June 2014 Building Buzz

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Bismarck-Mandan Home Builders Association

Building Buzz Building the Future of Bismarck-Mandan Since 1958.

June 2014 Permit Report: April 2014 Page 2 President’s Letter Page 3 BMHBA Summer Events Page 5 Member Highlight: MSM Realty, Inc. Page 7 Spring Parade of Homes Award Winners Page 8 National News Page 10-13 NDAB News Pages 14-15

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BMHBA Building Buzz

June 2014

Building Buzz Publisher/Editor: Dot Frank Layout Editor: Chelsea Gleich Building Buzz is a publication of the Bismarck-Mandan Home Builders Association 2600 Gateway Ave., Suite 1 Bismarck, ND 58503 Phone: 701.222.2400 Fax: 701.250.9730

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Professionals building our community through promotion of home ownership, education and legislation since 1958.

Bismarck-Mandan Permit Reports Through April 2014 BISMARCK - monthly/yearly permit reports can be found at www.bismarck.org Permit Type

YTD 2014

YTD 2013

New Residential

Single Family Detached

Single Family Attached Duplex

3 or 4 Unit

5+ Unit Residential Garages New Commercial Alter Public

109/$29.63M 58/$10.98M 38/$6.18M 9/$1.26M 0/$0M 4/$11.21M 19/$.189M 20/$1.42M 2/$.121M

147/$26.39M 109/$19.84M 35/$5.43M 1/$.250M 0/$0M 2/$.865M 14/$.168M 18/$7.925M 1/$.006M

MANDAN - monthly/yearly permit reports can be found at www.cityofmandan.com Permit Type

YTD 2014

New Residential

Single Family

Two Family Condos Apartments Remodel and Additions New Commercial Alter Commercial

10/$2.53M 10/$2.53M 0/$0M 0/$0M 0/$0M 48/$1.17M 1/$.47M 14/$5.74M

YTD 2013

67/$22.82M 53/$14.89M 0/$0M 12/$2.94M 2/$4.99M 56/$1.05M 6/$1.63M 9/$2.50M

June 2014

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BMHBA Building Buzz

A Word from Our President I’m happy to report that the conversation with Mother Nature that I alluded to last month paid off. We’ve been experiencing builder-friendly weather, which I hope continues throughout the construction season.

Never a dull moment with the BMHBA, May included several milestones…

We celebrated the culmination of our best SPOH yet. With 42 homes entered by 32 builders, Vance Vetter the 2014 Spring Parade of Board President Homes surpassed last year’s event by 12 homes. Nearly 5,000 people made their way through all homes, which is a 7 percent increase (or an extra 346 people) in attendance over last year.

We broke another record when it comes to attendance at the Spring GMM at the Seven Seas. Thank you for all who attended. Your presence pushed year-over-year growth past 200 percent.

We celebrated the recipients of the Judges’ and People’s Choice Awards from the 2014 SPOH. Turn to pages 8-9 to see the winners.

We hosted building officials from Bismarck, Mandan, Morton County and Burleigh County to discuss the spring construction season and address issues and concerns across our association.

We welcomed new staff member Brenna Curfman as the association’s member services representative. Please give Brenna a warm BMHBA welcome when you meet her over the phone, in the office or at an event.

We hosted members to free safety training in cooperation with the NDAB and ND Safety Council.

We invited all 108 members who joined the association

between 2012-2014 to a New Member BBQ at the BMHBA office. More than 50 attended!

This month the work continues to advance our association’s mission to build our community through the promotion of home ownership, education and legislation.

We’ll join associations across the county as we promote June as National Homeownership Month, we’re gearing up to host an educational event on home construction in flood impacted areas (this is a timely conversation prior to the City of Bismarck’s and Morton County’s adoption of a new flood map), and we continue to meet with city and county staff to ensure of members’ concerns are considered as new ordinances are contemplated and old codes are now enforced.

