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NAIL The official magazine of Home Builders Association of Middle Tennessee President Keith Porterfield Vice President Justin Hicks Secretary/Treasurer David Hughes Executive Vice President John Sheley Editor and Designer Jim Argo
NAIL Visit http://www.hbamt.org/nail.html and click The NAIL Advertising Rates (pdf) to download rates and registration form Email email@example.com for more details 6 The NAIL
Staff Connie Nicley Charlotte Fischer THE NAIL is published monthly by the Home Builders Association of Middle Tennessee, a non-profit trade association dedicated to promoting the American dream of homeownership to all residents of Middle Tennessee. SUBMISSIONS: THE NAIL welcomes manuscripts and photos related to the Middle Tennessee housing industry for publication. Editor reserves the right to edit due to content and space limitations. POSTMASTER: Please send address changes to: HBAMT, 9007 Overlook Boulevard, Brentwood, TN 37027. Phone: (615) 377-1055.
FEATURES 11 Tips from the professionals this tax season What you should know about last Decemberâ€™s Congressional Act before filing your 2017 returns.
13 Showcase of New Homes returns this summer
The scattered-site, new homes event returns for two 4-day weekends this June. Register now for big early bird savings.
15 Housing markets remain on upward trend
NAHBâ€™s leading markets index (LMI) shows housing still on an upward trend even as permits slip.
DEPARTMENTS 8 News & Information 17 SPIKE Club Report 18 March Calendar 18 Chapters and Councils
ON THE COVER: The Showcase returns this summer! For information about entering your new homes, see page thirteen. March, 2018
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Housing production makes healthy gains to start new year
surge in multifamily production pushed overall housing starts up 9.7 percent in January to a seasonally adjusted annual rate of 1.33 million units after an upwardly revised December reading, according to newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department. Multifamily starts rose 23.7 percent to a seasonally adjusted annual rate of 449,000 units. Meanwhile, single-family production posted a healthy 3.7 percent gain to 877,000 units. “The growth in production is in line with our reports of solid builder confidence in the housing market,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “A pro-business regulatory climate and increasing housing demand are boosting builders’ optimism, even as they continue to face supply-side hurdles such as
Demand for owner-occupied housing is rising due to favorable demographic tailwinds and a healthy labor market. 8 The NAIL
rising construction material prices and access to lots and labor.” “Demand for owner-occupied housing is rising due to favorable demographic tailwinds and a healthy labor market. Increases in after-tax incomes should help prospective buyers save for a downpayment on a home,” said NAHB Chief Economist Robert Dietz. “As consumers continue to enter the single-family market, we should see builders increase production to meet this demand.” Regionally in January, combined singleand multifamily housing production increased 45.5 percent in the Northeast, 10.7 percent in the West, and 9.3 percent in the South. Starts fell 10.2 percent in the Midwest. Overall permit issuance rose 7.4 percent to a seasonally adjusted annual rate of 1.4 million units, which is a post-recession high. Multifamily permits registered a 26.5 percent gain to 530,000 while single-family permits edged down 1.7 percent to 866,000. Permit issuance rose 92.5 percent in the South and 17.1 percent in the West. Permits declined 2.6 percent in the Midwest and 21.7 percent in the Northeast. n
55+ housing market ends fourth quarter on record high
uilder confidence in the single-family 55+ housing market remained strong in the fourth quarter of 2017 with a reading of 71, up 12 points from the previous quarter, according to the NAHB 55+ Housing Market Index (HMI). This is the highest reading since the inception of the index in 2008. “Builders and developers in the 55+ housing market are reporting strong demand across the country,” said Chuck Ellison, chairman of NAHB’s 55+ Housing Industry Council. “However, regulations in some parts of the country can make it challenging to meet the demand.” There are separate 55+ HMIs for two segments of the 55+ housing market: single-fam-
ily homes and multifamily condominiums. Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated sixmonth sales for that market are good, fair or poor (high, average or low for traffic). All three index components of the 55+ single-family HMI posted increases from the previous quarter: Present sales posted a record high, increasing 14 points to 79, while expected sales for the next six months jumped 10 points to 73 and traffic of prospective buyers rose seven points to 51. The 55+ multifamily condo HMI posted a gain of three points to 54. The index component for present sales increased four points
