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Lumber
National, State & Local
Building Industry News
2018: Issue 6

Tariffs
hit home
U.S. builders say Trump's tariffs are adding $9,000 to new home prices, and that's not all
Higher lumber costs, labor shortages Ted Wilson, president of Dallas-based for the last four or five years," he said. home building, Dietz said.
and growing regulations are holding U.S. homebuilding analyst Residential "The job openings rate in the construction "Today it's less than 20 percent," he
builders back as they try to ramp up Strategies. industry is now is actually higher than it said. "It's the hardest level for the builder
construction to meet the huge demand for That's still nowhere near the almost was at the peak of the building boom," to reach."
housing. 50,000 houses started in D-FW in 2006. even though builders are producing fewer Jim Boyd, a regional president with
After starting about 850,000 single- Wilson said that the factors affecting houses than in the early 2000s. nationwide builder Toll Brothers, said
family homes nationwide last year, market growth have shifted. Almost 230,000 building sector jobs are longer production times caused by fewer
builders around the country are forecasted "Previously it was lack of labor that unfilled, Dietz said. workers and more local requirements are
to construct almost 910,000 houses this limited starts. Today, it is more the lack of Local building regulations and zoning adding to construction costs.
year and increase production to 1 million affordable lots," he said. "Inflation is the requirements are also adding to higher "We are certainly experiencing a labor
homes by 2020, says Robert Dietz, chief foe in the fight to maintain affordability." new home prices and resulting in fewer shortage — everywhere from California to
economist of the National Association of Higher materials costs are also starts. Boise, Idaho, " Boyd said. "What used to
Home Builders. hammering the industry. "A quarter of a typical newly built take six months to build now takes seven
The rise in construction still won't be A spike in lumber prices caused by the home's purchase price is due to regulatory or eight months to build.
enough, Dietz said at a meeting of the Trump administration's tariffs on Canadian concerns," Dietz said. "These are zoning "It used to take a year or two to take a
National Association of Real Estate wood products is one of the biggest requirements, impact fees, delay costs — new project from inception to shovels in
Editors. burdens on builders, Dietz said. Lumber all of these factors are built into the cost of the ground," he said. "Now in a lot of
"We probably need about 1.2 million prices in the U.S. have risen 62 percent a home." markets, it's three to five years."
single-family starts," Dietz said this week since January 2017, according to him. He said local building regulations and Boyd said that "demand is pretty
in Las Vegas. "We continue to under build "We get a third of the lumber we use in requirements add up to about a quarter of exceptional right now," even though home
single-family housing." the U.S. from Canada," he said. "A lumber the cost of a typical U.S. single-family mortgage rates are rising.
Homebuilding in North Texas is still tariff is very much a tax on homebuyers. house and more than 30 percent of the "Moderate interest rate increases are
more than 30 percent below where it was It's pushed up the price of a typical home cost of an apartment. And, the higher the reflection of a good economy," he said.
before the Great Recession. by $9,000." costs of building have restricted the "We'd rather see 5 percent interest rates
Last year, Dallas-Fort Worth builders Labor shortage industry's ability to produce lower cost and a good economy than 3.5 percent and
started almost 34,000 single-family Dietz said a lack of construction industry new homes — the price point that is most a lousy economy."
homes. workers is also limiting homebuilding in in demand by younger buyers.
"I'm thinking we will see starts in the many U.S. markets. In previous cycles, entry-level homes By Steve Brown, Dallas Morning News
35,000 to 36,000 range this year," said "Labor has been an issue of the industry accounted to about 30 percent of national

429
PERMIT NO.
EL PASO TX
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PRSRT STD
2 Builders Outlook 2018 Issue 6

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2018 Issue 6 Builders Outlook 3
President’s

*
PRINT & INTERNET

Message
PUBLISHING

*
Social Media & WeBSiTe
conTenT ManageMenT

EPAB headed in the

*
e-Mail neWSleTTeRS

right direction
Edmundo Dena
President
el Paso association of Builders

coMMUnicaTion
STRaTegY

i have to say that i’m still feeling everyone thinks that events get continue with the city of el Paso
really good about the direction the done with a click of a finger. i and promises made to our
association is in. in the first five acknowledge that we depend on builders over a decade ago for ediToRial SeRViceS
months of the administration Ray and Margaret for most of third party charges. We are
we’ve had some great events and that, but i wanted to make sure making headway with that and it
an awesome membership drive. they had help this year. So, with will have an impact. We’re not
The direction is helped by the golf we named luis Rosas and there yet but we have their
commitment from our leadership Patrick Tuttle to chair the golf, attention and they are paying
team and the volunteers who helping Ray and Margaret and attention.
have really captured my moto of Sam who has been really as we go into July we have a
“good isn’t good enough”. i came involved in golf for years. Well big event on Saturday July 7 at
into my second term with a we had a great event to kick off Bassett Place shopping center. i
renewed determination that the the year. Same thing with the encourage you to be active in the
status quo could change and that membership drive. We were told event as it shows off our
it would take a team to make it to have seven or eight teams, but members as good as anything
happen. you know we had four great ones. else we do.
We started with making sure Sergio, edgar, Kelly, Randy and Have a good July, see you at
our board was active and myself were able to recruit our new Member welcome party
committed to the association. it’s members who took action and the that is being planned. Watch for
one thing to be a member another result was 108 new members. the date and time coming soon. Get Creative. Make it Snappy.
to be an acTiVe member. let i’m grateful that we’ve been 915•820•2800
me give you an example. successful so far. our struggles www.snappypublishing.com
4
Executive’s
Builders Outlook 2018 Issue 6

