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HBApdx.org HBAThe housing market is slowing down and that means our industry will be tightening its belt again. We’ve been through this before, and in much worse ways than what will hopefully be a shorter impact this time around. While I am writing this before our annual Housing Forecast, the sense I am getting is that we will be in a contracted market for the next 12-24 months. It’s obviously important to remember lessons learned from previous recessions. For HBA, that also means looking at programs and services we offered during the Great Recession and bringing back ones that we know add value. It also means helping our members take advantage of business opportunities that come during times like these and preparing members for the next growth cycle in our market. Those are the conversations our Board and Officers and staff have been having over the last few months and you will be hearing more about soon.
As you look at areas you need to tighten, I want to share a perspective that I think is critically important to the longterm viability of your company – when you join or renew HBA membership, you’re not paying a dues expense, you’re making a critically needed business investment.
For our trade contractors, suppliers and other associate members, who for the last few years have been so busy they didn’t need some of HBA’s services – now is the time we can help you develop leads, create relationships and identify business opportunities. Our shows, events, information and education programs can connect you with ideas and people, whether BtoB or BtoC, that can help you make good business decisions now and prepare you for the next growth cycle.
For our builder, developer and remodeler members –the issues that impact your ability to develop and build needed housing don’t go away during a recession. In fact, they can amp up. Just like you needed HBA during
the pandemic to keep construction going, you need a strong HBA during a recession to help ensure policies and regulations don’t make things harder or more expensive for you. Permit timelines, building moratoriums, local construction guidelines and requirements, SDCs, land supply, demo taxes, restrictions on middle housing as well as other fees that try to attach housing construction are just a small sampling of the issues we are currently working on and that have a huge impact on your businesses. Wellintentioned statewide regulatory work in areas like heat and smoke regulations, building codes, builder liability and more need to have HBA’s voice to ensure a balance between intended benefits and impacts on housing supply and affordability.
The reality is our members’ investment in HBA each year comes out to no more than a few hours of what you would pay an attorney to review a single issue. You value the work that attorney does for you – so view HBA in a similar light, but on a much larger scale. We aren’t just working on one issue or providing support in one area. HBA is a comprehensive resource, advocate and business partner. Membership is a critical investment to helping make sure you and your business have opportunities to fill your role in providing needed housing and prepare for a future that allows you to survive, thrive and support the people you employee.
One last plug – beyond membership being a good investment in general, HBA might be able to directly help your bottom line. Call us up and ask for info on our fuel savings program that is saving members up to $1/ gallon right now, or our fantastic health insurance trust (BIIT) which could save you hundreds to thousands while providing an even better benefit to your employees. Plus, explore our credit card processing, workers comp and other programs that can also save you money. We’ll be happy to help you determine which ones might be good opportunities for you. We’ll also connect you to the people who can help you both save money and offer better products to your employees or company than you have now. Just another way that HBA membership is a good investment.
Portland home builders have historically volunteered to help local nonprofits with building projects whenever they were asked. Twenty-five years ago, visionary HBA member Rudy Kadlub decided this giving nature of the industry needed to be elevated at the Home Builders Association of Metro Portland.
Kadlub spearheaded the 1997 formation of a charitable arm of the HBA, to be called the Metro Portland Housing Industry Foundation. Kadlub, of Costa Pacific Communities, tells us land use battles at the time left the industry with a negative public image. He felt a nonprofit would help promote what he calls “the concerned and generous nature of the HBA and its members, and to demonstrate how we would give back to the communities where we applied our trade through providing shelter.” He also envisioned the Foundation would try to protect the future of affordable housing through education programs.
The new organization needed funding, which led to the organizing of the first fundraising auction in 1998. The inaugural event chair, George Lorance, was immortalized as “Indiana George and the First Crusade,” on the auction catalog for the Indiana Jones-themed event. Attendees raised $40,000, which helped fund a Portland State University Urban Studies policy seminar. By year two, the auction proceeds allowed HBF to give its first grants to housing agencies HOST Development and Christmas in April.