I encourage to you stay in touch with the association though this publication, our website www.bmhba.com, through Facebook at www.facebook.com/bmhba and via text by texting any of the following key words to 51660: MEMBERS BUILDERS BMHBA Until next month, Vance Vetter, President BMHBA Board of Directors

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BMHBA Building Buzz

April 2014 New Members Dakota Filtration Solutions | Tanya Long Phone: 701-471-1687 Water Systems

GTG Homes | Troy Olson

Phone: 701-202-3289 Website: gtghomes.com Home Builder

Jordan’s Plumbing | Jordan Ziniel Phone: 701-471-2782 Plumbing & HVAC Supplier

Komfort Homes, Inc. | John Kulluk

Phone: 701-390-6043 Website: komforthomes.com Carpentry, Framers, General Contractor

MSM Realty, Inc. | Mary Shelkey-Miller

Phone: 701-258-1213 Website: msmrealtynd.com Real Estate/Developers

RLP Services, LLC | Lance Raatsi Phone: 218-966-2054 Erosion Control Services

June 2014 Anniversaries Armor Interactive | Sean DeVault

Website: armorinteractive.com Join Date: 2012 Branding, Computer Repair, Web Design

City of Mandan | Doug Lalim

Website: cityofmandan.com Join Date: 2013 Community Organization

Dakota RM Construction, Inc. | Dan Domagala Join Date: 1992 Concrete Contractor

Keller Hearth ‘n Home Products | Shirley Johs

Website: kellerhhp.com Join Date: 1978 Fireplaces & Stoves, Saunas, Spas/Pools, Masonry/Brick/Stone

Menards | Bryan Frank

Website: menards.com Join Date: 2008 Building Supplies, Lighting, Tools

Swenson, Hagen & Co. | David Patience

Website: swensonhagen.com Join Date: 1990 Drafting Services, Engineers, Planner/Designer, Land Surveying, Land Development Services

Townsquare Media | Bill Schmid

Website: cool987.com Join Date: 2009 Advertising (TV/Radio/Print), Web Design

Looking for a specific member?

Visit bmhba.com/members and search by name or category.

June 2014

2014 Board of Directors PRESIDENT Vance Vetter Vance Vetter Homes Phone: (701) 751-8218

PAST PRESIDENT Eric Brenden Northwest Contracting Phone: (701) 255-7727

SECRETARY/TREASURER Lynn Klein Gate City Bank Phone: (701) 355-7633

Paula Haider Haider Glass Specialties Phone: (701) 250-6787

1ST VICE PRESIDENT Drew Knutson Knutson Homes, Inc. Phone: (701) 258-3464

Nathan Jones Tollberg Homes Phone: (763) 205-2037 Scott Moran Hallmark Homes Phone: (701) 471-8796 Bill Schmid Townsquare Media Phone: (701) 250-6602

2ND VICE PRESIDENT Greg Zenker Ferguson Enterprises Phone: (701) 663-2446 Chad Moldenhauer K & L Homes, Inc. Phone: (701) 258-4584 Shannon Reichenberg Diversity Homes Phone: (701) 220-8177 C.J. Schorsch Fleck’s Furniture & Appliance Phone: (701) 323-0891

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BMHBA Building Buzz

June 2014

Kick Off Summer with the BMHBA

Association to Host Annual Picnic Join us on June 12 for our Annual Picnic at the Post. Participants of the Annual Picnic will enjoy outstanding BBQ, complimentary beverages, an expansive silent auction, networking and fun. The event begins at 6 p.m.

Tickets are required to attend and may be requested online at bmhba. com/events or by calling 222-2400.

Each member gets two free tickets; additional tickets are $10 each.

The association thanks our Picnic Sponsors:

• Platinum Kupper Chevrolet - Subaru • Platinum Starion Financial • Silver Sponsor Quality Title, Inc. • Silver Sponsor Midcontinent Communications • Bronze Sponsor Dakota Community Bank & Trust

Sponsorships are still available and include tickets and advertising. Contact Brenna at brenna@bmhba.com or 2222400 for details.