Message

Dealing with anti-development activism part of the job


Ray Adauto,
Executive
Vice President
EPAB

As the summer starts a couple spokespersons, wealthy with destruction while doing so with
of things are evident in El Paso. homes in areas where they trails. If you really want to
It’s hot and summer just started. don’t want anyone else to live. “save” the land, then nothing
Gas prices are up so thank If we did research we’d but rattle snake marks should
goodness for Costco. probably find they have second be on the ground. Not tread
Also it’s clear that issues with homes in the forest or a beach marks or shoe marks. Private
development are not over as somewhere. Ruidoso, La property rights in Texas are
the case for the northwest TIRZ Jolla…in places where those there for a reason. Perhaps my
land has had a group of citizen activists also didn’t want editorial is going to upset some
activists angry. This anger more development. Look, I of you, but that’s why it’s my
seems to rise with cameras on understand that some of the editorial space. Growth is
them while the City Council has activists are really concerned change and some don’t do well
told them the deal is done. I with change. I find the with change. I wonder if we’d
suspect that anti-development argument that this group has ever had gotten to be the 19th
activists will always be with us. concerning development largest city in the country if we
I tend to interpret their activism destroying the environment had had activists opposing Kern
to “we got ours and we don’t when in fact they have already or Coronado or Eastwood.
want you to have what we done that with bike trails and Imagine that.
have.” Yes, that’s what I think walking trails. They must think
because I have found that these it’s ok to have trails, just I never
activists are, or at least their get over the irony of claiming
National
2018 Issue 6 Builders Outlook 5