The fledgling Foundation made a turn when Kadlub learned about HomeAid America at a national building conference. HomeAid America grew out of the Building Industry Association of Southern California. HomeAid developed a template for
connecting builders and tradesmen with nonprofits needing to build or remodel shelters. A light went off for Kadlub; “I immediately saw the benefits of adopting its fund-raising model and mission, and recommended to HBF’s Board that we become affiliated with this national organization.” Portland joined 21 other chapters nationwide in 2003.
The first HomeAid-styled project for HBF was Haven House in 2004, led by Builder Captains Jim Chapman of Legend Homes, and Randy Sebastian of Renaissance Homes. To date, Builder Captains of HBF projects provide their expertise and time, and call on fellow members of the building community to provide donated or discounted labor or materials. This model saves shelter providers up to 70% of their project costs. At first, HBF worked on one project a year. By 2008, the Foundation juggled two. By 2022, HBF often has 3-4 projects underway, and several others in the pipeline each year. According to HBF Executive Director Brenda Ketah “Our successful fundraising over the years has allowed us to support our shelter projects with grant funding in addition to donated labor and materials which can often help get a project off the ground quicker.”
associations across the U.S. For those of you familiar with Builder 20 clubs, it’s a similar group but for HBA execs. I’m sure many of you can relate to the value of talking with, learning from, and comparing what works, new ideas, and challenges with peers who are similar in business operations but in different markets.
One of our sessions was led by a national leadership coach who shared her perspectives on things leaders must know, be and do. While some of what she shared reinforced other leadership training I’ve been a part of, I thought her perspectives on Five Things Leaders
Must Know was very insightful, especially in today’s current pandemic, cultural and political environments.
1. Know your tolerance for change and uncertainty being the new constant, and the flexible thinking required to navigate that.
2. Examine your openness to listening to and adopting fresh ideas and perspectives (and shifting if needed).
3. Understand your commitment level to becoming a leader in the world as we know it today.
4. Understand the need for self-care and also the need to help the self-care of others, especially those on your teams or close to you
5. Know where you are in the grieving process in any area of your life (her point was most of us have endured or are still going through grief of some kind in the last couple of years).
On top of those excellent self-reflection points, she shared that now, more than ever, people are wanting meaning and purpose in their lives and are seeking that in their jobs. According to research she shared, 87% of those who are working age are driven by a sense of wanting and needing purpose, not just a nice career or a great paycheck. That is an all-time high. So, what are things we all can do to be good leaders? Regardless of your current job, we all have ways and areas in our lives we can
• Express vision (the North Star). Not just for the organization, but also connecting it to the individual and their work/role.
• Make everything you can simple. Cut out unnecessary steps or work. Simplify decision-making. Empower others.
• Over communicate. This is critical in today’s world, but it also has to be done right. Stay concise. Be transparent and authentic.
• Actively seek clarity and understanding. This means not being right all the time and being OK with saying “I don’t know”.
• Act, get feedback and adjust. We sometimes have to go with the best info we have and take a step forward rather than waiting until we think we have all the answers or the environment around us becomes predictable. Paralysis analysis is even more dangerous
We all need some time to reflect and recharge and I hope you have or are finding ways to do that. The good news about the heightened need for purpose is that our industry has always been one that can provide a deep sense of meaning and fulfillment. But it can be easy for people, depending on a person’s job and any disconnect in how that impacts needed housing and shelter, to not see
One good example of a company helping make that connection is FedEx. In their recent TV commercial series, you hear a voiceover of someone talking about the impact they have in the world. Their work provides important health care to underserved and poor communities. Their work connects people to art, culture and music that feeds the soul. Their work supports champions and people who have persevered to achieve huge accomplishments in their lives. When the person talking is revealed, it’s someone working in the shipping department who makes sure packages are delivered safely and timely around the world. That’s the way leaders help people make connections in their jobs to a greater purpose. And we should have a far easier time of making that connection for anyone who works in our industry, regardless of their role. It’s challenged me to see and express that better for myself and our HBA team. I hope this inspires you as well.
