Call for Exhibitors! BIA-Hawaii Remodel it Right, Remodel it Green Expo 2013

The Building Industry Association of Hawaii (BIA-Hawaii) will present the 9th Annual Remodel It Right/ Remodel It Green Expo on Friday, August 9 through Sunday, August 11 at the Neal Blaisdell Exhibition Hall. Over 200 exhibitor booths will showcase Hawaii’s top contractors, suppliers, building industry experts and associates. Interested companies are welcome to contact BIA-Hawaii to participate in this convenient central location showcase of remodeling industry expertise. The event theme, “Remodel It Right, Remodel It Green”, will enlighten and educate homeowners on the latest products, services and trends in energy savings and sustainable living.

Unique features of this award winning Expo include the “Meet the Experts” presentations that provide on-going round table interactive discussions from the entire spectrum of the remodeling industry and the “Remodel It Right” Panel of Experts. These in-depth round table discussions will cover key topics that will provide a strong foundation for your remodeling project. Architecture, General Contracting, Contractor Licensing, Permitting Guidelines and Kitchen and Bathroom Remodeling Basics are all offered in the “Meet the Experts” area. A Free Remodeling Planning Kit will be offered to every family attending the sessions, while supplies last.

Companies interested in becoming exhibitors in the August 9-11, 2013 BIA Remodel It Right/ Remodel It Green Expo at the Blaisdell may contact Clarice Watanabe at (808) 629-7503 or email ckw@biahawaii.org for additional information.

Housing Tax Incentives Critical to Maintain Thriving Middle Class, NAHB Tells Congress

NAHB Press Release

WASHINGTON, April 25 - To meet the nation's growing need for affordable rental housing and homeownership opportunities, the National Association of Home Builders (NAHB) today called on Congress to maintain its support for vital housing tax incentives, including the Low Income Housing Tax Credit, the mortgage interest deduction and real estate tax deductions.

"Home building is an industry dominated by small businesses, so 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," said Robert Dietz, an economist and assistant vice president for NAHB, in testimony during a House Ways and Means Committee hearing on tax reform and residential real estate.

Moreover, when housing fares well, it spurs job and economic growth, Dietz added. "For these reasons, we urge Congress to be cautious and thoughtful when it comes to housing and tax reform."

U.S. Census data shows that more than 40 percent of renters are "rent burdened," or pay more than 30 percent of their household income on rent. The need for affordable rental options remains acute. The Low Income Housing Tax Credit (LIHTC) is the most effective tool for the creation of affordable rental housing. Utilizing a public-private partnership to attract investment, the program has produced and financed more than 2 million affordable rental units since its inception in 1986.

"As LIHTC properties must generally remain affordable for 30 years, they provide long-term rent stability for low-income households around the country," Dietz said. "But the demand for affordable housing far exceeds the availability of financing through the LIHTC program. The solution is not to eliminate the most successful affordable housing program in the country, but to provide it with the resources necessary to address the shortage of affordable housing options in our cities and towns."

When it comes to housing and tax reform, the spotlight typically falls on the mortgage interest deduction, and Dietz set the record straight on a number of false assumptions regarding this important homeownership benefit.

"First, we frequently hear that few home owners benefit from the mortgage interest deduction because itemization is required," he said. "In fact, most home owners will claim it. In 2009, 35 million taxpayers, or 70 percent of home owners with a mortgage, claimed the mortgage deduction in that year. Among all home owners who have ever held a mortgage, the vast majority have claimed the home mortgage deduction for years at a time."

Critics charge that the mortgage interest deduction encourages the purchase of a larger home, but these claims ignore the role of family size. Home owners with larger families need bigger homes and will therefore have a higher mortgage interest deduction.

"The need for a larger home created the higher home loan deduction, not the other way around," said Dietz.

He also noted that the cost of housing varies greatly across the nation, so what appears to be a large deduction for a given home in one area may reflect a modest home in a high-cost area.