Silent Auction Items Sought

The BMHBA is counting on its members to donate silent auction items for the Annual Picnic.

All proceeds from the silent auction benefit BMHBA scholarships to BSC’s building trades programs. Donations may be dropped off at the BMHBA office. Staff also is available to pick up items. Please notify Brenna at brenna@bmhba.com or 222-2400 of your willingness to contribute

by Tuesday, June 3. Your generosity led to more than $2,000 raised last year.

Together we can top that this year!

PAC Golf Tournament Registration Now Open Registration is now open for the Annual PAC Golf Tournament.

BMHBA will team up with the Bismarck Mandan Board of Realtors to host the tournament whose proceeds benefit both association’s Political Action Committees.

This year’s tournament is Monday, July 21 at Apple Creek Country Club. The $125 golf registration fee includes: 18 holes of golf, cart, a putting green, driving range, lunch and dinner. Register as an individual or team online at bmhba.com/events or by calling 2222400.

Don’t Miss These Upcoming Events!

June 1-30: National Home Ownership Month June 3: Events Committee Meeting June 12: Annual Picnic at The Post June 18: Membership Committee Meeting June 20: Executive Committee Meeting June 23: “Birdie with the Builders” State Golf Tournament June 24: BMHBA Board Meeting

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BMHBA Building Buzz

June 2014

Small Business IRS Update myRA: Helping Small Business Owners Support Their Employees’ Retirement Goals Small business owners have a number of demands on their time and resources, and that’s one of the reasons Treasury created myRA (My Retirement Account). This program, which will go into effect later this year, will enable employers to give workers access to a retirement savings account and a chance to begin saving regularly.

For businesses, making myRA available to employees is straight-forward. Treasury will handle account set-up and maintenance and will provide informational materials for business owners to share with their employees. There is no employermatch or contribution. In fact, all that interested employers have to do is to make Treasury-provided program materials available to their employees and set-up ongoing payroll direct deposits into myRA for interested employees.

Subscribe to e-News for Small Businesses

e-News for Small Businesses is a free electronic mail service designed to provide tax information for small business owners and self-employed individuals. It is distributed every other Wednesday.

Sign-up and you will receive information about:

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•Important upcoming tax dates for SB/SE customers •What's new for small businesses on the IRS website •Reminders and tips to assist small businesses/self-employed with tax compliance •IRS News Releases and special IRS announcements that pertain to SB/SE customers •Tax-related information from other federal agencies When you subscribe, you will receive a confirmation message by e-mail. Remember, you must respond to this email in order to verify your subscription.

Subscribe online at: https://public.govdelivery.com/ accounts/USIRS/subscriber/new?

Health Care Tax Credit YouTube Video

Find out how small businesses and tax-exempts that provide health insurance coverage to their employees may qualify for a special tax credit by watching a new YouTube video. Search “irs videos” on youtube.com.

BMHBA Building Buzz

June 2014

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Member Highlight: MSM Realty, Inc. Company Name: MSM Realty, Inc. Contact Name: Mary Shelkey-Miller Job Title: Broker/Owner Phone Number: 701-2581213 (office) 701-240-7355 (cell phone) Address: 1910 N 11th St.

Ste. 15, Bismarck 58501 Website: www.msmrealtynd.com

When was your company founded? Where and by whom? We opened in December of 2013 in Bismarck, ND by Mary Shelkey-Miller

What type of products/services does your company provide? We sell real estate to buyers and sellers. We work with first time home buyers, move-up buyers, empty nesters, investors, etc.

Which products/services would you say are “bestsellers”? All aspects of real estate.

What sets your company apart from the competition? Our company is based on Christianity and all of our work is God’s will.

What is your company’s mission statement? MSM Realty is dedicated to providing quality server to ALL that we come in contact with.

Is there anything new or interesting happening in your company or industry right now?

We are experiencing tremendous growth in our industry and we are very excited about that.