Along with larger buildings, HBF coordinated smaller, useful projects for shelter providers. In 2006, “Painting for a Better Tomorrow” kicked off, which is an annual volunteer event to paint well-used shelter buildings, freshening up their spaces. HBF also began collection drives for items our nonprofit partners need to help the houseless, packaging them as Hygiene Care Kits. Today, HBF supplies kits to programs helping people living outdoors, such as Portland Street Response, Street Books, and Blanchet House.
Educational outreach was also an initial focus for the Foundation. Proceeds from the first HBF auction were donated to a Portland State University Urban Studies policy seminar. HBF also raised money for college scholarships. To date, HBF has given away more than $300,000 through the Gary E. Milgard and Jim Irvine statewide scholarships to encourage students studying construction management, engineering, interior and landscape design.
With funding from HomeAid America, HBF established a partnership with the Northeast Portland training program Constructing Hope, and has provided stipends for its trainees such as funds for bus passes or tools. Constructing Hope offers a free pre-apprenticeship program for people who are typically low income, BIPOC, and the majority of whom have been formerly incarcerated. HBF further cemented its relationship with Constructing Hope in 2022 with funding from the new Portland Clean Energy Fund. HBA will work with Earth Advantage to
promote sustainable construction jobs, and HBF and HBA will provide educational opportunities to train people from Constructing Hope and three other training programs, Oregon Tradeswomen, Portland Opportunities Industrialization Center and Portland Youth Builders during the next three years. All parties involved will work together to help program trainees find jobs within the industry.
HBF also rolled out a program to involve local high schools and training programs in our shelter building. Spring of 2022 brought a pilot of a “Picnic Table Project” with a Career Connections Grant from the National Association of Home Builders, Bank of America, and International Wood Products. Two schools and Constructing Hope built sturdy cedar picnic tables with materials from HBF, which were donated to local Safe Rest Villages for people leaving homelessness. The project drew praise from City Commissioner Dan Ryan, who shared: “I want to recognize the fantastic work of the Home Builders Foundation-HomeAid Portland for their support of shelters all around our region…They combine skill-building programs with donations of their final product to shelters.”
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“I want to recognize the fantastic work of the Home Builders Foundation-HomeAid Portland for their support of shelters all around our region… They combine skill-building programs with donations of their final product to shelters.”
–Portland City Commissioner Dan Ryan
The Home Builders Association of Metro Portland has partnered with Regence BlueCross BlueShield of Oregon and Capital Benefit Services to bring members more affordable health care through the Building Industry Insurance Trust. HBA members deserve a health plan that's tailored to your industry and focused on the well-being of your employees and your business. Powered by the most trusted name in health insurance, your plan offers access to a broad provider network and support from an award-winning customer service team. To learn more or get a quote, visit buildingindustryinsurancetrust.com or call (425) 641-8093.
As the number of people experiencing homelessness has grown in the greater Portland community, HBF strives to be a part of innovative solutions. In late 2018, HBF teamed with Catholic Charities and other local programs on a project for Kenton Women’s Village. HBF helped host the 2019 Building Pod Challenge, where 21 builders from the residential and commercial building industry built sleeping pods over a four-month span.
Since then, HBF has assisted with two additional pod villages, St. Johns Village and Clackamas County’s Veteran’s Village. Shelter operator Daniel Hovanas of Do Good Multnomah praises HBF, “At our villages, participants are safely and comfortably sheltered in a beautiful setting that affords them the opportunity to re-discover the dignity and humanity that comes with belonging to a community.” The three villages built in part by HBF were recently lauded by their residents in a study by the Portland State Homelessness Research and Action Collaborative.
HBF also commissioned an innovative three-room modular shelter called the “MOD”, built by HBA Past President and HBF supporter Nathan Young of MODS PDX. The shared walls and roofing on the MOD result in lower costs for temporary housing. HBF featured the structure at the 2021 NW Natural Street of Dreams, and the Fall Home and Garden Show, winning praise from the public. The
prototype is currently with the BIPOC Village in NE Portland, where it is used by counseling staff.