Housing affordability remains flat in 2017
ata for all four quarters of 2017 show housing affordability remaining essentially flat throughout the year, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) released today. In all, 59.6 percent of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $68,000. This is just slightly up from the 58.3 percent of homes sold that were affordable to median-income earners in the third quarter, and effectively the same rate as in the fourth quarter of 2016, when the HOI stood at 59.9 percent. “Builder confidence and consumer demand remain strong, and this should help bring more buyers into the marketplace in the year ahead,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “At the same time, builders are working hard to keep home prices affordable as they continue to grapple with persistent labor and lot shortages, burdensome regulations and rising costs for building materials. Another factor that could have a negative effect on housing affordability in the first quarter is a recent rise in mortgage interest rates.” “Ongoing job and economic growth coupled with tight inventories and rising household formations are boosting housing demand,” said NAHB Chief Economist Robert Dietz. “Mean-
while, NAHB has reduced its home price forecast this year to 2.9 percent as a result of the recently enacted tax reform legislation. While it will further boost economic activity, the new tax law is expected to contribute to price softness in some high-cost, high-tax markets now that deductions for income and property taxes are capped at $10,000 per year.” The national median home price fell to $255,000 in the fourth quarter of 2017 from $260,000 in the previous quarter. Price changes in this series can sometimes diverge from other national measures due to the limited geographic scope of the underlying data. Meanwhile, average mortgage rates inched down four basis points in the fourth quarter to 4.06 percent from 4.1 percent in the third quarter. Youngstown-Warren-Boardman, OhioPa., and Syracuse, N.Y., tied as the nation’s most affordable major housing market. In both metros, 88.3 percent of all new and ex-
to 59, expected sales for the next six months rose five points to 60 and traffic of prospective buyers remained even at 40. Two of the four components of the 55+ multifamily rental market went up from the third quarter: present production increased three points to 62 and expected future production rose four points to 61, while present demand for existing units fell four points to 71 and future expected demand dropped nine points to 67. “The strong performance of the 55+ HMI at the end of 2017 is consistent with recent increases in broader measures of the housing market,” said NAHB Chief Economist Robert Dietz. “We expect continued growth in the market for new 55+ housing in 2018 due to favorable demographics, rising home owner wealth and the current tight supply of existing homes on the market.” For the full 55+ HMI tables, please visit nahb.org/55hmi. n
isting homes sold in the fourth quarter were affordable to families earning the area’s median income of $54,600 and $68,000, respectively. Meanwhile, Cumberland, Md.-W.Va., was rated the nation’s most affordable smaller market, with 96.9 percent of homes sold in the fourth quarter being affordable to families earning the median income of $53,900. Rounding out the top five affordable major housing markets in respective order were Indianapolis-Carmel-Anderson, Ind.; Scranton-Wilkes Barre-Hazleton, Pa.; and Columbia, S.C. Smaller markets joining Cumberland at the top of the list included Kokomo, Ind.; Wheeling, W.Va.-Ohio; Davenport-Moline-Rock Island, Iowa-Ill.; and Mansfield, Ohio, which also posted a fifth place tie with Monroe, Mich. San Francisco, which had been the nation’s least affordable housing market for 19 straight quarters before being displaced by Los Angeles in the third quarter of 2017, once again assumed the mantle as the least affordable market. There, just 6.3 percent of the homes sold in the last quarter of 2017 were affordable to families earning the area’s median income of $113,100. Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles,-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and Santa Rosa. All five least affordable small housing markets were also in the Golden State. Please visit www.nahb.org/hoi for tables, historic data and details. n March, 2018
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Millenials lead the homeownership resurgence
