Concerns about rising costs for building materials and labor helped drive NAHB’s Remodeling Market Index (RMI) of remodeler confidence down six points to 49 in this year’s first quarter, according to data released this week. Contributing to the decrease was an eight-point decline in the component measuring future market indicators, which went from 56 to 48 this time around. The component measuring current market conditions posted a four-point decline to 50. On a positive note, all categories of remodeling in owner-occupied homes achieved a reading of 51 or better in the latest report, meaning that more remodelers reported improving activity in that sector than declining activity. Repairs and minor additions are currently the strongest categories of business for remodelers as home owners continue to invest in deferred maintenance and room-by-room remodeling, notes 2013 NAHB Remodelers Chairman Bill Shaw, GMR, GMB, CGP. Meanwhile, commenting on the latest data, NAHB Chief Economist David Crowe said, “Although this quarter’s RMI indicates a pause in the improvement that the remodeling market had been showing, it is nevertheless the third highest reading for the RMI since the first quarter of 2006. Like the rest of the home building industry, remodelers are starting to feel squeezed by higher costs and limited availability of labor and materials, which is unusual at such an early stage of a housing recovery. However, the downturn was so deep and extended that this time it may take a while to re-establish the supply chains.” For more info, see the RMI tables at nahb.org/rmi or contact Rose Quint (800-368-5242 x8527).
In a second round of congressional testimony this week, NAHB vigorously defended the importance of vital housing tax incentives such as the Low Income Housing Tax Credit, mortgage interest deduction and real estate tax deductions as lawmakers consider ways to reform the U.S. tax code. NAHB economist and Assistant Staff Vice President Robert Dietz told members of the House Ways and Means Committee that, “Because home building is an industry dominated by small businesses, the idea of simplifying the complicated tax rules related to business has great appeal. At the same time, our industry remembers painful lessons from the 1986 Tax Reform Act, when the commercial and multifamily sectors experienced a downturn due to unintended consequences.” He reminded legislators of the important impacts that housing has on the economy and job growth, noted the critical role that the Low Income Housing Tax Credit plays in creating affordable rental housing, and set the record straight on a number of false assumptions regarding the mortgage interest deduction. For these reasons and more, he said, we urge Congress to be cautious and thoughtful when it comes to housing and tax reform. “Housing provides the momentum behind an economic recovery because home building and associated businesses employ such a wide range of workers. With the right policies in place, housing can be a key engine of job growth that this country needs,” Robert said. Read more here, or for additional information, contact Robert Dietz (800-368-5242 x8285) or J.P. Delmore (x8412).
The week before Christmas was a busy one for NAHB’s Senior Officers as they traveled to Washington for high-level meetings with key government officials on a variety of major housing finance and tax issues that will substantially affect the residential construction industry. Led by Chairman Barry Rutenberg, the entire Senior Officer team first met with Edward DeMarco, who is the acting director of the Federal Housing Finance Agency (FHFA) that regulates Fannie Mae and Freddie Mac, on Dec. 18. Later that same day, they met with Richard Cordray, director of the Consumer Financial Protection Bureau, and also with Comptroller of the Currency Thomas Curry. On the following day, our representatives visited the Federal Reserve to provide Chairman Ben Bernanke with an overview of current conditions in the housing market and continuing obstacles to a more robust recovery, including overly tight credit conditions for both buying and building new homes. This personal outreach to top federal officials is central to NAHB’s strategy to remain “at the table” and pro-actively engaged on issues of primary importance to our members as policy proposals are being formulated that will likely impact our industry for generations to come. Chairman Rutenberg will provide more details on these latest discussions at our upcoming Board of Directors meeting in Las Vegas. Contact: MondayMorningQuestions@nahb.org.
As reported in NAHB’s latest Washington Update, home builders and remodelers have been given a 90-day reprieve from federal OSHA enforcement of new, more stringent fall protection regulations, which have been in effect since September 15, 2011. The previously announced temporary enforcement measures, which provide priority free on-site compliance assistance, penalty reductions, extended abatement dates, measures to ensure consistency and increased outreach, have been extended until March 15, 2013, to allow the industry more time to learn about the rule. NAHB has long held that OSHA’s fall protection standard — including requirements that all residential construction companies must ensure that any employees or subcontractors doing work that’s six feet above ground or floor level must be protected with guardrail, safety net or personal fall arrest systems — could actually cause greater danger on the job site than using alternate methods that home builders say are safer. NAHB again made that argument and recently sent a letter and petition to OSHA officials asking them to reopen the rulemaking and try again to create a rule that applies to home builders, rather than a one-size-fits-all approach that is better suited to commercial contracting. “We are very pleased that OSHA heeded our calls” in delaying enforcement of the new guidelines, noted NAHB Chairman Barry Rutenberg when OSHA made its announcement on Dec. 11. Get the full story in the Washington Update. Contact: Rob Matuga (800-368-5242 x8507).