Builder News

Housing Starts Reach


Post-Recession High in
May as Permits Soften
n Total housing starts rose 5
percent in May to a seasonally
adjusted annual rate of 1.35
million units, according to newly
released data from the U.S.
Department of Housing and Urban
Development and the Commerce
Department. This is the highest
housing starts report since July
2007.
While housing production
numbers rose, overall permits —
which are a sign of future housing
production activity — dropped 4.6
percent to 1.3 million units in May.
Single-family permits fell 2.2
percent to 844,000 while
multifamily permits fell 8.7 percent
to 457,000.
“Ongoing job creation, positive
demographics and tight existing
home inventory should spur more
single-family production in the
months ahead,” said NAHB Chief
Economist Robert Dietz.
“However, the softening of single-
family permits is consistent with
our reports showing that builders
are concerned over mounting
construction costs, including the
highly elevated prices of softwood
lumber.”
The May reading of 1.35 million
is the number of housing units
builders would begin if they kept
this pace for the next 12 months.
Within this overall number, single-
family starts rose 3.9 percent to
936,000 — the second highest
reading since the Great
Recession. Meanwhile, the
multifamily sector — which
includes apartment buildings and
condos — rose 7.5 percent to
414,000 units.
Year-to-date, single-family and
multifamily production are
respectively 9.8 percent and 13.6
percent higher than their levels
over the same period last year.
The year-to-date metric can help
compare performance data over a
specific time period and show
growth trends.
“We should see builders
continue to increase production to
meet growing consumer demand
even as they grapple with
stubborn supply-side constraints,
particularly rising lumber costs,”
said NAHB Chairman Randy Noel,
a custom home builder from
LaPlace, La.
Regionally, the Midwest led the
nation with a 62.2 percent
increase in combined single- and
multifamily housing starts. Starts
fell 0.9 percent in the South, 4.1
percent in the West and 15
percent in the Northeast.
Looking at regional permit data,
permits rose 42.1 percent in the
Northeast and 7.2 percent in the
Midwest. They fell 4.6 percent in
the West and 13.9 percent in the
South.
6
EPAB Membership
Builders Outlook 2018 Issue 6
Updated every month, here is a list of the 2018 EPAB Membership.
Remember to please do buinsess with fellow members.
The Heritage Group E.F. Building Materials, Inc MTI Ready Mix, Inc.
Builder members David Bingham Efren Fraire Tony Mullen
as of June 1, 2018 Trejo Construction Co. Eagle Roofing Products New American Funding
Juan Trejo Scott Aguilar Brenda Trillo
Bain Construction Tropicana Building Corp. El Paso Building Materials New Era Foam
Scott Bain Bobby Bowling IV Ken Wade George Tollen
Bella Vista Custom Homes, Inc. Tropicana Development El Paso Disposal Passage Supply
Edgar Garcia Greg Bowling Irma Parsons John Chaney
BIC Homes Tropicana Homes El Paso Mortgage Bankers Association Patriot Mortgage
Antonio Cervantes Randy Bowling Gilbert Pedregon Randy Bowling
Blue Star Construction Tropicana Properties El Paso Times Pella Windows
Carlos Villasana Demetrio Jimenez Sal Hernandez, Justin Riley Jason Bates
Bowling Construction Villagi Homes, LLC El Paso Truss Performance Glass & Aluminum
Randy Bowling Kristi Eddings Luis Mendiola Hector Hernandez
Carefree Homes Will Harvey Development
El Paso Winnelson Perl Mortgage
Richard Aguilar Will S. Harvey
Jesus Sanchez Steven Sepulveda
Casas De Leon, LLC Winton/Flair/Accent Homes
Ferguson Enterprises Inc. Pioneer Bank
Nick Bombach Herschel Stringfield
Albert Holguin Kathy Carrillo
Cisco Homes LLC Fire Smoke n Grill Post Tension Steel
Francisco Arroyos III Associate Members
Bill Owen Dennis Moore
Classic American Homes as of May 1, 2018
First American Bank Powerfoam Insulation
Priscilla Hernandez Louis Sauceda Arnie Pedersen
Crown Heritage Homes 2-10 Home Buyers Warranty
First Light Federal Credit Union Prewire of El Paso, Inc.
Lydia Mlouhi James Hebert
Lorenzo Revelez Steven Drury
Cullers & Caldwell Builders 84 Lumber
First National 1870 Pride industries dba Pride Ascend
John Cullers Ernie Chavez
Haley Merritt Dr. Lonny Wright
Cullers Homes 915 Siteworks, LLC
Firth, Johnston, Bunn & Kerr Randall Smith, CPA
Jason R. Cullers Hugo Jasso
Dawco Home Builders Jay Kerr Randall Smith
ABC Supply Co., Inc.
Walter O. Lujan Foxworth Galbraith Lumber Rebath of El Paso/Las Cruces
Larry Eck
Deal 2 Deal Custom Homes Dan Villarreal Lisa Walling
Acme Brick Company
Delton Deal Franklin Building Materials Remcon Self Storage
Steve Bush
Del Rio Engineering, Inc. Cristina Sheldon Will Harvey
Adams Moulding & Lumber
Sal Masoud G2 Ram Electric Richman Group Affordable Housing
Tom Swahlen
Diamond Homes, LLC Luis Cano Corp.
Area Iron & Steel Works, Inc.
Valerie Baquera GCC Sun City Materials,LLC Kevin Hoffman
Fred L. Edmonston Jr.
Donald Ward Builder, Inc. Antonio "Tony" Chavez Rocky Mountain Mortgage Company
Atrium Homes
Donald Ward GECU- Greater El Paso Credit Union Dean Inniss
Ricardo Bocardo Jr.
E. Valencia Land Development LLC Danny Galindo Roe, Brad
Bank of Texas
Eddie Valencia GEPAR-Greater El Paso Assoc. of Bradley Roe
Ray Owen
Edward's Homes, Inc. Realtors Rudolph Chevrolet
Baron Supply
Eduardo Fernandez Jason Sanchez Mike Ruffin
David Trammell
EPT Bella Custom Dream Homes Greater El Paso Chamber of Commerce Saldivar Electric, Inc.
Barragan & Associates
Leti & Javier Navarette David Michael Jerome Martin A. Saldivar
EPT Land Communities Benito Barragan
Harris Real Estate Group Sarabias Blue Sanitation
David Bogas Barrett Airworks
Lane Harris Monica Brown
Everest Homes Alexandro Castro
Haskins Electric Senercon
Edmundo Dena, Jr. Beasley, Mitchell & Co., LLP
Charles B. Haskins, Jr. Javier Ruiz
Fortune Custom Homes Brad Beasley
Home of Texas Sherwin Williams Paint
Javier Andrade BMC Select
Mark Smiley Cruz Lopez
Gaddy Construction Mike Catalino
Homes of El Paso Sierra Title Company
Charles Gaddy Boise Cascade
Riley Stephens Angelique Roman
GMF Custom Homes, LP Mike Flores
HUB International Simpson Strong-Tie Company, Inc.
Frank Torres Border Construction Specialties
Luis Rosas Ken Donham
Guel Construction Ricardo Yvellez
Inter National Bank Snappy Publishing
Rudy Guel Border Solar
Natalie Ojeda Ted Escobedo
Hakes Brothers LLC Javier Ruiz
Interceramic Tile & Stone Gallery Solar Smart Living
Chris Hakes Bukaty Financial Companies
David Holguin Larry Perea
Hanson Asset Management, LP Ruth Rivera
J & H Concrete & Post Tension Southwest Décor El Paso Corporation
Russell Hanson Builders Source Appliance Gallery
Jorge Herrera Chris Matthews
Homes by Design Sandra Lucero
Jack White Building Specialties Spectrum Technologies
Leslie Driggers Hoard C. D. Lee/Britton Insurance & Bonding
Claudia Lardizabal Miled Daou
Hunt Communities, LLC Anthony Landavazo/Lisa Daniels
Kathy Parry James L. Ellis, CPA, PC Stewart Title of El Paso
Casa Ford & Casa Nissan
ICON Custom Builder, LLC. Jim Ellis Cindy Bilbe
Luke Lowenfield
Carlos Garcia Jimmy Garza Emergency Water Removal StrucSure Home Warranty
CEA Engineering Group
Industrial Realty Group Incorporated Veronica Buchanan Scott Whisenant
Jorge L. Azcarate
Brent D. Harris Jobe Materials, LP Su Casa Magazine
Central Texas Metal Roofing Supply
JER Custom Homes, LLC Charlie Tellez Bob Skolnick
Co.,Inc.
Jorge E. Rodriguez Joe Bernal Insurance & Financial Sun City Winnelson
Ben Garza, III
Kayton Lee Residential, Inc. Services, Inc. Dean Moore
Centricity
Brianna Barnes Joe M. Bernal Texas Gas Services
Brent R. Morgan
Lloyd Hamilton Contruction Keenan Supply Mica Short
City Bank Texas
Lloyd Hamilton, III Nancy Rivas Texas Title Company
Bob Kotarski
LMJ Construction Co., LLC LCR Resources, Inc. Steve Raney
City Lights
Mike Lopez Ralph Sanchez TFCU
Thomas Brown
Loyalty Homes L & P Building Supply Yolie Melendez-Estrada
Cognent, Inc.
Gustavo Loy Denise McConnell The Dorian Group/Ocean Gallery USA
Martin Paredes
M A Builders & Design, LLC Legacy Real Estate Services/TTi Prop. Miguel Angel Mercado
Commercial Insurance Brokers, Inc.
Mustafa Ali Man. The Home Systems Heating & Cooling,
Metro Homes, Inc. Ken Foster
Patrick Tuttle Inc.
Judith Arrunada, Fernando Torres Conde, Inc.
Lone Star Title Co. of El Paso Jesus Chain
Millennium Homes Conrad Conde
Sam Trimble Trane Residential Solutions
Dan Ruth Copenhagen Imports
Love Engineering, Inc. Robert Meske/ Kathleen Chacon
Pacifica Homes, Inc. Flemming Carlsen
Montez Love TRE & Associates
Juan Jose Vasquez CQC Testing and Engineering,LLC
Majestic Realtors Linda Troncoso
Palo Verde Homes Jaime Rojas
Patti Mushorn Trim Team
Edgar Montiel Delek US dba 7 Eleven
MAK Roofing & Construction Juan & Kris Hernandez
Pointe Homes Sonja Scanlan
Felix Vizarreta USA General Contractors
Carlos Villalobos Demcon Disposal Management, LLC
Masco Contract Serv dba Gale Insul Javier Olmos
Porter Homes Maria Elena (Nena) Gomez
Tom Harmon Vision Consultants, Inc.
Albert Porter Desert Quest Plumbing
McCoy's Building Supplies Kelly Sorenson
R.C. Baeza & Associates Hector Gonzalez
Doug Danner WestStar Home Loans
Robert C. Baeza Dorney Security
Merrill Lynch Cinco Houghton
R.E. Welch Contractor John Dorney
Thomas Gabriel WestStar Bank
Gordon Welch Dunn-Edwards Paints
Mini Concrete Materials David Osborn
Rassette Homes, Inc. Nathan Gordon
Joe Soto WestStar Title
Donald Rassette
Santana Custom Homes Monster Link Marketing Rachel Valles
DWS Building Supply
Fernando Santana Raul Mendoza
Sabrina Voorhies
Southwest Land Development Serv. Morrison Supply
Doug Schwartz Sam Shallenberger
2018 Issue 6 Builders Outlook 7
Economic
Forescast