omentum continues to build for the housing industry, as evidenced by recent news from the Census Bureau regarding homeownership. “Contrary to some analysts’ predictions that the rate would fall to 61% or lower in the coming years, the new [Census Bureau] estimates indicate it increased to 64.2% in 2017,” said NAHB Chief Economist Robert Dietz. “The data also showed six consecutive quarters of gains in the count of home owners, with notable growth among those under the age of 35.” Indeed, the homeownership rate of millennials (36%) registered the largest gains among all age groups, as noted by NAHB economist Na Zhao in a recent Eye On Housing blog post. That growth suggests millennials are increasingly recognizing the long-term benefits and value of investing in a home. After bottoming out to a cycle low of 62.9% in the second quarter 2016, homeownership has been on an upswing largely
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due to an increase in household formations. Meanwhile, the number of renter households has gone down. In addition to the rise in household formations, ongoing economic growth is expected to continue boosting housing demand throughout 2018 — even despite the recently enacted tax reform legislation that
is likely to hold back the growth of home prices. “While it will further boost economic activity, the new tax law is expected to contribute to price softness in some high-cost, high-tax markets now that deductions for income and property taxes are capped at $10,000 per year,” Dietz said. As the nation’s largest demographic group — totaling more than 90 million — millennials are poised to dominate the home buying market in the months and years ahead. n
Tax season update
How an end of year Congressional Act affects your tax returns.
n December 20, 2017, Congress passed the Tax Cuts and Jobs Act, which will have a significant impact on the Homebuilding industry. John Bellenfant from the Bellenfant CPA Firm addressed these issues at a recent HBAMT Board of Directors meeting. Significant areas are highlighted below. Standard Deduction The standard deduction for a married couple will radically increase to $24,000. This change would affect the tax advantage of buying a starter home. Most entry-level purchases will find it beneficial to take the standard deduction, instead of using itemized deductions. It could also discourage prospective entry-level purchases who might decide to continue renting if there is not tax benefit to buying. Some market observers feel that there will be an increase in investment in single family rental homes. In Nashville, there are already designs for entire neighborhoods of rental properties.
Business Interest Deduction The deduction provides the taxpayer a choice of a one-time election for a deduction limited to 30% of adjusted gross income; or for real estate, a 100% deduction for business interest with certain tradeoffs. Domestic Production Expenditures Deduction The domestic production expenditures deduction has been eliminated. Changes in Section 179 Expensing Election The amount of equipment eligible for Section 179 deduction has increased to $1,000,000 for 2018 and beyond. The limit on equipment purchases has increased to $2.5 million. n
Home Mortgage Interest Deduction Limitation Mortgage interest will remain deductible on both primary and secondary residences. However, the outstanding indebtedness will be limited to $750,000 down from $1,000,000 under the prior law. This change will impact the upper-end house market in Tennessee. Mortgage Interest on a Second Home Mortgage interest will continue to be deductible on a second home, as long as the mortgages on both the primary and secondary homes do not exceed $750,000. The original house bill eliminated mortgage interest on second homes, so this is a benefit that was retained. Home Equity Interest The new law will eliminate a deduction for interest on a second mortgage. Deduction of Property Taxes The new law limits the deduction for state and local taxes to an aggregate of $10,000 for both property taxes and either state income tax or sales tax. Since Tennessee is a low tax state, this will benefit its residents. Reduced Corporate Taxes The maximum federal taxes for a corporate homebuilder is 21 percent. Twenty percent deduction for Business Owners Homebuilders that are classified as a partnership, LLC, or S-corporation will qualify for a deduction of 20 percent of their business income. Of course, there are always limitations. The income subject to the deduction would be calculated at the ownerâ€™s reasonable compensation and time. One additional limitation is based on the amount of salaries paid. For most companies there is no limitation below $315,000. At income levels above this amount, the deduction will be limited by the lesser of 50% of wages or 20% of income. There are no deductions for service organizations (i.e., attorneys, doctors, consultants) who make more than $415,000. Estate Tax Exemption The estate tax exemption has been raised to $11.2 million for an individual and $22.4 for a married couple. March, 2018
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2018 Showcase of New Homes Entry Form (one form per entry)
Attached is my CHECK, PLANS (color house picture and floor plans), DIRECTIONS and DESCRIPTIONS. I am completing all sections of this form to be applied to the rate checked below.