Now, HBF is responding the growing needs for services in the suburbs. HBF helped bring builders, suppliers, and volunteers in the past two years to a new drop-in center project for young people at risk of or who are houseless at Beaverton’s HomePlate Youth Services. In the coming year, Project Homeless Connect in Hillsboro, and Harvest House in Newberg will receive help with major remodeling projects thanks to HBF and HBA’s building community.
“Where we make the greatest impact is through generating a groundswell of cash grants, volunteers and in-kind donations to help save our shelters a lot of money. In the past few years we have found that we are particularly effective in helping small and medium-sized shelter operations, many of which are building a shelter for the first time. We are there every step of the way to help navigate them through the process of building out their dream facility,” HBF Project Manager Chris McDowell explains.
HBF is proud of the more than 70 shelter projects developed or enhanced in our first quarter century. We’ve served some of our most vulnerable neighbors, from children, to families, young women escaping sex trafficking, veterans, and people in recovery. With needs high, we hope HBA’s members, the building industry, and the larger community will join HBF in our efforts to provide everyone in our community safe, dignified housing.
Get information for the Northwest Region including technical literature, products, and contact details for your local territory managers.
Get information for the Northwest Region including technical literature, products, and contact details for your local territory managers.
MIKE BAIR - Portland Metro Trus Joist Territory Manager bairm@trusjoist.com (503) 853-4638
MIKE BAIR - Portland Metro Trus Joist Territory Manager bairm@trusjoist.com (503) 853-4638
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November 2
PBUD Council, 9:00 am
November 7 New Member Welcome and Onboarding, 1:00 pm, Zoom
Past Presidents Committee, 3:00 pm
November 9 HPC Executive, 10:00 am, HBA Offices + Zoom
November 10
HBF Executive, 8:00 am, HBA Offices Government Affairs, 10:00 am
November 16 PWB Executive, 10:00 am, HBA Offices + Zoom Membership & Retention Committee, 3:00 pm, HBA Offices + Zoom
November 17
HBF Board of Directors, 7:30 am, HBA Offices Finance Committee, 10:30 am, HBA Offices + Zoom HBA Executive, 11:30 am, HBA Offices + Zoom
November 24 - 25 Thanksgiving Holiday –HBA Offices Closed
December 1 PRO Executive, 1:00 pm, HBA Offices + Zoom
December 7 PBUD Council, 9:00 am Auction Committee, 1:00 pm, HBA Offices
December 8 HBF Executive, 8:00 am, HBA Offices Finance Committee, 10:30 am, HBA Offices + Zoom
been no
December 13
SOD Builder/Sponsor, 12:00 pm
December 15 Finance Committee, 10:30 am, HBA Offices + Zoom HBA Board of Directors (1st of ’23) + Orientation, HBA Offices
December 23January 1 HolidayHBA Offices Closed
For
Building News, the 2023 NW Natural Street
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dates and details are subject to change.
Presented by the PARR Lumber Company Thursday, November 3
7:00 am – 9:30 am
Oregon Convention Center - Portland Ballroom 777 NE Martin Luther King Jr. Blvd. | Portland Cost: Registration: $95 | Table of 10: $900
On Thursday, November 3 at 7 am, the Home Builders Association will host the Annual Housing Forecast at the Oregon Convention Center. More than 500 industry professionals and government officials will gather for this informative breakfast highlighted by insight and analysis with unique perspectives on the housing industry.
The 2023 Housing Forecast will feature NAHB Chief Economist/SVP Dr. Robert Dietz and Josh Lehner, Economist with the Oregon Office of Economic Analysis. They will discuss what 2023 holds for the housing market and our industry as a whole, including economic and building issues, as well as trends and predictions related to different market segments such as multi-family, single-family, infill and remodeling. In addition to expert economists’ insight and analysis of the housing industry, we are pleased to announce two additional program items!
HBA will recognize the recipients of two special awards to kick off our program: Tom Ellis, Mayor of Happy Valley with the 2022 Ernie Platt Memorial Public Servant Award, honoring his years of public service in local government and support for housing, and Gary Phillips, owner of Gary’s Vacuflo, with the 2022 HBA Lifetime Achievement Award.