How many employees does your company employ? 1 What do you enjoy most about your job? Helping clients fulfill their dream of home ownership.

What is the biggest challenge facing your company/ industry right now? How are you dealing with it?

Finding affordable housing for those that don’t have the large income base.

If you had only one sentence to sell your company to a potential customer/client, what would you say?

Our agents go above and beyond for our clients so that they know they ARE important to us!

Anything else you would like to include? I would just like to say that we are excited for 2014 and beyond and look forward to working with those in our industry as well as the builders and all the other trades in order to work toward happy clients!!

Number 1 Reason to Remodel: Simple Desire for New Amenities

According to remodelers who answered special questions on NAHB’s Remodeling Market Index (RMI) survey for the 1st quarter of 2014, a simple “desire for better/newer amenities” ranked as the number one reason customers choose to remodel their homes. On a scale of 1 to 5 (where 1 indicates never or almost never, and 5 is very often), the average remodeler’s response was 4.3.

“Desire for better/newer amenities” edged out the second place “need to repair/replace old components” by one tenth of a point. These traditional market drivers were the only reasons to remodel with an average rating above 4.0. Another fairly traditional reason, “desire/need for more space” came in third at 3.7.

Reasons to remodel that are of special interest to particular stakeholders—like aging in place and energy efficiency—were further down the list, with average responses near the 3.0 center of the scale. Relatively low average ratings for increasing the home’s investment value or preparing it for a sale continue to support the idea that owners are more likely to remodel for themselves than for future owners. Getting a property ready for a distressed sale scored a particularly low 1.3 (very near the minimum possible 1.0).

There was an increase from 2.8 to 3.0 in the “desire to be able to age in place,” something many observers were probably expecting given the aging population. “Desire/ need for more space” also increased two tenths of a point. “Desire for better/newer amenities” posted the largest gain, going from 4.0 to 4.3. A rise in remodeling projects motivated by desire for more space or better amenities is consistent with the general housing market recovery that many experts expect to continue.

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BMHBA Building Buzz

Home Builders Association Announces Winning Builders The Association celebrated the culmination of our Spring Parade of Homes by announcing the 2014 People’s and Judges’ Choice Award winners.

Each year, the BMHBA hosts a Spring and Fall Parade of Homes. The parade of homes opens up dozens of newly constructed homes for residents to tour to take in the latest building techniques and trends and to meet the builders who make new home construction happen.

This year’s event attracted more than 5,000 people through 42 homes in Bismarck and Mandan. Spectators vote for their favorite home in various price categories to determine the People’s Choice winners.

Additionally, an architect, interior designer and Realtor together tour the homes to score the builders on a set criteria to determine the Judges’ Choice Award winners.

BMHBA builders will open a new set of homes again this Fall during the Fall Parade of Homes from Sept. 25-28.

June 2014

2014 Spring Parade of Homes People’s Choice Award Winners Diversity Homes SL 1308 Shires Drive Mandan

Venture Building Company 709 14th Street E Mandan

Vance Vetter Homes

3706 Woodbend Drive Mandan

Rick Slavik Construction 4736 Feldspar Bismarck

Vance Vetter Homes 2709 E Calgary Bismarck

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Prairie Aire Homes, Inc.

3932 Crest Circle Bismarck

Fireside Custom Homes

3905 High Creek Road Bismarck

K & L Homes

3706 Valley Drive Bismarck

Knutson Homes, Inc. Bismarck • Dickinson • Dunn County • M andan • Minot Renville County • Watford City • Williston • Sidney, MT

2515 Langer Lane Bismarck

June 2014

BMHBA Building Buzz

2014 Spring Parade of Homes Judges’ Choice Award Winners Diversity Homes SL 1308 Shires Drive Mandan

Venture Building Company 709 14th Street E Mandan

Vance Vetter Homes

3706 Woodbend Drive Mandan

Rick Slavik Construction 4736 Feldspar Bismarck

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We’ve added text messaging to our communication tool belt!