Elliot Eisenberg
Economic & Policy
Blog

The Economy Through 2018: u


Finally Behaving Well!
CELEBRATING
EPAB
THE BEST OF EPAB
EL PASO ASSOCIATION OF BUILDERS
INNOVATION u DESIGN u EXCELLENCE u ACHIEVEMENT

ENTRY INFORMATION
Despite more political uncertainty
than usual emanating from
Washington, the next 12 months are
forced to turn away work due to a lack
of skilled labor. With both U.S.
population growth and immigration
COMING SOON
shaping up well. The odds of a slowing, an advantageous solution is
recession remain very low – about for firms to invest in labor-saving
10% -- despite now being in the middle technology to boost output.
of the second longest economic Fortunately, due to the recent tax
recovery in US history. Global growth reform, tax treatment of purchases of
is solid, and while inflation is rising, it’s plant and equipment is more favorable
doing so slowly, giving the Fed time to today than at any time in recent
raise rates at a leisurely pace and not memory.
upend the fastest economic growth our Because of the ongoing labor
economy is about to experience since shortage, skyrocketing input costs
2005. including lumber, aluminum, and rising
Giving the economy a strong boost land costs, single-family housing starts
is a combination of net tax cuts totaling will rise by no more than 5 percent
more than $1 trillion passed in over the next 12 months and
December and spending increases multifamily activity should remain
totaling $400 billion passed in where it is. By contrast, remodeling
February. Collectively, these stimuli activity looks to grow by a strong 7.5
should raise near-term GDP by half a percent due to a combination of ever-
point. As a result, the Fed is likely to rising home prices boosting home
raise rates at least two more times this equity, shrinking inventory of existing
year – each time by one-quarter point houses, and limited starts, all of which
– and possibly three times. This will be are causing homeowners to remodel
done to protect the economy from rather than move. As for existing sales
overheating and proactively prevent activity, it might grow by as much as 1
inflation from rising much higher than 2 or 2 percent, but not more; home
percent/year, the Fed’s target inflation prices will rise by 6.5 percent over the
rate. next year.
GDP growth during the next 12 Growth during the rest of 2018 looks
months should average 2.8 percent, up to be meaningfully better than what we
from 2.3 percent in Q1 2018. have experienced since the end of the
Unemployment will continue to decline Great Recession. This is due to
from the current rate of 3.9 percent to t decent global growth and passage of
least 3.7 percent and perhaps as low tax cuts and spending increases here
as 3.6 percent, rates not seen in more in the US.
than 50 years. Inflation, as measured A wildcard in all this is trade. A
by the Consumer Price Index, will rise dissolution of the North American Free
from 2.0 percent now to 2.5 percent by Trade Agreement (NAFTA) and a trade
year-end 2018. As for 10-year war with China or Europe would
Treasury rates; by year-end expect weaken growth – albeit not
them to be at or near 3.2 percent, up substantially – at least in the short-run.
from the current 3 percent. The knock-on effects such as a
Regrettably, the worker shortage will possible decline in consumer
worsen. Employer surveys show an confidence are of more concern.
ever-increasing number of firms in a Lastly, while interest rates will rise in