Thursday, November 10
Time: 7:30 am- 9:00 am
Home Builders Association of Metro Portland 15555 SW Bangy Rd. – First floor | Lake Oswego Cost: $20/members, $25/non-members
Join us on Thursday, November 10, to celebrate the 8th anniversary of the founding of HBA’s Professional Women in Building Council, the successes of 2022, and learn about what exciting plans they have in store for 2023. Please join us to celebrate this amazing council, hear what they achieved in 2022, and thank the 2022 Chair Mariah Hurlburt for her strong leadership. We will welcome our incoming Chair, Melissa Galland, and hear her plans and vision for 2023. There will be a delicious breakfast from Celebrate Catering.
Formerly known as Builders Ball
Friday, November 18
5:30 pm – 7:30 pm
Home Builders Association | HBA Conference Center 15555 SW Bangy Rd., Lake Oswego – First Floor
Early registration: $45 | After November 11: $55
HBA Annual Awards + Leadership Inductions and Cocktails + Appetizers!
Join us for our reimagined version of HBA’s signature year-end celebratory member event!
Enjoy an evening cocktail hour and heavy appetizers, followed by a shorter, reception-formatted recognition program celebrating HBA’s annual award recipients and recognizing incoming and outgoing HBA leadership. The program wraps up early enough for attendees to stay and connect socially, head out for dinner after, or get home at a decent hour for the start of your weekend.
Hosted by Home Performance Council Wednesday, December 7
3:00 PM - 7:00 PM
Location: Oregon City – TBA Cost: $35
**Save the date!** Take a walking tour of a few of the local Portland breweries in Southeast. Sample some brews, eat some food, and bring the Holiday Spirit! We will be raffling off prizes throughout the night, sell festive gear like antlers, and hope to see everyone decked out for the holidays. More coming soon!
Presented by Contract Furnishings Mart Wednesday, December 14 5:30 PM - 8:00 PM
Location: TBA! Cost: Member $15, Non-Member $20
**Save the date!** Take a moment to reconnect with fellow PRO and HBA members, enjoy delicious food & drinks, and help raise money for Home Builders Foundation this holiday season. More information coming soon!
Catering is
Executive
beyond
Customize a
and
1st Security Bank Linda Mariani NMLS # 1492162 360-259-6990 Linda.Mariani@fsbwa.com 1220 Main Street #400 Vancouver WA 98660
Lending Institutions - Mortgages
Anlon Custom Construction Scott Bowles 503-313-5332 scott@anloncustom.com PO Box 153 Beaverton OR 97075
Builders - Custom Builders - Residential
Champion Outdoor Lighting Jakob Haymond 425-256-1947 sales@championoutdoorlighting.com 80 NE 14th Ave Apt 233 Portland OR 97232
Lighting - Outdoor
Bachelor General Contractor Monica Hnath 503-407-4229 monica@bachelorgc.com 5224 NE 42nd Ave Portland OR 97218 General Contractor
Crowley’s Granite Concepts Paulette Withers 503-966-2356 paulette@crowleysgranite.com 10100 SW Herman Rd Tualatin OR 97062 Countertop Suppliers & Installation
Landis & Landis Construction, LLC Thane Landis 503-320-9443 tjlandis@llconstruction.com PO BOX 50 Marylhurst OR 97036 General Contractor
Mckenna Metal LLC Scott McKenna 503-224-4888
Rozm@mckennametal.com 2300 NW Nicolai St. Portland OR 97210
Railings - Steel - Structural
50-59 Years
Neil Kelly Design/Build Remodeling 40-49 Years
Timberland Homes Inc. 30-39 Years Dan Riehl Excavating NW Realty Group Pacific Design Inc. 20-29 YEARS
Audio/Video By Design, Division of Fred’s Sound of Music Cudahy Lumber Company Jim Carlson Construction Kraft Mobile Screen Service
10-19 YEARS
Ashland Brothers Landscapes Avgerakis Custom Homes, Inc. Campbell’s Tile Concepts Cascadian Landscapers, Inc. Chris Balmes Properties LLC Crandall Group
Dave Bearson Construction Ent. Dunn Carney LLP Elliott Powell Baden & Baker Inc.