What You Should Know: Requirements Under the Patient Protection and Affordable Care Act
With the November election in the rearview mirror, implementation of the new health care law, the Patient Protection and Affordable Care Act, is about to hit the accelerator. Most of the mandates don’t start until 2014, which is when most Americans will be required to carry insurance or pay a penalty. Additionally, companies with 50 workers or more will be required to offer insurance to their workers or pay a penalty. The need to implement these provisions and others in advance of statutory deadlines, however, will result in “a wave of guidance” over the next few months, a Treasury Department official recently stated.
Thanks to NAHB Actions, Many Builders Will Be Exempt
NAHB has compiled the attached list of mandated provisions that are to take effect in 2013 and 2014. Some employers will be impacted, but since the majority of home builders employ fewer than 50 persons, these builders will be exempt from providing mandatory health care to their employees when the law goes into effect in 2014. As you may recall, an early draft of the measure contained a provision that targeted the construction industry by requiring a health coverage mandate for any employer with five or more employees, rather than the 50-employee threshold enjoyed by all other small businesses. NAHB launched a major lobbying blitz to remove this onerous provision from the final legislation, arguing that singling out the construction industry was unfair and that the provision threatened the viability of countless small home builders across the nation. As a result of NAHB’s efforts, the provision was dropped and the 50-worker threshold was signed into law.
Rumors About the New 3.8% Medicare Tax Are Untrue
Rumors have been circulating on the Internet that the new 3.8% Medicare tax on so-called unearned income set to take effect in 2013 is a direct tax on the sale of a home. As explained in the Dec. 11 edition of NAHB’s Washington Update, this just isn’t true. The tax will not affect income that is currently tax-exempt, including most capital gains due to the sale of a principal residence.
In the months ahead, NAHB will continue to be actively engaged as the new law is being implemented –especially as outstanding regulations on the definitions of employer, employee (full-time, part-time, seasonal) and safe harbors are considered. Stay tuned to this report and the Washington Update for all the latest developments. In the meantime, your contact for more information on the health care law is Suzanne Beall (800-368-5242 x8407).
With numerous legislative and regulatory proposals taking aim at the American Dream of homeownership and federal elections just around the corner this November, NAHB is seeking to harness the public’s well-documented support for this worthy cause through our newly launched website at www.ProtectHomeownership.com.
This consumer-oriented website alerts readers to the numerous threats to homeownership, including recent proposals to scale back or eliminate the mortgage interest deduction, raise the minimum downpayment on most mortgages and revoke federal government support for the housing finance system. Importantly, the site also provides multiple ways for the public to take positive action to protect this fundamental element of American life. For example, visitors are encouraged to sign an online petition that urges lawmakers to keep housing as a national priority, and are told how they can participate in upcoming homeownership rallies that are scheduled in a number of communities across the country in coming months. Our site also connects visitors to social communities at Facebook.com/ProtectHomeownership and Twitter.com/4Homeownership to facilitate discussion on related issues and news. In all, we hope to empower citizens from all across this country to step up and tell their political representatives how important homeownership is to them, and how strongly they feel about the need to preserve critical homeownership incentives in the U.S. tax code and regulatory policy.
On April 27, bipartisan leaders of the House Transportation and Infrastructure Committee and the House Agriculture Committee introduced legislation (H.R. 4965) to prevent the Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Corps) from using a draft guidance to dramatically expand the reach of the Clean Water Act to include virtually every ditch, pond and seasonal runoff ditch in the nation.
With the strong backing of NAHB, House Transportation Chairman John Mica (R-Fla.), along with ranking member Nick Rahall (D-W.Va.), Water Resources Subcommittee Chairman Bob Gibbs (R-Ohio), Agriculture Chairman Frank Lucas (R-Okla.) and ranking member Collin Peterson (D-Minn.) unveiled the bill to reduce the overreach of federal power under the Clean Water Act and to ease the regulatory burdens for America’s businesses, farmers and individual property owners.