AWARDS CEREMONY
growing number of industries facing the second half of 2018 (as they have
growing difficulties in the recruitment of in the first half), the increases will be
skilled workers. With unemployment measured, and the chances of a

SUMMER 2018
below 4 percent – and with labor force recession are very low.
growth weak – the struggle to find
workers will get worse before it gets Have a wonderful summer and see
better. More and more firms will be you in August!
2018 Issue 6
BUILDERS OUTLOOK • EPAB ON THE SCENE

Prove it Tour
The “Prove IT!” touring display made a
scheduled stop at the El Paso Association
of Builders. The display, actually a rolling
trailer, was brought into the area by
member Boise Cascade. The products
demonstrated were from AdvanTech and
Zipsystems, two of the national leaders in
wood and composite wood products and
sealants.
“I’m pleased that the Association was
able to arrange this tour for us,” said
President Edmundo Dena as he went
through the display. “Our building methods
keep changing and government
requirements including the newer insulation
requirements can be better met with
systems like these,” he said.
Casey McCuan and Miguel Flores from
Boise Cascade arranged for the demo to
visit. “Our customers are the leading
building materials retailers and
wholesalers,” Casey told the Outlook. “We
want to bring in the latest technology to El
Paso and show our end users, the builders,
how to use it and what their savings would
be,” he continued.
At the display Lowe’s Home
Improvement, one of newest members,
thought the display had merit. “We can
see the advantage of using a system like
these for the builder and homeowner.” The
AdvanTech reps were quick to point out
that when you can combine the strength of
their OSB insulated wood product you get
cost savings and a happier customer. “As
you can understand the insulation being
applied at the factory allows the builder to
present a quieter product with great
insulation qualities,” said Mike Flores.
More information is available by calling
Mike at 915-525-6037.

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You could win

$100,000
towards the purchase
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Join us for a one-day
‘pop up’
home buying fair
SATURDAY 7•7•2018
10am - 4pm Bassett Place
6101 Gateway Blvd West

Event partners

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builders www.elpasobuilders.com
©

www.elpasobuilders.com
915•778•5387
* The El Paso Association of Builders has purchased a $100,000 insured promotion that will pay a winner if all eight digits are entered on a number pad to exactly match a
code that is controlled by the third party promotion company. There is no guarantee of a winner. Entrants must be 18 years or older. Entries will be accepted between
10:00am and 4:00pm July 7, 2018.

JOIN US JULY 7
A special one-day home buying extravaganza!
EXHIBITOR BOOTHS STILL
AVAILABLE!
Must be a member of the El Paso Asssociation of Builders

home buyers at your exhibitor


First Home Saturday - a home booth and receive contact data Bassett Place, with its central A media plan with extensive radio,
Make plans now to participate in LOCATION ADVERTISING

for visitors entering our location and ample parking, is a television, and print advertising
sweepstakes. perfect location for First Home will begin 10 days prior to the
buying fair to be held at Bassett

Saturday. Recent demographic event and run until July 7. A social


Place on July 7.

• The highly promoted event is an • First Home Saturday is data indicates that this is an ideal media campaign will also be
ideal opportunity to identify first specifically designed for venue to target first time buyers. launched two weeks before the
time home buyers and offer your affordable home builders and event.
services as they begin their those who wish to reach this
search for a new home. valuable target market. The First Home Saturday Event
SHOWTIME

will open July 7 at 10:00 AM


• A special grand prize • The event is exclusively and conclude at 4:00 PM. Spaces are available for $477 -
EXHIBITOR SPACES

sweepstakes promotion will be designed for Members of the Exhibitors will be allowed to set includes a 6 foot table.
featured in all event advertising El Paso Association of up their booths starting at 9:00
to help encourage a great turn- Builders only. Every participant PM Friday July 6 & Saturday July
out. must be a member of EPAB in 7 between 9:00AM - 9:30AM.
good standing.
SPACE IS LIMITED -

