Monday, October 7, 2013

New Index Shows Housing Markets Back to Normal in 52 Metros

NAHB Press Release

WASHINGTON, Oct. 7 - Housing markets in 52 out of the approximately 350 metro areas nationwide have now returned to or exceeded their pre-recessionary levels of activity, according to the newly minted National Association of Home Builders/First American Leading Markets Index (LMI), released today. The index's nationwide score of .85 indicates that, based on current permits, prices and employment data, the nationwide housing market is running at 85 percent of normal activity.

Baton Rouge, La., tops the list of major metros on the LMI, with a score of 1.41 - or 41 percent better than its last normal market level. Other major metros at the top of the list include Honolulu, Oklahoma City, Austin and Houston, Texas, as well as Harrisburg, Pa. - all of whose LMI scores indicate that their housing markets now exceed previous norms.

Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning that their housing markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Casper, Wyo.; Bismarck, N.D.; and Florence, Ala., respectively.

"This index helps illustrate how far the U.S. housing recovery has come, and also how much further it has to go as we continue to face some significant headwinds in terms of credit availability, rising costs for lots and labor, and uncertainties regarding Washington policymaking," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of activity. More than 350 metro areas are scored by taking their average permit, price and employment numbers for the past 12 months and dividing each by their annual average over the last period of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

"Smaller metros are leading the way to a housing recovery, accounting for 43 of the top 50 markets on the current LMI," observed NAHB Chief Economist David Crowe. "This is very much in keeping with the results of our previous index for improving markets, and is an indication of the extent to which local economic conditions dictate the strength of individual housing markets."

"The housing markets of 118 metros scored by the LMI this month show activity levels of at least 90 percent of their previous norms - a very encouraging sign of things to come," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.

Editor's Note: In calculating the LMI, NAHB utilizes employment growth data from the Bureau of Labor Statistics, house price appreciation data from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. The LMI is published on the fourth working day of each month, unless that day falls on a Friday -- in which case, it is released on the following Monday.

Friday, October 4, 2013

Lactation breaks and posting requirements went into effect July 1, 2013

Lactation breaks and posting requirements went into effect July 1, 2013 
(from DLIR's blog, Inside Hawaii's Wage Standards and the DLIR)

     Act 249, Regular Session 2013, was signed into law and become effective on July 1, 2013.  The Act requires employers to provide a private place (other than a bathroom) and the time for mothers in the first year of their child's birth, to express breast milk.   The law also requires employers to post a notice about nursing mother's rights.  The DLIR has provided a suggested poster that can be found on the DLIR website.  

Who's covered?
This law protects all employees who need to express milk while at work within the first year of their child's birth.  This is a much broader application than a similar law under the Federal Labor Standards Act ("FLSA").  The
FLSA provision applies only to those employees who are not exempt from the overtime law under FLSA.  The FLSA also provides that any State law offering greater protection has priority.  This means Act 249 is the standard in Hawaii for all employers.

All employers?  YES!
The law does provide an opportunity for employers with less than 20 employees to prove that providing the space and time would impose an undue hardship.  Notice it is the employer who has to show the undue hardship if they choose not to provide the space and time required under the law.  

What kind of space and how much time?

      Act 249 specifies employers need to provide  "reasonable break time" which is not defined.  As well, the place provided must be "shielded from view and free from intrusion."  Employers who are struggling with how to provide this may reach out to proponents of the measure including  
Breastfeeding Hawaii who have various suggestions and alternatives to assist employers with compliance.
Private right of action and penalties

   The DLIR does not enforce this law, it is enforced by court action, similar to 
Hawaii's whistleblower law.  Employers who fail to comply with opportunity to express milk law  may be sued in an appropriate court and be subject to a civil fine of $500 a day for violations.  In addition, employers may be liable for damages to the employee or employees who bring the private right of action in court.

What to do if employer and employee can not agree
The law provides a legal remedy that allows a lawsuit in the appropriate court.  The Hawaii State Bar Association has an information and referral line (808-537-9140) that will provide free referrals to several attorneys that are familiar with this issue that will help you find a resolution.

Mediation may be the answer
Employees or employers may reach out for assistance in resolving the matter through mediation.  Community mediation centers throughout the State provide professional workplace mediation.  To find out more about how this can help, you can contact a local mediation center near you.  Honolulu, Oahu - 
Mediation Center of the Pacific(808) 521-6767; Wailuku, Maui - Maui Mediation  (808) 244-5744;  Hilo Hawaii - Ku'ikahi Mediation Center  (808) 935-7844; Kamuela, Hawaii - West Hawaii Mediation Center - (808) 885-5525; Kauai - KEO Mediaton (808) 245-4077 Ext: 229 or 237.

Thursday, October 3, 2013

Housing Recovery Picks Up Steam Despite Persistent Headwinds

NAHB Press Release

WASHINGTON, Oct. 3 - With home prices and household formations rising and household balance sheets healing, the ongoing housing recovery is expected to gain momentum next year even as several challenges remain, according to economists who participated in yesterday's National Association of Home Builders (NAHB) Fall 2013 Construction Forecast Webinar.

"The cards are in play for a decent and fairly strong recovery in 2014 and particularly in 2015," said NAHB Chief Economist David Crowe. "From the standpoint of GDP growth, housing has been a plus, growing at two, three and four times the rate of the rest of the economy in recent quarters."