NAHB is urging its members to call their representatives and ask them to cosponsor this important bill to compel the EPA and Corps to go back to the drawing board and craft a balanced approach to federal jurisdiction of the nation’s waterways.
H.R. 4965 is a companion measure to Senate bill S. 2245, the Preserve Waters of the United States Act, which was introduced by Sen. John Barrasso (R-Wyo.) and 29 other senators on March 28. NAHB continues to seek additional support for the Senate legislation as well.
The nation’s home builders have long supported the goals of the Clean Water Act, which is called into play when homes are built near rivers or wetlands and when builders take steps to avoid stormwater runoff from construction sites.
But recklessly broadening the scope of the act to include virtually all waters – including roadside ditches — within its regulatory reach will severely restrict the industry’s ability to recover and make new homes more costly without a corresponding environmental benefit, said NAHB Chairman Barry Rutenberg.
In May 2011, the EPA and Corps issued this draft guidance that significantly broadens the definition of federal waters of the United States under the Clean Water Act, allowing the EPA to go from regulating oceans and rivers to even the smallest bodies of water, including mudflats, prairie potholes and roadside ditches.
The proposal, which was sent in final form to the Office of Management and Budget in February, is radically broader in scope than previous guidance documents on this topic.
By issuing a guidance document as opposed to going through the more transparent rule-making process, EPA and the Corps are bypassing the necessary public outreach required under the Administrative Procedures Act and failing to fully consider the legal, economic and unforeseen consequences of their actions.
Upon introducing the bill, Rep. Mica said in a press statement that “this guidance would allow the unprecedented regulation of waters, occasionally wet areas and land use decisions not previously subject to federal regulation. Any regulatory expansion under the Clean Water Act must follow proper, transparent rulemaking procedures – not the unlawful, backdoor conversion of publicly unvetted agency guidance into de facto federal regulation.”
On March 28, House and Senate members sent a letter to OMB pressuring the Administration to halt the implementation of this water guidance overreach.
Further, the guidance uses an overly broad interpretation of the U.S. Supreme Court’s decision in the Rapanos case that addressed the issue of jurisdiction over “waters of the U.S.” under the Clean Water Act. The guidance contends that virtually all wet areas that connect in any way to navigable waters are jurisdictional, an assertion that was rejected in the Rapanos decision.
Warning of the severe economic consequences if the EPA and Corps guidance document is finalized, Rutenberg said: “This blatant regulatory overreach would lead to many more land development, road construction and residential projects requiring federal permits and would exacerbate permitting delays. In turn, this will increase construction costs, cause job losses, drive down housing affordability and hamper economic growth.”
To view legislation, click here and type the bill number in the box in the upper center screen.
For more information, email Courtney Flezzani at NAHB or call her at 800-368-5242 x8459.
With Congress and the Administration now looking at several proposals to wind down Fannie Mae and Freddie Mac and encourage greater participation in the mortgage finance system among private institutions, NAHB has unveiled a comprehensive framework for housing finance reform that we will advocate in ongoing negotiations.
The plan, which was developed through a specially appointed NAHB working group and approved by NAHB’s Board of Directors at its recent meeting in Orlando, stresses that any transition away from the current housing finance system must be done in a careful and deliberate manner to avoid further disruptions to an already fragile market. It is also built upon the recognition that, as the private market assumes a greater role in the mortgage marketplace, it is absolutely vital to maintain an appropriate level of government support to preserve financial stability, promote investor confidence and ensure liquidity and stability for homeownership and rental housing. In keeping with these core directives, NAHB’s plan seeks to:
- Include private, federal and state sources of housing capital.
- Offer a reasonable menu of sound mortgage products for both single-family and multifamily housing that is governed by prudent underwriting standards and adequate oversight and regulation.
- Transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multifamily conventional mortgages.
- Consider the 12 regional Federal Home Loan Banks for this securitization role.
- Phase in the new system over time and allow Fannie and Freddie to remain operational until the alternative system is fully functioning.
- Provide a federal backstop to ensure that conventional 30-year home loans and adjustable rate mortgages are available at reasonable interest rates and terms.
- Structure the federal support to the conventional mortgage market of the future through a privately funded insurance fund similar to the FDIC’s backing of the fund that insures savings deposits. This will allow the government to be the insurer of last resort in order to reduce the risk to taxpayers.