To receive text messages from the association, text MEMBERS, BUILDERS and/or BMHBA to 51660.

You may receive up to 4 messages per week. Message and data rates may apply when sending and receiving text messages. Messages sent from automated system.

Consent not required to purchase goods and services.

Text STOP to 51660 to opt-out. Text HELP to 51660 for assistance or call 800-211-2001. To view our Privacy Policy visit www.sentextsolutions.com/privacypolicy.

Blend Home Design 3816 Downing Street Bismarck

Knutson Homes, Inc. 3827 Crest Circle Bismarck

Stoneshire Builders

4912 Granite Drive Bismarck

K & L Homes

3706 Valley Drive Bismarck

Knutson Homes, Inc. 2515 Langer Lane Bismarck

www.qualitytitlend.com 2211 East Main Ave. PO Box 1276 Bismarck, ND 58502-1276

ph: 701.204.6145 | f: 701.425.0425

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BMHBA Building Buzz

June 2014

National News Senate Bill Would Resuscitate Housing Finance System The Senate Banking Committee on May 15 approved NAHB-supported legislation to breathe new life into the housing sector by providing a consistent and affordable supply of mortgage credit for single-family and multifamily housing.

Sponsored by Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho), the Housing Finance Reform and Taxpayer Protection Act of 2014 represents a bipartisan approach to bring certainty and stability to the housing finance market and provide much-needed credit for qualified single-family and

multifamily borrowers.

The legislation would gradually wind down Fannie Mae and Freddie Mac into a private-sector-oriented system, where the federal government’s role is clear, but its exposure is limited. Federal support would be limited to catastrophic situations where carefully selected levels of private capital and insurance reserves are depleted before any taxpayer funds are employed to shore up the mortgage market. NAHB is urging the full Senate to consider this legislation as soon as possible.

Bipartisan housing finance reform legislation was recently passed by the Senate Banking Committee and deserves an up or down vote on the Senate floor.

If passed, this bill will fix the nation’s flawed housing finance system and breathe new life into the housing sector by providing a consistent and affordable supply of mortgage credit for single-family and multifamily housing. We need to urge all Senators to SUPPORT, S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2014, AND urge its immediate consideration on the Senate floor.

After six years of government conservatorship our nation’s housing credit system remains in a constant state of uncertainty and confusion. Home builders, lenders and other market participants cannot adequately plan for the future and home buyers are either denied credit or paralyzed by the mixed messaging. Absent reform, all critical policy decisions on the operations of Fannie Mae and Freddie Mac will continue to be left to one unelected regulator, bipartisan compromise that would fund nearly $5

billion in annual affordable housing programs would be put on the back burner, and taxpayers would be exposed to yet another government bailout. S. 1217 works to address these concerns in a rare bipartisan policy achievement and deserves to be brought to the Senate floor for a vote.

Call to Action: Write your Senators at http:// capitolconnect.com/builderlink/ Your Ask: Urge your Senators to SUPPORT S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2014. Encourage the Senate leadership to advance long-overdue bipartisan housing finance reform legislation.

Soaring production of multifamily apartments pushed nationwide housing starts above the million-unit mark in April, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Total housing production rose 13.2% for the month to a seasonally adjusted annual rate of 1.07 million units, due entirely to a 39.6% increase on the multifamily side, while single-family production held steady.

Issuance of building permits, which can be an indicator of future building activity, rose 8% to a seasonally adjusted annual rate of 1.08 million units in April. This was due entirely to an increase in the multifamily sector, where permits registered a 21.8% gain to 453,000 units.

Single-family permits registered a marginal 0.3% gain to 602,000 units.

For more details, view the Eye on Housing blog at eyeonhousing.org.

Urge Your Senators to Vote for Housing Finance Reform NOW

Multifamily Starts Soar as Single-Family Stays Flat in April

June 2014

BMHBA Building Buzz

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National News Developing in Wetlands Can Get a Whole Lot Tougher Radical proposed changes to the Endangered Species Act (ESA) could have major repercussions for developers seeking building permits if they are adopted. Their focus: how the federal government designates critical habitat under the ESA and what types of development and construction (or adverse modification) can occur there.