SEE RATES AND DEADLINES ON REVERSE SIDE Please note: Money, completed entry form, color photo and floor plans must be returned before final dates to qualify for rate checked.
Please type or print. Fill in the blanks. This form must be complete.
Name of Builder: ______________________________________________________________________________ Home Office Contact Name: _____________________________________________________________________ Contact’s Numbers - Office: _______________________________ Mobile: _______________________________ Contact’s Email address: ________________________________________________________________________ I do hereby certify that I am a Builder Member in good standing with HBAMT. Do hereby agree to abide by all the rules and regulations (available at HBAMT offices). I will put forth my best efforts to have this home completed by June 14, 2018.
Date: _______ Company: ____________________________ Signature: ________________________________
List following information exactly as you would like it to appear in the Home Buyers Guide HOUSE AMENITIES and FACTS (this section is important for both promotional and production purposes).
Name of House and/or Plan Name: ______________________________________ MLS Area #: ______________ Company Name: ______________________________________________________________________________ Model’s Phone: ________________________________ Agent’s Mobile: __________________________________ Street Address: ________________________________ City/Subdivision: _________________________________ Price of Home (as is with options) $_________________ (NOTE: INCLUDE LOT) Base Price of Home (starting at) $_________________ Total square footage: __________ Number Car Garage: ___________________ Marketed by: ________________________________________ Telephone: _______________________________ Please check: Is this a model home? Yes r No r Style of Home? Condo r Single Family r
Is this home furnished? Yes r No r
Judge home for awards? Yes r No r
On a separate sheet of paper, type a brief description (about 75 words) on the unusual and outstanding features of your home. This description will be printed in the Showcase Home Buyers Guide (plan book) as it is submitted! THIS IS IMPORTANT! Attach explicit directions to the house starting from a major highway (remember, you may know how to get there but the general public does not!) These directions will be included in the plan book. Entries which have not submitted plans, descriptions and directions by May 18, 2018 will be omitted from the Home Buyers Guide. Please return completed form to: HBAMT - Showcase l 9007 Overlook Blvd, Brentwood, TN 37027 Phone: (615) 377-1055 l Fax: (615) 377-1077 l Email: firstname.lastname@example.org 14 The NAIL
Housing markets remain on upward trend Index shows housing still on upward trend even as permits slip.
