The North Peninsula Building Association represents builders and associates of the building industry. We advocate constant improvement of building and business practices to provide quality construction in our community.
Vol. 5, Issue 8
NPBA 13th Annual Golf Tournament!
PO Box 748 • 3430 E. Highway 101, Ste. #1, Port Angeles, WA 98362
The new home price premium:
What it is and what it means to builders Guest Contributor MICHAEL C. STOSKOPF, EXECUTIVE OFFICER, CEO, BIA of Southeastern Michigan
Cedars at Dungeness, September 28 at 1 p.m. shotgun start Check out the new prizes added this year and be sure to register your team for an opportunity to win! Hole in One Prizes: • Nissan Frontier sponsored by Wilder Auto • Big Green Egg sponsored by Everwarm • Sport Venue Package-airfare, accommodations and tickets to your choice of the following: U.S. Open Golf or Tennis, Daytona 500, World Series, March Madness/Final Four, BCS College Football Championship Game KP Prize: Closest to the pin within 12" wins $1,000 Pre-Game Fun: $5,000 Consecutive Putting Green Contest $25,000 Shoot Out! One lucky person will have the opportunity to have a shot to win $15,000 for them and $10,000 for the NPBA. Cost is $90 per person and includes golf, cart, range balls, beverage and raffle tickets, dinner. Sponsorships are also available. Contact the NPBA at 452-8160 or firstname.lastname@example.org.
See you on the greens! Sponsored by
In June, the Joint Center for Housing Studies of Harvard University released its annual report, “The State of the Nation’s Housing 2012.” The report bears out what our members are experiencing: while 2012 marks the beginning of a recovery, the road ahead, “still faces a number of pressures that may make the turnaround more muted than in recent cycles.” While not discussed, data within the report sparked my attention to a trend that may significantly impact the “market share” new home builders will claim in the coming years. The trend is a significant increase in the difference between the median price of an existing home as compared to the median price of a newly constructed home. That difference is called the New Home Price Premium, or the amount of additional purchase price a homebuyer is willing to spend to buy a new home rather than an existing home. As the chart shows, using report data going back to 1980, there is a “sweet spot” for the New Home Price Premium. Excluding recession years, if the premium is 14 percent or less, the number of new homes sold increased by an average of 5 percent per year. However, when the New Home Price Premium exceeds 14 percent, the number of new homes sold actually decreased by an average of 5 percent a year. Since 2008, the New Home Price Premium has doubled, reaching nearly 40 percent, putting it significantly out of the “optimal” range and potentially diminishing the production and sale of new homes. Another illustration of how the New Home
Price Premium relates to new home sales can be seen by looking at the market share ratio between existing homes and new homes. From 1980-2007, even during three national recessions, the ratio of existing home sales to new home sales was generally 5 to 1. For every new home sold there were five existing homes sold. In fact, the annual ratio was never higher than 5.7 nor lower than 4.3. However, beginning in 2008, the New Home Price Premium began to significantly increase and, not surprisingly, new home sales plummeted with the ratio of existing homes sold to new homes sold growing from 7.5 in 2008 to 12.4 in 2011! Due to the lingering impacts of the Great Recession, there are a number of factors that are likely to be driving the price of new homes up and the price of existing homes down. For instance, there is a segment of the existing home market that is comprised of distressed sales which artificially lower sales prices as banks and/or “underwater” owners unload them. Furthermore, even non-distressed sales of existing homes have remained at stubbornly low values since 2006. Finally, many new homes being built since 2009 are simply cash deals that are possibly for larger, more expensive homes and thus skewing the new home sales price upward.
These and other factors may be moving the New Home Price Premium out of its optimal range. Even so, as discussed here, empirical evidence suggests that the American consumer historically will generally accept paying a premium of up to 14 percent for a new home. While regional and micro-economic climates will differ, until we see national average new home price premiums return to a more realistic range, I believe we will see a diminished production and sales of new homes and the economic benefits typically associated with new home construction. I understand that numerous factors – and onerous challenges – go into the construction of a new single-family home and a builder’s related decision-making on the price point he is trying to achieve. Still, builders may want to consider the sales price of existing homes in the local market – no matter how unrealistically low they may seem - when determining their pricing and product strategies. While we cannot know if other factors would have interceded, historical results indicate that if the New Home Price Premium had remained at or below 14 percent from 2008 through the end of 2011, there could have been up to 14.7 million more new homes sold during that time period. Now that’s a figure worth considering!