• By participating in First Home


CALL EPAB TO RESERVE YOUR

Saturday, you will have the


SPACE TODAY! 915-778-5387

opportunity to meet first time


10 Builders Outlook 2018 Issue 6

Mortgage Fed Raises Target Range


& Banking
Communicates More Hikes in ’18 but Fewer in ‘20
BY MICHAEL NEAL recession. change from March, when they declared that at the median, a decline in expectations for
As was widely expected, the Federal Open If such a situation arises, “it’s very hard to “near-term risks” appeared roughly balanced. the unemployment rate from 3.8 to 3.6
Markets Committee (FOMC), the monetary navigate that without having an economic Analysts read that as an endorsement of percent. The relationship between economic
policy making arm of the Federal Reserve, downturn,” Eric Rosengren, the president of the economy’s staying power. “By not growth and the labor market is captured by
raised the target federal funds rate to a the Federal Reserve Bank of Boston, said in referring to the slower G.D.P. growth in the Okun’s Law. In addition, and consistent with
range of 1.75 percent to 2.00 percent from a an interview last month. “My concern is that’s first quarter or potential risks from trade an expectations-augmented Phillips Curve,
range of 1.5 percent to 1.75 percent. Going much worse than just having slightly slower policy, the committee is emphasizing that the decline in the median expectation for the
forward, the median projection of the federal growth” from a slightly faster pace of rate there are more signs of strength than unemployment rate at the end of 2018,
funds rate at the end of this year rose, but increases. weakness in the economy,” Ben Ayers, coincides with an expectation, at the median,
the median expectation for the number of No sign of concerns over economic senior economist at the insurance firm of faster inflation.
rate hikes in 2020 was offsetting, so that, by growth Nationwide, wrote after the meeting. In 2019, the median projection for the mid-
the end of 2020, the median expectation for The chairman of the Fed, Jerome H. The FOMC also released its Summary of point of the target federal funds rate rose
the federal funds rate was unchanged. Powell, and other officials are broadly Economic Projections which capture, from 2.875 percent in the March iteration to
The decision to raise the range of the optimistic about the strength of the economy anonymized, economic projections of 3.125 percent in June. If the FOMC follows
target federal funds rate largely reflects but have noted some risks on the horizon for Federal Reserve Board members and the median expectation in 2018 and 2019,
strengthening in the labor market, both the growth — most notably a potential drag from Federal Reserve Bank presidents under their then the number of rate hikes, presuming
increase in jobs and the falling a trade dispute with other nations, like China. individual assessments of projected they are all 25 basis points, in 2019 remains
unemployment rate. Household spending Some economists have also raised early appropriate monetary policy. These the same at three.
has picked up and business fixed investment concerns about slowing growth in Europe, projections are released every three months Although the median expectation for the
continues to grow strongly. At the same time, which could affect the United States, and and provide “forward guidance” about the federal funds rate increased in 2018 and
the FOMC noted that inflation, both overall about other market metrics that could views of the FOMC. filtered to a higher median rate in 2019, it
and core inflation, have moved close to two portend a slowdown, such as the rise in A histogram illustrating the distribution of remains the same in 2020 at a mid-point of
percent. Treasury bond yields. expectations for the federal funds rate across 3.375 percent. Assuming all the hikes are 25
Despite the decision to increase the target There were few hints of those concerns Board members and Bank presidents in both basis points, then FOMC projections
rate, the FOMC still believes that the stance in this meeting’s statement. March and June 2018, indicates that the communicate one more rate hike in 2018,
of monetary policy remains accommodative. The statement declared that “business number of respondents expecting the federal but one less in 2020 so that the total number
Labor market conditions should continue to fixed investment continued to grow strongly” funds rate to reach a mid-point of 2.125 of rate hikes by the end of 2020, the longer
strengthen and inflation should return to two since the last Fed meeting, which was more percent, one more rate hike this year, fell path of the federal funds rate, remains
percent on a sustainable basis. bullish language than the March statement. It from six to five, while the number expecting unchanged. However, the figure above
Several Fed officials have raised concerns noted, as it did in March, that household the mid-point to reach 2.375 percent, two indicates that one fewer respondent expects
in recent weeks about the economy’s spending growth had moderated since the more rate hikes this year, rose from six to the mid-point to be 3.375 in 2020 and an
“overheating” and publicly pondered whether end of last year. It eliminated a line from the seven. At the median of respondents, the additional respondent expects it to be higher
the Fed may need to pour on some cold March statement that declared “the economic expectation for the federal funds rate rose by the end of that year. While the median
water with higher interest rates. The concern outlook has strengthened in recent months,” from 2.125 to 2.375 percent, or from three expectation for the federal funds rate in 2020
is that if the Fed does not raise interest rates but did not add any new language about total this year to four. remains unchanged, there appears to be
quickly enough, wages and prices could risks to growth. The reason likely reflects an upward upward pressure on the median expectation
begin to spiral up, forcing a sharp rate Officials said that “risks to the economic revision to the median rate of economic for the federal funds rate in 2020.
increase that could push the economy into outlook appear roughly balanced,” a slight growth in 2018, from 2.7 to 2.8 percent and,
11

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12 Builders Outlook 2018 Issue 6