verall housing and economic activity in metro markets across the nation remained on a gradual, upward trend in the fourth quarter of 2017 even as permit activity remained a stubbornly lagging indicator, according to the National Association of Home Builders/ First American Leading Markets Index (LMI) released today. “While the home price appreciation and employment components of the LMI are at healthy levels and continue to expand, we are concerned with the sluggish permit activity,” said NAHB Chief Economist Robert Dietz. “The weak permit numbers indicate that builders may be hesitant to start projects as they contend with supply-side hurdles, such as rising material prices and labor shortages.” “This report shows that the overall housing market is moving forward at a gradual pace, with the fastest growing metro areas mostly in the South and West,” said NAHB Chairman Randy Noel, a custom home builder and developer from LaPlace, La. “Continued economic growth, rising consumer demand and a pro-business political climate should keep housing on an upward trajectory in 2018.” Markets in 195 of the 337 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the fourth quarter of 2017. This represents a year-over-year net gain of 25 markets. Meanwhile, 82 percent of markets have shown an improvement year over year. Two of the three individual components of the LMI registered healthy readings. Employment is at 98 percent of normal activity and home price levels are well above normal at 158 percent. However, single-family permits are running at only 56 percent of normal activity. In an encouraging sign, employment levels are at or above normal activity in 128 markets — a 8.5 percent rise over last quarter. Permit levels, on the other hand, are at or above normalcy in only 62 markets and dropped 7.5 percent from the third quarter of 2017. “The number of markets on this quarter’s LMI at or above 90 percent has risen to 274 — more than 81 percent of all metro areas,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which
co-sponsors the LMI report. “This shows that the overall market continues to make modest, but consistent gains.” Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.71 — or 71 percent better than its historical normal market level. Other major metros leading the group include Austin, Texas; Honolulu; Oxnard, Calif.; and Provo, Utah. Rounding out the top 10 are San Jose, Calif.; Nashville, Tenn.; Spokane, Wash; Los Angeles; and Salt Lake City. Among smaller metros, Odessa, Texas, has an LMI score of 2.15, meaning that it is now at more than double its market strength prior to the recession. Also at the top of that list are Midland, Texas; Walla Walla, Wash.; Florence, Ala.; and Gadsden, Ala. The LMI examines metro areas to identify those that are now approaching and exceeding their previous normal levels of economic and housing activity. Approximately 340 metro areas are scored by taking their
average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth. For permits and employment, both the 12-month average and the annual average during the last period of normal growth are also adjusted for the underlying population count. 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.“We don’t need 12 Alexas dripping their cords all over the interior design,” he said. “We need to make [home technology] impossible for home owners to replicate themselves in a used home.” n
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Sixteen SPIKES (in bold) increased their recruitment numbers last month. What is a SPIKE? SPIKES recruit new members and help the association retain members. Here is the latest SPIKE report as of January 31, 2018. Top 20 Big Spikes Mitzi Spann Terry Cobb Jim Fischer John Whitaker James Carbine Trey Lewis Jennifer Earnest David Crane Kevin Hale Reese Smith III James Franks Steve Moody Davis Lamb Jackson Downey
757 570 566 542 382 380 360 301 299 261 236 219 202 182
Jim McLean Louise Stark Harry Johnson Steve Cates C.W. Bartlett
164 163 146 142 138
Life Spikes Sam Carbine Tonya Esquibel Steve Hewlett B.J. Hanson Jordan Clark Carmen Ryan Dave McGowan Randall Smith Wiggs Thompson John Zelenak Duane Vanhook Helmut Mundt Michael Dillon Erin Richardson Christina Cunningham David Hughes Lori Fisk-Conners Beth Sturm Don Bruce Justin Hicks Marty Maitland John Broderick Joe Morgan Keith Porterfield