Five Star Builders
Giulietti/Schouten AIA Architects Habitat for Humanity Portland/Metro East Maughan Design & Remodel O’Neill Builders
Pamplin Media Group Private Lending Associates Revive, LLC
TerraFirma Foundation Systems, Inc. WFG National Title Insurance Co.
5-9 YEARS
Berkshire Hathaway - West Portland Classique Floors + Tile Complete Exteriors, Inc. Curtis Heintz Excavating Farrell Realty & Property Management Galaxy Stone Works Green Canopy NODE Homes Jasmann Group Northwest LLC Kentco Paintco / Kentco Industries Inc
Moffet Energy Modeling Northland Design & Build OHI Construction Portland Houseworks LLC RE/MAX Equity Group River City Real Estate Co. RK Electric, Inc. Roof Masters Inc Sharon Storey Real Estate - eXp Realty, LLC The Plumbers Inc. Trinity Flooring West Fraser White Lightning Electric Wongs Building Supply
1-4 YEARS
Alliance Door Products Apex Air LLC Boden Store Fixtures, Inc. Brix Paving Northwest Inc. Capital Lumber Co. Cedar House Media Clearwater Homes LLC Conserva Irrigation of NW Portland
D & T Excavation, Inc
DeCosta Properties - KW Luxury Homes Eagle Strategies LLC Excellence Excavating & Rockeries Gold Heat Icon Construction & Development LLC Integrity Insurance & Bonding Inc Integrity Roofing Co. Light House Architecture and Construction Marathon Construction Services, LLC May Awning & Patio Co.
Monkeyman’s Tree Service Morgan Holen & Associates, LLC Newberg Glass + Mirror Inc. Oregon Lumber Company
Pacific Timber Products Petra Heating & Air Conditioning Relevant Building Company Rodda Paint Company Rose City Laboratories LLC Stoller Wine Group Vista Structural Engineering, LLC WILLCO, Inc.
a point and renewal of affiliate or PRO Council adds a quarter (.25) of a point.
CANDIDATES SEPTEMBER SPIKE SPIKE TOTAL Brent Olsen 1 5 Alex Secor 1 1
LIFE MEMBERS
SEPTEMBER SPIKE SPIKE TOTAL Gary Phillips 0.5 424.75 Jon Girod 1.5 246 Rudy Kadlub 0.5 520.25 Mike Riddle 0.5 255 S. Robert August 19 4546.75
SPIKE 2600 AUGUST SPIKE SPIKE TOTAL John Gooley 5.5 2672
Note: Life and Spike 2600* members must recruit at least one new member each calendar year to receive recognition and remain on the Spike List. *Includes totals with Salem HBA
Connect with us at HBApdx.org
November at the HBA is when we celebrate the Professional Women in Building (PWB) Council that began 8 years ago. This year’s annual celebratory event, the PWB Anniversary Breakfast, takes place on November 10th.
Every month, the PWB Council and its leadership continue to inspire me.
Even during the recent years that have been a struggle for us all, the council continues to come to their meetings with creative ideas to promote diversity and women in our industry, support each other with professional and personal development education, and expand their efforts on workforce development and supporting women entering the construction industry. The Professional Women in Building Scholarship Fund has raised over $9,000 in only a few months!
Recently, HBA’s PWB Council has partnered locally with Girls Scouts to create the House That She Built patch, helping educate elementaryaged students in the community about the home-building industry. PWB reads Scouts The House That She
Built, a best selling children’s book that educates young readers about the people and skills that go into building a home, and is organizing and gathering volunteers for a STEM Day on November 12th.
PWB continues to support HBA by rallying behind Fish Construction NW and the building of the HBA Support House, where Fish Construction will donate all of the proceeds from the sale of the home to support the general budget of HBA. PWB members have been instrumental in helping get materials, labor, and supply discounts and donations for the HBA Support House. The council is always ready and willing to jump in to help with Home Builders Foundation projects of needs.
I am encouraged by this council and all of our members who continue to dedicate their time and resources to HBA and the larger home-building industry during these challenging times.