The El Paso Association of Builders proudly welcomes our neswest members

150 Sunset W.W. Sales Go Pro Refrigeration Southwestern Prewire


Danny Heredia Eric Hoppes Huberto Diaz Joe Trejo
4 Tech A/C Service Eze-R-Designs Parra's AC & Heating Services Bella Vista Realty
Enrique Hernandez Leticia Mata Aureliano Parra Grisel Ortega
Marlo Building Services Barraza Drywall Corp. Polar Mechanical LLC Century 21 The Edge
Roberto Martinez Ignacio Barraza Francisco Amezquita Scott Kesner
Electrolux Jose Moreno Drywall StarTech Heating and Air ERA Sellers & Buyers Real
Adger Colley Jose Moreno Conditioning Estate
Whirlpool S & J Dry Wall, LLC Luis Proctor Karla Rayos
Gwen Walker Sergio Jalil Wolf Air HVAC Home Pros Real Estate Group
G E Appliances Allbrite Electrical Arturo Alcantar Penny Moore
Christine R. Villanueva Carlos Nunez New Start Insulation Keller Williams, Mo Goodariz
El Paso Audio Video by Design Castillo Electric Jose Carreon Agency
Noe Gutierrez Jose Del Val Dominguez Insurance Agency Mo Goodariz
Althon Investments, LLC Elizardo Garica Electric Victoria Dominguez Minerva Al-Tabbaa Realtor
Jose Luis Martin Mario Elizardo Garcia Farmers Insurance Mercedes Minerva Al-Tabbaa
D B Innovations LLC L O I Engineers Ruiz agency Hector de la Canal Summus Realty
Dan Berry Bernadino Olague Mercedes Ruiz Hector de la Canal
Padilla Homes Bukaty Financial Compaies Great American Insurance Group Alden Roofing and Remodeling
Misael Navarrete Group Julie Tomlison Alejandro Dena
Vallance Construction LLC Ruth Rivera Edmund Esper Investor H P Roofing & Construction
Oswaldo Prieto Jack White Building Specialties Edmund Esper Heriberto Prieto
Vista del Sol Archetectural Claudia Lardizabal Amelia's Janitorial Service Hernandez Roofing
Design Bordertown Carpets Amelia Gomez Concepcion Hernandez
Luis J. Lopez Brian M. Abraham Designers Mart Imperial Construction
Rosewood Design and Build Carpet Warehouse Valerie Edmiston Alejandro Garcia
Brianna Barnes Erez Belkin Citizens Loan Center RGR Roofing LLC
Medlock Commercial Edgars Flooring Jim Easley Mario Rodriguez
Contractors LLC Edgar Enriquez New American Funding Loyas Shutters
Steve Medlock G E Appliances - Tania Guzman Alfredo Loya
Eclat Homes & Designs Christine R. Villanueva Tania Guzman St. Mary's Custom Shutters
Veronica Guerra G & G Enterprises GC Monster Link Marketing Dolores Lopez
Massey Johnson Foundation Repair Raul Mendoza Soil Mechanics
Josie Ledesma Juan F. Garcia A + Remodeling & Repairs Lorenza Escareno
J.B. Laminates Segura Framing Martin Arroyos Value Stone
Gina Rodriguez Erika Segura J. C. Balcorta Painting Isabel Chacon
Cabinet Masters Sergio Herrera Framing Cruz Balcorta JFM Stucco (Enterprises)
Mike Robles Sergio Herrera Ramon Romero Painting Jaime Flores (Jose)
Eagle Custom Cabinets Garage Doors and More Ramon Romero CMF Tile Installation
Juan Benabidez Miguel Moran Rey Construction Carlos Munoz
David Hernandez Cabinets Sun City International Doors Manuel Reyes Miguel Sanchez Cano Tile
David Hernandez Jorge Carmona Serrano's Construction Miguel Sanchez Cano
Bassett Woodworks Juan Carlos Perez, grading Juan Serrano David J. Ellis fee attorney for
Danny Murillo Juan Carlos Perez VMP Painting Sierra Title
Agustin Favela Concrete Quality Granite Victor Prieto David Ellis
Agustin Favela Hector Porras X Construction Hector Phillips, fee atty for
Oropeza Concrete Stone City Rocks Emannuel Chavaria Sierra Title
Angel Oropeza Chris Baca Alvarado Plastering & Stucco Hector Phillips
Felipe Rocha Construction Forge Factory Strength & LLC Senpai Training and
Felipe Rocha Conditioning Jorge Enrique Alvarado Development
Border Construction Specialties Edmundo Portillo EDLR Plastering Leonardo Corral
Ricardo Yvellez Lowes Home Improvement Eduardo DeLa Rosa Sun West Windows and Glass
Big A Construction (concrete) Johnny Rodriguez J. F. Plastering Ernie Hernandez
Thelma Vasquez A C Refrigeration LLC Juan Flores DeLa Torre Iron Works
Pate & Appleby LLP Angel Cabrera Q Martins Plumbing Alfredo dela Torre
Richard De Santos Belmont's Air Conditioning, INC. Jose Martinez The Iron Snail Inc.
SBNG, P. C. Rafael Belmonte MOEN David Zuniga
Tyler Smith Diaz Services Inc. HVAC Frank Graf Rito Magallanes
Emmanuel Diaz Rito Magallanes
2018 Issue 6 Builders Outlook 13

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August 16
Board meeting 11:00
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S h o w ro o m :
Our deepest Condolences to 9400 Gateway East  El Paso, TX  79907
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Call 778-5387 today! © 2018 El Paso Association of Builders •  6046 Surety Drive • El Paso • Texas • 915-778-5387
Regulation:
14 Builders Outlook 2018 Issue 6