Helping to spur the housing rebound was a double-digit increase in home prices over the past year, driven in part by tight inventories of new and existing homes for sale and gradual gains in employment.

"We expect to see price increases moderate in the next few years as we see additional inventory on the market and investors back away as the bargains disappear," said Crowe.

Another bright spot is rising household formations that were delayed during the downturn as college graduates and young professionals were forced to move back in with their parents or double up as roommates. At the height of the housing boom, the U.S. was producing 1.4 million additional households every year. That figure plunged to 500,000 during the depth of the recession and today is now back up to 700,000.

Meanwhile, households across the nation have been increasing their savings and shedding debt. "They've corrected a lot of excesses and feel more comfortable about moving forward," Crowe said, noting that the University of Michigan Consumer Sentiment Index shows that the percentage of consumers who believe that now is a good time to buy a house is back up to levels last seen near the housing boom.

However, Crowe cited several headwinds that are impeding the recovery.

"Credit conditions are much tighter now, builders are increasingly facing labor shortages, lot supplies are tight, building material prices are rising, and inaccurate appraisals are hurting home sales" he said.

"You can't charge more than you can get an appraisal for," Crowe added. "Even though we are seeing price increases in labor, land and materials, 36 percent of builder recently said they had lost at least one sale over appraisals coming in below the cost of production."

A Solid Outlook

NAHB is forecasting 924,000 total housing starts in 2013, up 18 percent from 783,000 units last year.
Single-family production is expected to rise 17 percent this year to 629,000 units, jump an additional 31 percent next year to 826,000 and surpass the 1 million mark in 2015.

NAHB is projecting that multifamily starts will increase 20 percent in 2013 to 296,000 units and rise an additional 10 percent to 326,000 units next year, which Crowe characterized as a normal level of multifamily production.

Meanwhile, residential remodeling has returned to previously normal levels of the early 2000s and remodeling activity is expected to register a modest gain this year over 2012.

"Our Remodeling Market Index has been above 50 for three of the last four quarters, indicating that remodelers feel things are going better," said Crowe. "Remodeling did not fall as much, so it does not have as much ground to make up."

Dodging a Bullet

Regarding the uncertainties emanating out of Washington over the government shutdown and the impending Oct. 17deadline when the government will run out of cash to pay its bills, Mark Zandi, chief economist at Moody's Analytics, expressed optimism that Congress will move quickly to resolve these critical issues.

"I truly anticipate that lawmakers will get it together, but that is definitely a challenge to my economic outlook," said Zandi. "If policymakers can't get it together by Oct. 17, we're toast, and I think we are going into recession."

Assuming the government meets these challenges, Zandi cited three reasons for optimism moving forward. First, the fiscal drag that is weighing heavily on the economy in the form of tax increases and government spending cuts that are now being implemented will continue to fade in the coming years. This fiscal drag will shave 1.5 percent off of GDP growth this year, about 0.7 percent next year and gradually fall to zero by 2016, he said.

Second, Zandi noted that the "private economy has done a marvelous job of reducing leverage and getting their balance sheets in order. American companies are in very good shape and they will do well going forward, with continued strong export growth. That will be a strong source of economic growth for a long time to come."

Finally, Zandi said that demographics make a compelling argument for a strengthening housing market.

"In the current housing market, supply is running around 950,000 annual units," he said. "In a normal economy, we should be producing 1.7 million units. That's a big difference. We've already made a lot of progress in working off excess inventory. We won't get housing construction up to 1.7 million quickly. The big problem in the next five years won't be too much housing, but too little housing."

All Markets Are Local

Looking beneath the national numbers, Robert Denk, NAHB's assistant vice president for forecasting and analysis, noted a range of conditions across the country and differences among the states in the amount of distress suffered during the recession and the headway that is being made in recovery.

Housing nationwide bottomed out at an average of 27 percent of normal production in early 2009.

The hardest hit states where production soared to unsustainable levels during the boom years -- California, Nevada, Arizona and Florida -- bottomed out at 10 percent to 20 percent of normal when the housing bubble burst. In sharp contrast, better states that did not experience a huge production run up during the boom declined to 50 percent of normal production.

"We've now gotten past the point where we are digging out of holes and repairing the carnage of the housing markets," said Denk. "It's no longer about the boom and the bust. Now it's about the underlying [state and regional] economies and how that is supporting the housing recovery."

For example, while Texas and Florida have roughly the same number of mortgages, Florida had nearly five times as many foreclosures during the height of the downturn and today has less than double.

Now that housing has entered a new stage in the healing process, local economic conditions are dictating the pace of recovery. "That's why the bubble states are no longer in the bottom tier and have moved ahead of the industrial Midwest," he said.

The gradual and steady housing recovery now underway across the land will bring nationwide housing starts to 71 percent of normal by the fourth quarter of next year and 93 percent of normal by the end of 2015, Denk said.

Leading the way will be oil and gas producing states Texas, Oklahoma, North Dakota, Louisiana, Wyoming and Montana; and Iowa, supported by agricultural commodities.

In another way of looking at the long road back to normal, by the end of 2015 the top 20 percent of states will be back to normal production levels, compared to the bottom 20 percent, which will still be below 84 percent.