In particular, the PWB Council is successful because of its ability to focus on a common goal and work together to make progress. When
PWB members collaborate, there is positive energy between them that is undeniably powerful. Our entire HBA Membership has this power as well. We need to come together, especially in person, to feel that energy, connect and develop those long-lasting and influential relationships by working together on common goals that benefit our industry, membership, and community.
Join a council or a committee, help plan an event, or help with an HBF project to take small steps towards starting the journey. It won’t take long before you have a strong group of friends or colleagues here or reconnect with ones you haven’t seen in a long time.
This is one of the many ways HBA helps its members pull through challenging times. We lift each other up, we work alongside each other. We remember that the HBA is a strong and caring community of members with knowledge, experience, passion, and support to share with each other and the next generation of this industry.
Connect with us at HBApdx.org
For months HBA Government Affairs staff have been working closely with Washington County’s Land Use and Transportation Department (LUT) to address long-standing permit delays that have plagued construction projects in the county. For nearly a year, the county’s central permitting departments have been understaffed and operating under inefficient processes that resulted in delays at both the Intake and File Check phases of permit applications of all types. On either side, the delays reached a peak of nearly 8 weeks, adding roughly 4-months of delays on projects ranging from simple deck repairs to new home construction.
As a result of HBA’s direct engagement, the problem now appears to be getting better with delay times at those stages of permitting dropping by nearly two-thirds. In early August, HBA Government Affairs delivered 10 concrete policy proposals to help Washington County improve their permitting process and foster better communication with builders. Through meeting with County Commissioners several times, talking with the County Administrator, and regularly meeting with LUT leadership, HBA was able to work collaboratively to move the needle on the issue in just months.
Below is a breakdown of current permitting delays and timeframes provided by the county:
• File Check: 1-week (down from 7-weeks)
• Permit Set-Up: 4-weeks (down from 7-weeks)
• Average time to process residential permit (without revisions): 6-weeks. This does not include permit set up, and begins once plans are uploaded in ProjectDox.
Here are some of the process improvements the county has implemented to address the delays:
• Closed public counter on Wednesdays and Fridays. This helps provide staff with uninterrupted time to process backlog of file check/finalized documents for permitting.
• Onboarding and rehiring of staff. The county has hired two new permit technicians and one permit supervisor and have recently retired a staff member who’s returned for a limited duration to help process backlog permits.
• Processing prioritization. Staff have been prioritizing residential permit applications with greater overall efficiency. This has reduced the number of items in the inbox queue by about 30% since September.
• Concurrent review. More recently, the county has instituted concurrent review processes for residential permits. The form is now posted on the website for industry use.
• Triaging staff time. Permit technicians now have daily task assignments with a single focus, which helps staff focus solely on one process at a time, i.e., file checks, answering phones, counter or application setup.
• Removing solar panel permit regulations. Additionally, a recent process improvement eliminated a
step required to set up solar panel permits. A formal review process for the many solar applications in the queue was removed, saving countless hours of staff time. Staff realized that this added review could simply be addressed during the inspection stage. Since a large number of incoming permit applications were for solar panels, this change paid immediate dividends.
Stephen Roberts, the Director of Land Use & Transportation at the county said that his team hopes to see even greater improvements going forward. “We’re excited about the team’s continued progress and optimistic that we can return to normal timelines for the incoming application step within the next few weeks.”
HBA would like to thank the many members who have taken the time to talk with county staff and work with the government affairs team to formulate nearly a dozen policy recommendations. In particular, Kelly Ritz of Stone Bridge Homes NW, was an invaluable resource these past few months and helped elevate many process-oriented resolutions that the county has since adopted. And while the current permitting system is not perfect, these improvements do reflect the progress that we as an industry can build on.
With a regional housing supply shortage of roughly 60,000 units, permitting inefficiencies are the last thing that should prevent local jurisdictions from meeting their housing production goals. We will continue to work with county staff and policy makers to ensure that other permitting processes can be streamlined, improved, or removed to increase building output. It is always our objective to cut down on permitting wait times while increasing customer service, maintaining municipal budgets, and fostering safe and reliable building standards.