Vol. 5, Issue 8
Thank you to the following returning members!
2 Grade Excavation & Development Northwest Log Homes D & K Rentals
CODE CORNER Clallam and Jefferson County, Port Angeles, Port Townsend, Sequim, Juan de Fuca Chapter of ICC
Question: Can I install decorative security bars over the windows and doors on the first floor level of my house? Answer: The Building Code states “Bars, grilles, covers, screens or similar devices are permitted to be placed over emergency escape and rescue openings, bulkhead enclosures, or window wells that serve such openings provided the minimum net clear opening complies with the Code and such devices shall be releasable or removable from the inside without the use of a key, tool or special knowledge or force greater than that which is required for normal operation of the escape and rescue opening.”
NPBA Featured Members
In the coming months, NPBA will feature members in our newsletter. In this section, learn what members like most about being an NPBA member, what inspires them and other interesting facts! For your chance to appear in this section, attend one of our many events and enter your name into a drawing.
Nell Clausen, Estes Builders
What do you like best about being an NPBA member? I like the monthly newsletter that highlights construction specific events and articles. I also enjoy the yearly building Expo. It is a great resource for our company to have conversations with clients looking at building a custom home. Who or what inspires you? People who give their time and money to support the needy in this world. If you are living a comfortable life, you should be grateful and help both your local and international neighbors by helping them with the resources we often take for granted (food, water, shelter, etc.)
Thank you for voting us Best Place to Bank for 16 years!*
Lower mortgage rates. Faster closings. We’ve made our mortgage loan process easier, faster, better!
800-800-1577 ourfirstfed.com *First Federal was voted Best Place to Bank and Best Customer Service in 2011 Peninsula Daily News ‘Best of the Peninsula’ poll. Member FDIC
What is your best business practice? Keeping our promises whether it is to our clients, employees or our vendors. What is one thing you want others to know about your company or business? That the Estes Builders goal for each of our clients is to build them a beautiful, well-designed, high-quality home that they will have for a very long time.
Mike Thomas, Lakeside Industries
What do you like best about being an NPBA Member? The best thing about being an NPBA member is the membership as a whole. I think that it’s a great thing that there are a wide variety of members in the home and home building fields. That accessibility makes it simple to find a contractor for anything one might need. It is reassuring to know that if I need anything in the home building industry, I don’t need to look anywhere except the NPBA Directory.
Who or what inspires you? There are a couple of people here at Lakeside Industries that inspire me. Their integrity, dedication to the company and the asphalt industry, and constant pursuit of becoming leaders in our industry are a few things that I look up to and that inspire me. What is your best business practice? I think our best business practice is communication. We strive to be the best at communication, both internally and with our customers. With better communication we become a more efficient and safer company. And with great communication with our customers we make them feel confident that they are getting the best quality paving job possible. What is one thing you want others to know about your company or business? The one thing I would want others to know about Lakeside Industries is that we are here to meet everyone’s asphalt needs. I know that we are mostly visible when we are paving highways and roads and some people think that that is all we do, but we also do patching, driveways, parking lots and everything in between. Feel free to look us up in the NPBA Directory and give us a call.
You are invited to a Water and Land Use Event Are you interested in Water and Land Use Issues? Then plan to attend the Water and Land Use Event hosted by the Sequim Association of Realtors, Port Angeles Association of Realtors and the North Peninsula Building Association to hear the following speakers present information about current land and water topics. Bill Clarke of Bill Clarke Law and Government Affairs will discuss
the Dungeness Water Management Rule. Sheila Roark Miller, DCD Director, will talk about the Carlsborg Project and Kristina Nelson-Gross of Kristina Nelson-Gross Law will cover Shoreline Master program updates. The event will take place on Aug. 23 from 1-4 p.m. at The Cedars at Dungeness. Cost to attend is just $17 and includes appetizer buffet and beverage.