Moreover, the mortgage interest and real estate tax deductions are two of the few elements in the tax code that that account for differences in cost-of-living.

"The real estate tax deduction is an important reminder that home owners pay more than $300 billion in property taxes each year. This fact is often ignored in the federal tax debates because these taxes are collected by state and local governments," said Dietz.

There is also a direct correlation between the age of a home owner and their resulting benefit from the mortgage interest deduction. As a share of household income, the largest deductions are for those 35 and younger. The benefit of a deduction that reduces the net cost of monthly house payments is particularly important to these home buyers, who typically have less equity, tighter household budgets, and must meet the needs of a growing family.

"Given this demographic connection, NAHB believes that any policy change that makes it harder to buy a home, or forces young families to defer home purchases, will have a significant impact on wealth accumulation and the makeup of the middle class," said Dietz.

Regarding the mortgage interest deduction rule for second homes, Dietz said that many mistakenly think this refers to expensive beach property, when in reality, such homes are often owned free and clear or rented, which excludes the owner from taking the mortgage interest deduction.

In practice, the second home deduction is important for many who don't think of themselves as owning two homes. Repealing the deduction for second homes would penalize millions of home owners who move from an existing home and buy a second home in a given tax year. There would be further negative economic consequences in terms of lost home sales, home construction and local tax revenues.

Noting that building 100 single-family homes creates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues that helps boost local communities and schools, Dietz said that how housing is treated in an future tax reform will shape the economy going forward.

"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."

Remodeler Confidence Dips in First Quarter 2013

NAHB Press Release

WASHINGTON, April 25 - Remodelers' confidence in the market dipped in the first quarter of 2013 when the Remodeling Market Index (RMI) fell six points to 49, according to the National Association of Home Builders (NAHB). Concern about the rising costs of construction materials and labor contributed to the pause in the general upward trend of remodelers' confidence.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.

"Remodelers remain optimistic about the outlook for growth in the remodeling market this year, but the rising cost of doing business makes it difficult to deliver the prices that many of our customers expect," said 2013 NAHB Remodelers Chairman Bill Shaw, GMR, GMB, CGP, a remodeler from Houston. "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."

The future market indicators component of the RMI decreased from 56 in the previous quarter to 48. Current market conditions also fell from 54 in the previous quarter to 50. Remodelers indicated that activity was particularly strong in owner-occupied properties, rating all categories of remodeling in owner-occupied homes 51 or better.

"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," said NAHB Chief Economist David Crowe. "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."

The RMI was 47 in the Northeast, 47 in the Midwest, 51 in the South and 52 in the West.

For more information about remodeling, visit www.nahb.org/remodel.

Short-Term Ups and Downs for Housing

NAHB Report

Recent housing market data have illustrated that while the long-run trend for housing remains one of improvement, there will be bumps along the road. In particular, availability of building lots and skilled labor, rising building material prices, and big-picture economic and policy developments will present month-to-month challenges for home builders and other housing businesses.

For instance, the share of first-time home buyers remains lower than the historic average. For the housing market to return to normal, these buyers need access to credit and stable labor market conditions to afford a home.

As a result of these challenges, builder confidence has declined slightly in 2013. The NAHB/Wells Fargo Housing Market Index (HMI) dropped two points to 42 in April. This is the third monthly decline from a peak of 47 in December and January. Two of the three components pulled the composite index down: The current sales component fell two points to 45 and the normally lower traffic component fell four points to 30.

However, consistent with long-run improving trends, the component measuring expectations for future sales increased three points to 53, tied for the highest level since February 2007.

One factor holding builder confidence back is a rise in the cost of some building materials. Since last March, Production Price Indices have significantly increased for gypsum (18%), softwood lumber (30%) and OSB (68%).

Consistent with the decline the HMI, single-family housing starts were down 4.8% in March. Single-family construction fell to a 619,000 annual pace from an upwardly revised February rate, which in turn was the highest since May 2008. The first-quarter single-family starts average was 628,000, up 6% from the fourth quarter of 2012.