133 131 119 118 115 115 106 103 99 99 98 93 90 77 76 74 68 63 62 63 57 54 54 51
Ron Schroeder Andrew Neuman John Ganschow Derenda Sircy Bryan Edwards Ricky Scott Ashley Crews Phillip Smith Jody Derrick Don Mahone Rick Olszewski Frank Tyree
51 50 49 46 44 41 40 35 34 28 28 26
Spikes Steve Shalibo Jay Elisar Frank Jones John Burns Kenny Burd Perry Pratt Will Montgomery Rob Pease Bob Bellenfant Stacy DeSoto McClain Franks Jim McCann
23 19 17 16 10 10 10 9 8 7 6 6
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MARCH Calendar Sunday
Sales & Marketing Council meeting
Dickson County Chapter meeting
Remodelers Council afternoon mixer
Metro/Nashville Chapter meeting
Chapters & Councils CHAPTERS CHEATHAM COUNTY CHAPTER Chapter President - Roy Miles: 615/646-3303 Cheatham County Chapter details are being planned. Next meeting: to be announced. Chapter RSVP Line: 615/377-9651, ext. 310 DICKSON COUNTY CHAPTER Chapter President - Mark Denney: 615/446-2873. The Dickson County Chapter meets on the third Monday of the month, 12:00 p.m. at the Ponderosa Restaurant in Dickson. Next meeting: Monday, March 19. Topic: to be announced. Price: FREE, lunch dutch treat. Chapter RSVP Line: 615/377-9651, ext. 264 MAURY COUNTY CHAPTER Maury County Chapter details are currently being planned. Next meeting: to be announced. Chapter RSVP line: 615-377-9651, ext. 312; for callers outside the 615 area code, 1-800-571-9995, ext. 312 METRO/NASHVILLE CHAPTER Chapter President - John Whitaker: 615/843-3300. The Metro/Nashville Chapter meets on the fourth Monday of the month, 11:30 a.m. at the HBAMT offices. Next meeting: Monday, March 26. Topic: to be announced. Builders Free pending sponsorship. Price: $10 per person with RSVP ($20 w/o RSVP). Chapter RSVP Line: 615/377-9651, ext. 261 ROBERTSON COUNTY CHAPTER
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Next meeting: to be announced. Robertson County RSVP line: 615-377-9651, ext. 313.
sponsorship; $20 for non-members with RSVP ($25 w/o). Council RSVP Line: 615/377-9651, ext. 308
SUMNER COUNTY CHAPTER The Sumner County Chapter meets on the fourth Tuesday of the month, 11:30 a.m. at the new Hendersonville Library. Next meeting: to be announced. Chapter RSVP Line: 615/377-9651, ext. 262
HBAMT REMODELERS COUNCIL Council President - Ricky Scott. The HBAMT Remodelers Council meets on the third Wednesday of the month at varying locations. Next meeting: Wednesday, March 21. Location: Cambria. Topic: “Afternoon Mixer with the RMC!” Price: free for RMC members with RSVP pending sponsorship; $15 for non-members with RSVP ($20 w/o). Council RSVP Line: 615/377-9651, ext. 263
WILLIAMSON COUNTY CHAPTER Chapter President - B.J. Hanson: 615/884-4935. The Williamson County Chapter meets on the third Tuesday of the month, 11:30 a.m. at the HBAMT offices. Next meeting: to be announced. Builders Free pending sponsorship. Price: $10 per person with RSVP ($20 w/o RSVP). Chapter RSVP Line: 615/377-9651, ext. 305 WILSON COUNTY CHAPTER The Wilson County Chapter meets on the second Thursday of the month, 11:30 a.m. at the Five Oaks Golf & Country Club in Lebanon. Next meeting: to be announced. Chapter RSVP Line: 615/377-9651, ext. 309 COUNCILS GREEN BUILDING COUNCIL Council President - Erin Richardson: 615/883-8526. The Green Building Council meets on the fourth Wednesday of the month, 11:00 a.m. Next meeting: to be announced. Topic: to be announced. Price: free for Green Building Council members pending
INFILL BUILDERS COUNCIL The Infill Builders Council typically meets on the third Thursday of the month, 11:30 a.m. at the HBAMT offices Next meeting: to be announced. Price: to be announced. RSVP to: 615/377-9651, ext. 265 - or to email@example.com MIDDLE TENN SALES & MARKETING COUNCIL Council President - Ashley Crews. The SMC typically meets on the first Thursday of the month, 9:00 a.m. at the HBAMT offices. Next meeting: Thursday, March 1, 9:00 a.m. at the HBAMT. Topic: “Insta-Famous!” A look at current tools and trends real estate professionals can use to market themselves and their properties online. SMC members free pending sponsorship; non-SMC members $25 w/RSVP, $35 w/o RSVP Council RSVP Line: 615/377-9651, ext. 260.
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The March 2018 issue of The Nail, the official monthly publication of the Home Builders Association of Middle Tennessee (HBAMT).