Vol. 5, Issue 8
After my daughter attended your Business Law course through Peninsula College, she advised us to have all of our contracts reviewed. Why should we have contracts reviewed when there are no changes in our circumstances and the contracts seem to be working for us? Answer: Most people believe that once a contract is drafted, that it does not need to be reviewed. That is not the case because laws, circumstances and desires do change. Many clients will consult with their accountants, physicians and insurance agents annually yet never consider the condition of legal documents. Contracts should be reviewed annually with your attorney and sooner if there are changes in circumstances that may involve your contracts. Even when you believe that there are no changes, an annual review of your circumstances, needs and desires with a professional opens the door to better communication about your “choices” and “legal” health. It also is important to remember that estate planning documents such as wills, trusts and powers of attorney are contracts. Parenting agreements, rental agreements, leases and
Dear Donna Donna L. Knifsend even arbitration clauses that you sign in order to see your physician are contracts that can bind the parties. As such, statutes often regulate how and what can and cannot be in contracts. The inverse also is true where many people believe that they are entering into “valid” contracts only to find out later that major elements (requirements) for a valid contract (such as date, definite and certain terms, and a signature of the party to be charged) are missing. In short, contracts come in various sizes and shapes … so to speak … and you may not even realize the consequences of the document. Do not sign a contract without reading and understanding what you are agreeing to. If you are unsure of the consequences of the contract, take it to your attorney for review. If you pull “canned” legal templates from the
Certified Lead Renovator Class A Certified Lead Renovator Class is from 8 a.m.-5 p.m. Wednesday, Aug. 29, at the Service Master Training Room, 130 Harrison Road, Sequim. If you do remodel work, painting, window installation, etc., in a pre-1978 home disturbing 6 square feet or more of surface, then you need to take this class. By law, each company needs at least one person certified and must attend a class that is approved by the EPA in order to do work on houses that contain lead paint. This class will provide you with an in-
Calendar of events: August:
23 Housing Summit, Cedars at Dungeness 28 Rob McKenna Event
5 Expo Committee 13 NPBA Board Meeting 20 NPBA General Membership Meeting 28 NPBA 13th Annual Golf Tournament
dividual certification. In addition, companies need to register with the Washington State Department of Commerce, the fee is $25. To register your company or to determine if you need this training, visit: www.commerce. wa.gov/lead. The NPBA is an approved training partner of the National Center for Healthy Housing (NCHH) and teaches the Lead Renovator and Dust Sampling Technician classes under NCHH’s EPA accreditation. NPBA member Annie O’Rourke is a certified trainer and will be the instructor for this class. To register, e-mail email@example.com or call the office at 452-8160. NPBA would like to thank Service Master for being a sponsor of this valuable training program!
NPBA is looking for volunteers to serve on a variety of committees. If you are interested in helping, please contact FaLeana at firstname.lastname@example.org or call the office at 452-8160 to discuss the rewarding volunteer opportunities which exist in your association!
Internet, have them reviewed to make sure that the document conforms to state, federal and local laws. Remember that it is more cost effective to have your attorney review your contract before you sign it rather than to get you out of a lawsuit later. The same principle applies to updating contracts. Annual review of legal documents keeps you on track so that issues and desires are not forgotten as time passes. Even when your attorney prepares a contract for you, be sure to read the document and ask questions. You are not undermining or offending your attorney with such communication but rather enlightening yourself as to why certain clauses are necessary and/or beneficial and what the legalese translates to in plain English. Finally, beware of those “accept” buttons on Internet pages because they are the gateway to contracts that bind you to terms and conditions that very few people ever read. Donna may be reached at: Donna L. Knifsend, Esq. PC 360-670-9406 or e-mail her at LawsuitPrevention@att.net. Disclaimer: The advice given herein is strictly for informational purposes only and does not reflect advice to the readers. If you have a legal issue, see an attorney for full evaluation and advice.
business briefS: Employment Opportunities
• Angeles Millwork & Lumber Company is seeking a full-time Contractor Salesperson and also a full-time person for our Rental Department. See job descriptions and application details at www.angelesmillwork.com/employment.htm. • Estes Builders is looking for an enthusiastic, professional Custom Home Sales Advisor to add to our team in our Poulsbo office. As one of the area’s most imaginative employers, Estes Builders fully invests in our staff with a complete plan for personal development, competitive earnings, and other valuable benefits. If you know an energetic, honest, driven individual with a demonstrated track record of commitment to superior customer satisfaction follow-through and professionalism, please pass their name and contact information on to Patricia Mitts at email@example.com or have them call 360-683-8756 for application instructions. Sales and/or homebuilding industry experience is helpful but not necessary. The position is full time.