Overall housing starts actually rose 7% for March, but this surge was due to an unsustainable jump in multifamily apartment construction, which was up 31% month over month.

At a 392,000 annualized pace, the starts rate for units in properties with more than five units is the highest it has been since January 2006. This pace is above the total number of five-plus starts in any year since the 1980s, suggesting that the rate of multifamily construction is not sustainable going forward. Consistent with this conclusion, multifamily permits for March were down 8%, while the number of five-plus permits waiting in the pipeline (previously issued but not yet converted to starts) declined 19%.

Nonetheless, total housing starts in March rose above the 1 million pace (1.036 million), a psychological, if not economically meaningful, threshold.

New home sales continued slow improvement. HUD and Census reported new home sales up 1.5% in March at an annual rate of 417,000 per year. Except for the January outlier rate of 445,000, this is the highest rate of sales since the end of the home buyer tax credit in early 2010. The first-quarter average came in at a 424,000 annualized sales rate, which is the highest since third-quarter 2008.

Inventories of newly built homes continue to stand near historic lows at 153,000, with a mere 41,000 homes completed and ready to occupy. In a normal market, there are about 100,000 ready-to-occupy new homes for sale. At the current sales pace, the inventory represents only a 4.4-month supply.

On the other hand, existing home sales were down in March. Per the National Association of Realtors (NAR), existing home sales decreased 0.6% in March from a downwardly revised level in February. However, the sales rate is up 10.3% from the same period a year ago.

NAR reported that March total existing home sales were at a seasonally adjusted rate of 4.92 million units combined for single-family homes, townhomes, condominiums and co-ops. That compares to 4.95 million units in February, and 4.46 million units during the same period a year ago.

Total housing inventory at the end of March increased 1.6% from the previous month to 1.93 million existing homes for sale. At the current sales rate, the March 2013 inventory represents a 4.7-month supply, compared to a 4.6-month supply in February, and a 6.2-month supply of homes a year ago.

The increase in March inventory suggests that rising prices are inducing more households to place their homes on the market, after previously holding back because of low prices. Those same rising prices may be dampening the enthusiasm of investors and cash buyers whose participation declined in March.

Indeed, all cash sales were 30% of transactions compared to 32% in February, and 32% in March 2012. Investors accounted for 19% of March 2013 home sales, compared to 22% in February and 21% a year ago. First-time buyers accounted for 30% of March 2013 sales, the same as the previous three months, although down from 33% during the same period a year ago. Historic norms would place the first-time home buyer share closer to 40%.

Rising rents could further increase demand for new and existing home sales in the months ahead. Per data from the Consumer Price Index, real rental prices rose by 0.1% in March. They have increased steadily since June 2012 and have now surpassed the cycle high established in May 2009.

Lastly, with the release of the 2010 Census, the Office of Management and Budget (OMB) has published new definitions for metropolitan statistical areas (MSAs). Major changes to MSA definitions take place every 10 years when population counts and commuting patterns are revised following the decennial census. In 2013, 23 brand-new areas were designated as MSAs: 10 in the South region, five in the Northeast, five in the West, and three in the Midwest. Pennsylvania added four news MSAs, the most of any state.

Besides creating brand-new metro areas, the OMB guidelines also changed the name of many MSAs (and a few Divisions). One such name change, for example, took place in Baltimore, where the MSA name changed from Baltimore-Towson, Md., to Baltimore-Columbia-Towson, Md. This indicates that Columbia now has the necessary population and employment totals to be named a principal city of this metropolitan area.

The new OMB guidelines also resulted in a few areas losing their MSA status. In some cases, the counties affected were absorbed by another MSA. In other cases, the counties are simply not metropolitan counties any longer. Poughkeepsie-Newburgh-Middletown, N.Y. is an example of the former. Its two counties were absorbed into the divisions that make up the New York City MSA.