Meanwhile, the U.S. Fish & Wildlife Service (FWS) and National Marine Fisheries Services are adding up to 700 species to those protected under ESA as a result of a controversial 2011 legal settlement between the two agencies and two environmental groups.

The ESA requires federal agencies to designate critical habitat whenever they determines a species to be endangered or threatened. Briefly, a species’ critical habitat includes the physical and biological features essential to its conservation and requires special management protections.

The challenge to members: Unlike ESA protections that focus on individual members of a protected species in a given property, critical habitat regulations apply regardless of whether the species is even present. Typically, members don’t know if their proposed land development or construction projects are under federal protection until they apply for a permit to develop in wetlands as required by the Clean Water Act. A recent proposal to expand federal jurisdiction over wetlands makes it likely that more members will be affected.

NAHB Environmental Issues Committee members will meet with FWS leadership during the Spring Board of Directors meeting this month in Washington, D.C. to discuss these rules and are looking for member input on how the proposals could affect their projects.

Member examples will also be part of NAHB’s formal written comments, due in July.

Your Bismarck-Mandan Home Builders Association membership automatically makes you a member of the North Dakota Association of Builders and the National Association of Home Builders. That gives you special access to NAHB’s legal services.

The National Association of Home Builders’ NAHB Legal Research Program provides free legal research assistance and information on building industry-related issues to all members and staff of affiliated home builder associations.

While the NAHB staff counsel cannot replace your local attorney, they offer legal research, litigation funding, and/or litigation strategy, depending on the situation and the issues involved. You can review the Legal Services brochure available at nahb.org for details.

NAHB offers members easy access to information about federal and state case law.

Attorneys are available at NAHB to examine proposed local legislation for procedural and substantive legal issues in the Legal Ordinance

Review Program.

And the legal team works with NAHB’s Building Product Issues Committee to minimize construction defect and builder liability problems arising in connection with new construction and remodeling.

Throughout the year, NAHB Legal Services focuses on land development challenges, environmental issues, and problems affecting our industry.

This is just one more way that membership in your local home builders association can directly help you and your business.

Need free legal information or support on land use, environmental or construction liability issues?

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BMHBA Building Buzz

June 2014

National News Join the Safety Stand-Down June 2-6 NAHB is working with the federal Occupational Safety and Health Administration to promote the National Safety Stand-Down June 2-6 to raise awareness about the hazards of falls, and has tools so all its member companies can do the same.

Why the Stand-Down? Falls are responsible for nearly half of all work-related home building deaths. Without appropriate safety measures, roofers, carpenters,

construction laborers, painters and remodelers, as well as others working on ladders and scaffolding are all at risk. As OSHA says, Safety Pays; Falls Cost!

A Safety Stand-Down is a voluntary event for employers to talk directly to employees about fall hazards and to reinforce the importance of fall protection.

On June 1, owners of multifamily rental buildings of more than five units will be able to obtain a maximum of $500,000 worth of insurance through the National Flood Insurance Program (NFIP), just like other commercial buildings. The Federal Emergency Management Agency (FEMA) was given authority to make that change through the Biggert-Waters Flood Insurance Reform Act of 2012.

This rule change doubles the amount of flood insurance available to these owners. The current maximum level of $250,000 will continue to apply to multifamily buildings with two to four residences. In general, this

change will not apply to condominium buildings, where individual owners are usually responsible for obtaining their own flood insurance.

A notice from Freddie Mac advises that its current borrowers who are required to carry flood insurance will be expected to comply with the new limits at the next renewal date of their NFIP policies. A bulletin from Freddie Mac gives additional details.

But requirements from other lenders may be different, so multifamily owners should review their coverage with their lenders.