Vol. 5, Issue 8
COZI HOMES CONSTRUCTION, INC.
Cozi Homes www.cozihomesconstruction.com
Lic. # COZIHC106303
Ken, Lance, Matt In 1979, Ken Zeigler and Lance Coe joined forces to form Cozi Homes Construction. Initially swamped with lawn maintenance and painting jobs, now Cozi specializes in remodels, additions, concrete, foundations, custom homes, and is an authorized installer for the PUD and City of Port Angeles weatherization programs. Notable projects include a 5,500 sq. ft., 3-story geodesic dome home with an elevator, a home with an indoor swimming pool, and another with an entryway turret.
While Lance and Matt Dunning focus on construction, Ken meets with clients, prepares bids and coordinates all of the details which requires organization, efficiency and excellent communication skills with everyone involved.
“What a pleasant experience it was to have you and the guys as our builders. I learned a great deal about building from our talks and I always felt like we were partners in the whole operation. The house is everything we dreamed it would be. When people talk about their horrible experiences with building, I just say ‘you didn’t have the right builder.’ ” — Debbie Brisendine
“Repeat customers keep us busy and often become longterm friends. We’ve even built a second home for several clients. Plus, we are fortunate that many of our subcontractors have been with us for over 20 years, so we’re like one big happy family.
Seeking 2013 Board of Director Nominees Please contact Nominations Chair Roger Wheeler at 457-1420.
Thank you to the following renewing members!
Air Flo Heating Company Angeles Electric Bills Plumbing & Heating Bliemeisters’ Wood Works C & F Insulation Cornerstone Builders Dave’s Heating & Cooling Service Dawson & Caswell Construction Glass Services Hi Tech Fire & Security Homer Smith Insurance Jeanne Martin, CPA Pacific Office Equipment Pacific Refrigeration Richerts Marble & Granite Straits Electric TLC Excavation & Construction Tracy’s Insulation Ulin’s Concrete Pumping Company Westerra Homes
2012 Officers and Board of Directors President: Rick Gross, Estes Builders LLC 1st Vice President: Garret DelaBarre DelaBarre Construction 2nd Vice President: Bill Feeley, Feeley Construction Inc. Treasurer: Julie Myers, First Federal Secretary: Donna Knifsend Lawsuit Prevention & Mgmt Immediate Past President: Tracy Gudgel Zenovic & Associates State Directors: Annie O’Rourke, Drafting Solutions Scott Schwagler, J & J Construction Garret DelaBarre, DelaBarre Construction Mark Smith Builder Directors: Alex Anderson, Alex Anderson Concrete Larry Hanna, L.P. Hanna Construction Bill Feeley, Feeley Construction Inc. Greg McCarry, Westerra Homes Associate Directors: Kelly Raymond, Sound Community Bank Dan Donovan, Allform Welding Inc. Roger Wheeler, RJ Services Life Director: Bill Roberds, Excel Utility Construction Inc. Executive Officer: FaLeana Wech
Summer Is Home Energy Audit Time! Summer is here, and while we’re all enjoying the benefits that come along with it, including lower energy bills, this is the perfect time to conduct a home energy audit! Visit the PUD’s YouTube channel to view our “Home Energy Audit” video where you can learn how to conduct your own home audit that can save you money as we head into Fall! Find it at www.youtube.com/clallampud
“We have always shopped almost exclusively at Angeles Millwork and Hartnagel for materials, in fact we started our business Member just about the same time as Lonnie Linn started working at Angeles Millwork. We have been more than satisfied with the service and staff at both stores,” explains Ken. —————————— Contractor Spotlight is sponsored by —————————— Lumber and building materials for all types of construction projects.
1601 S “C” St., Port Angeles
457-8581 • angelesmillwork.com
3111 Hwy 101 E, Port Angeles 452-8933 • hartnagels.com
Rely on the employee owned and operated stores that contractors rely on!