- Continue the role of the federal government housing agencies (HUD, FHA, VA, USDA and Ginnie Mae).
- Expand the role of the Federal Home Loan Banks in the housing finance system.
- Restart a carefully regulated fully private mortgage-backed securities market through reforms to the securities ratings system to remove conflicts of interest that led to problems in the past.
- Repair other flaws that produced the housing boom and bust by closing the gaps in standards and oversight that allowed and facilitated the improper and illegal activities in financial and mortgage markets.
By including a strong federal backstop for both single-family and multifamily mortgage markets and ensuring a consistent stream of mortgage credit, NAHB believes this plan will produce a sound housing finance system that provides a stable and affordable supply of credit for home buyers and rental housing. Going forward, NAHB will be working with the Administration, Congress and policy stakeholders to make this goal a reality, and we have already begun to promote our plan among lawmakers and the media. For more, read NAHB’s white paper containing our comprehensive plan for housing finance reform and see our recent public statement. Contact: Chellie Hamecs (800-368-5242 x8425)
With one out of every three home builders reporting that they have lost signed sales contracts because of flawed appraisals, a new report from the Government Accountability Office (GAO) ramps up the pressure for a solution to this critical problem.
A newly published report from the Government Accountability Office (GAO) this month cites multiple inadequacies in the regulation and enforcement of standard appraisal practices, and clearly states that the authority that oversees appraiser regulatory programs established by the states needs to improve its monitoring procedures. Specifically, the GAO report finds that the Appraisal Subcommittee that oversees appraiser regulatory programs has “limited” enforcement tools and procedures for reporting compliance levels. The report also cites “several weaknesses” that have potentially limited that body’s ability to monitor state appraiser regulatory agencies, federal financial institution regulators and the Appraisal Foundation (a private, nonprofit corporation that sets criteria for appraisals and appraisers). Observing that ”the critical role of real estate appraisers in mortgage underwriting underscores the importance of effective regulation of the appraisal industry,” the GAO study calls on the Appraisal Subcommittee to strengthen its oversight by developing specific policies and procedures for monitoring the appraisal requirements of the federal financial institutions regulators. Responding to this important report, NAHB Chairman Bob Nielsen said that clearly, “The current system is not working,” and “We must resolve a flawed appraisal process that produces inaccurate assessments of home values, because this fosters price instability, puts more families in danger of default or foreclosure, and undermines the housing and economic recovery. It’s time that regulators, appraisers, lenders and all of the stakeholders in this debate come together and agree on major reforms in appraisal practices and oversight to ensure that homes are appraised at their fair market rate.” Read NAHB’s official response here, or view the GAO report at this link. Contact: Steve Linville (800-368-5242 x8597)
**ALERT: NAHB TO RELEASE NEW APPRAISAL PRIMER**
Want to know more about the Appraisal Subcommittee mentioned in the story above? Have questions about how appraisals are generated, what knowledge and training appraisers have, and how they arrive at a value for your high-quality home for which there are no appropriate area comparables? NAHB’s Housing Finance experts will release a comprehensive new Appraisal Primer in time for the International Builders’ Show that’s aimed at answering your questions and helping you to obtain the fairest appraisal possible for your project. This free member resource will be published on www.nahb.org within the next few days and profiled in Nation’s Building News, so keep a lookout for your next edition. Of course, we’ll also provide more details in an upcoming edition of this report!
A new benefit for NAHB members is our “Legal Tips” section on www.nahb.org that includes regularly updated postings from our Legal Research Program. During its 37 years of continuous operation, the Legal Research Program has responded to thousands of our members’ legal questions covering a wide range of subjects related to residential construction and business operations for home builders, remodelers and associates.
The program strives to provide accurate legal information in plain language that is easily understood. Current topics include:
- Website images and copyright infringement
- Voluntary Affirmative Marketing Agreements
- Immigration law compliance and subcontractors
- Cancellation requirements for home improvement contracts
- Pre-contract language for protecting plans submitted with bids
Please note that the responses appearing in “Legal Tips” have been modified to protect the identity and privacy of the members making the original requests for information. NAHB members can access “Legal Tips” by visiting www.nahb.org/legaltips. For more information on “Legal Tips,” or to make individual requests for legal information from the Legal Research Program, contact David Crump at 800-368-5242 x8491.