Protection Agency will be forced to rewrite its guidance on this issue, and we will work with the agency to ensure that septic systems are not covered by the Clean Water Act.

For more information, contact Tom Ward at 800-368-5242 x8230.