Over 30 Percent of the Cost of a Multifamily Development


BY PAUL EMRATH
Regulation imposed by all levels of
government (whether local, state or
federal) accounts for 32.1 percent of
the cost of an average multifamily
development, according to a new study
conducted jointly by the National
Association of Home Builders (NAHB)
and the National Multifamily Housing
Council (NMHC). The study is based
primarily on a survey of multifamily
developers from both organizations.
The results show that well over 90
percent of multifamily developers
typically incur hard costs of fees paid
to local governments, both when
applying for zoning approval, and
again when local jurisdictions authorize
the construction of buildings. But the
study also shows that government
regulation often imposes costs in other
ways as well.
Among the regulations covered by
the NAHB-NMHC analysis, the cost
was highest for changes to building
codes over the past 10 years,
accounting for 7.0 percent of the cost
of developing the property on
average. No one would argue against
standards for basic soundness and
safety of structures, but building
codes have been in place for
decades, and have expanded well
beyond this. There is now a separate
code devoted to energy conservation,
for example, and NAHB has criticized
particular changes to this code for
limiting flexibility and driving up costs
without improving energy efficiency
(sometimes to the benefit of specific
product manufacturers).
Many local governments require
new development to conform to
community design standards (for
example, streets, sidewalks, parking,
height of buildings, landscaping, and
architectural design). These
standards impose added costs if they
require more than a multifamily
developer would normally provide.
These beyond-ordinary development
requirements were the second most
costly type of regulation, accounting
for 5.9 percent of development costs,
on average. The chart below shows
the average costs for the various
types of regulation covered in the
NAHB-NMHC study.In the chart, the
“other” category includes Interest on
refundable fees charged when site
work begins, the value of land that
the developer must dedicate to the
government or otherwise leave
unbuilt, the cost of so-called
affordability mandates imposed
without any incentives to offset the
cost, and a “pure” cost of delay (i.e.,
how much the delay would cost even
if regulation imposed no other type of
cost)
As mentioned above, on average
these costs sum to 32.1 percent of
the cost of developing a new
multifamily property. One-fourth of the
time they reach as high as 42.6
percent. For more detail on each
type of regulation, as well as a
complete description of the NAHB-
NMHC survey and methodology used
to estimate the costs, please consult
the full NAHB-NMHC study.
Builders Outlook 2018 Issue 6 El Paso Disposal
6046 Surety Dr. El Paso, TX 79905
915-778-5387 • Fax: 915-772-3038
■ ExEcuTivE OFFicERS
PRESiDENT
Edmundo Dena
Luis Rosas, HUB International
Brenda Aguirre, Rocky Mountain Mortgage
Sandra Lucero, Builders Source
772-7495
vicE PRESiDENT Ted Escobedo, Snappy Publishing
Sergio Cuartas Jorge Herrera, J&H Post Concrete & Post Tension
SEcRETARY Angelique Roman, Sierra Title
Edgar Garcia Patrick Tuttle, Legacy Real Estate
ASSOCIATES VICE PRESIDENT Sam Trimble, Lone Star Title
Sam Shallenberger Patricia Martinez, Stewart Title
ExEcuTivE vicE PRESiDENT Randall Smith, Randall Smith, CPA
Ray Adauto
PAST PRESiDENT ■ TAB STATE DiREcTORS
Don Rassette Randy Bowling - Life Director
Sam Shallenberger
■ cOMMiTTEE cHAiRS Edmundo Dena
Membership
Ted Escobedo ■ NATiONAL DiREcTORS
Patrick Tuttle Bobby Bowling, IV
Demetrio Jimenez
Finance committee Leslie Driggers Hoard -Alternate
Kathy Carrillo/Treasurer Antonio Cervantes - Alternate
Henry Tinajero
Honorary Life Members
Community Outreach Mark Dyer
Angelique Roman

For All Your Electrical Needs


Wayne Grinnell
Brenda Aguirre Don Henderson
Patricia Martinez Anna Gill
Brad Roe
Land Use Council Rudy Guel
Sal Masoud

Residential Specialists
Past Presidents
Education committed to Serve
Kelly Sorenson Edmundo Dena

Tract Homes • Custom Homes


Delton Deal Edgar Montiel
Frank Torres
■ ADviSORY TO THE BOARD Frank Arroyos
Jay Kerr, Firth, Johnston, Bunn & Kerr Greg Bowling
Randy Bowling
■ BOARD OF DiREcTORS Bobby Bowling Iv
Builders: Doug Schwartz
Delton Deal, Deal 2 Deal John Cullers
J.J. Vasquez, Pacifica Homes Robert Baeza
Leti Navarrete, Bella Custom Dream Homes Mark Dyer
Bud Foster, Southwest Land Development Kelly Sorenson
Kathy Parry, HUNT Communities Rudy Guel
Lee Gillett, Classic American Brad Roe

915-208-9313
Laura Loy, Loyalty Homes Herschel Stringfield
Walter Lujan, Dawco Homes Bob Bowling Iii

Total Customer
Fernando Torres, Metro Homes Pat Woods

800-853-3996
Leslie Driggers Hoard, Homes by Design Carlos Villalobos
Carlos Garcia, ICON Custom

Satisfaction
EPAB Mission Statement:
Sal Masoud, Del Rio Development The El Paso Association of Builders is a federated professional
Fernando Santana, Santana Custom Homes organization representing the home building industry,
Chris Hakes, Hakes Brothers committed to enhancing the quality of life in our community by
Associates: providing affordable homes of excellence and value.
Joe Bernal, Joe Bernal Insurance The El Paso Association of Builders is a 501C(6) trade
Henry Tinajero, WestStar Bank organization.
Kathy Carillo, Pioneer Bank © 2018 Builder’s Outlook is published and distributed for
John Chaney, Passage Supply the El Paso Association of Builders
by Ted Escobedo, Snappy Publishing, LLC

2017 Member Of The Year 2017 Associate Of The Year


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