Slightly lower median home prices along with steady mortgage rates contributed to higher housing affordability in the first quarter of 2014, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). In all, 65.5 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $63,900. The HOI in the fourth quarter of 2013 was 64.7 percent.

The national median home price dipped from $205,000 in the fourth quarter to $195,000 in the first quarter while average mortgage interest rates were virtually unchanged, moving from 4.54 percent to 4.57 percent in the same period.

Syracuse, N.Y. was the nation’s most affordable major housing market, as 93.7 percent of all new and existing homes sold in this year’s first quarter were affordable to families earning the area’s median income of $67,700.

Other major U.S. housing markets at the top of the affordability chart in the first quarter included Buffalo-

Niagara Falls, N.Y.; Youngstown-Warren-Boardman, Ohio-Pa.; Harrisburg-Carlisle, Pa.; and Dayton, Ohio; in descending order.

Meanwhile, Cumberland, Md-W.Va. claimed the title of most affordable smaller market, with 96.3 percent of homes sold in the first quarter being affordable to those earning the median income of $54,100. Smaller markets joining Cumberland at the top of the affordability chart included Springfield, Ohio; Kokomo, Ind.; Mansfield, Ohio; and Lima, Ohio.

San Francisco-San Mateo-Redwood City, Calif. held the lowest spot among major markets on the affordability chart. There, just 13.3 percent of homes sold in the first quarter were affordable to families earning the area’s median income of $100,400. All of the five least affordable small housing markets were in California.

At the very bottom of the affordability chart was Santa Cruz-Watsonville, where 21.1 percent of all new and existing homes sold were affordable to families earning the area’s median income of $77,900.

Multifamily Building Owners Eligible for More Flood Insurance Coverage

Housing Affordability Edges Higher in First Quarter

June 2014

BMHBA Building Buzz

Page 13

National News SLOOS: Mortgages See Weaker Demand and Tighter Standards The Federal Reserve Board recently released its April 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices. The survey addresses changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months.

According to the household component of the April survey results, banks eased their lending standards for auto loans and credit cards. At the same time, a net share of bank officers reported having observed rising demand for auto loans and credit cards. In contrast, a net share of bank officers reported that their bank had tightened lending standards on prime residential mortgages and a net share reported having observed a decline in demand for prime residential mortgages.

Figure 1 illustrates these results. According to the figure, a net percentage of 7.8% of senior bank officers reported that lending standards on auto loans had eased and a net of 10.9% of officers reported having observed a rise in demand for auto loans. Similarly, a net percentage of 9.2% of senior loan officers reported that their bank had eased lending standards on credit cards and a net percentage of 9.8% of officers reported having observed greater demand for credit cards over the first quarter of 2014. In contrast, a net percentage of 1.4% of senior bank officers reported that their bank had tightened their standards on prime residential mortgages and a net percentage of 25.8% of officers reported having observed a decline in demand for these mortgage products. An equal share of bank respondents reported tightening lending standards and easier lending standards as well as stronger demand and weaker demand for other consumer loans.

Figure 2 illustrates that the net tightening in lending standards masks variability in its underlying

composition. However, the net decline in observed demand for prime residential mortgages was widespread. According to the figure, a net fraction of 8.6% of bank officers at large banks reported that their large bank eased lending standards on residential mortgages. However, the easier lending standards reported by large banks was more than offset by the 11.4% net fraction of bank officers at “other� banks that reported tighter lending standards. According to the survey, large banks refer to large, national banks while other banks encompass large but regional banks.

Bank officers at both large banks and other banks reported that demand for prime residential mortgages had declined over the first quarter of 2014. A net fraction of 34.4% of senior bank officers at large banks reported having observed a drop in demand at their large bank and a net fraction of 17.1% of bank officers at other banks observed a drop in demand at their bank.

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BMHBA Building Buzz

June 2014

June 2014

BMHBA Building Buzz

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PAID Permit #72 Bismarck, ND 58501

2600 Gateway Avenue Suite 1 Bismarck, ND 58503

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