The Home Builders Association of Metro Portland has partnered with Regence BlueCross BlueShield of Oregon and Capital Benefit Services to bring members more affordable health care through the Building Industry Insurance Trust. HBA members deserve a health plan that's tailored to your industry and focused on the well-being of your employees and your business. Powered by the most trusted name in health insurance, your plan offers access to a broad provider network and support from an award-winning customer service team.
To learn more or get a quote, visit buildingindustryinsurancetrust.com or call (425) 641-8093.
On September 1st, 2022, HBA submitted testimony urging the City of Milwaukie to table several possible resolutions that could increase buildingrelated energy restrictions. The council has yet to release any draft language for the three resolutions being considered at the September 6th Council meeting. There are concerns that the city is considering banning natural gas options in new home construction, or potentially altering energy-related building codes beyond state guidelines.
HBA is worried that there has not been sufficient public engagement to formulate an informed policy on the topic that could have serious impacts on the city’s housing production goals and livability standards.
HBA’s government affairs team is fighting back against what we believe is a flawed framework to raise the City of Sandy’s Parks System Development Charges (SDCs) to $20,000, or a 438% jump by just 2026. We have submitted written testimony and are working to engage with the council and rethink the policy shaping this increase. We are encouraging Sandy (along with other jurisdictions) to align any increases with hard data on either population growth’s impact or inflationary statistics. We are fighting hard to push back against the “middle-of-the-pack” mentality that governs how some municipalities measure fee increases based on other jurisdictions.
Metro Council President Lynn Peterson and planning staff have provided updates to MTAC, MPAC and local jurisdictions on the UGB Exchange process, including Clackamas County, Damascus CPO, and the cities of Forest Grove and Oregon City. Metro has provided detail on the methodology and criteria being used for potentially removing land from the UGB in support of Tigard’s request for River Terrace 2.0, totaling about 350 buildable acres. HBA Government Affairs staff continues to be present at these meetings and has met directly with Metro leadership on the project. We will continue to monitor the exchange process and provide updates on when Council plans to hear testimony and take a vote.
For her article titled, “Whatever Happened to the Starter Home?” the New York Times reporter Emily Badger sat down with our very own Justin Wood, the immediate past president of the Oregon Home Builders Association (OHBA) Board of Directors and current member of HBA of Metro Portland and the National Association of Home Builders (NAHB) Boards. Justin outlined how local governments can get in their own way when engaging in the housing market. Citing rising land costs, permit fees, and tree removal charges, Justin articulated the root causes for why Portland and the nation no longer sees the construction of more affordable homes for families just starting out. Additionally, Justin mentioned the implementation of new middle housing zoning, a new possibility that may help reverse the tide of onerous government regulation.
On Monday October 3rd, the City of Sandy passed an indefinite moratorium on all commercial and residential development. Citing a “secret” year’s long battle
For more information on any of the below items, please contact Director of Policy and Government Affairs Preston Korst at prestonk@hbapdx.org
with state and federal water regulators, Sandy’s City Council voted unanimously to issue a rare city-wide building moratorium for at least 6-months. Releasing the text of the resolution with virtually no warning, the city pulled the rug out from under local builders while halting any potential development from occurring—all in the midst of a severe housing shortage.
As a result of poor planning and lacking investments, city officials codified Resolution 2022-24, which bans all new building activity that would require new sewer connections. The city did carve out a vested or pre-approved allowance of up to 120 residential units to connect to the city’s sewer system during the building freeze. However, beyond that no additional projects will be allowed to move forward.
The cause of this last-minute moratorium is apparently due to the city’s sewer and sanitary water systems having little to no capacity for new users. Having racked up over 200 National Pollution Discharge Elimination System Permit (NPDES) violations for exceeded capacity in recent years, Sandy will use the freeze to test for new capacity in spring of 2023, while making infrastructure improvements and technical fixes to city pipes and sewer basins.
A staff report released just days before the moratorium outlines the rationale: “To reduce the potential for additional violations as the city constructs the improvements, the City will limit new connections to the system through a moratorium on development until additional capacity can be demonstrated. The temporary moratorium is necessary to prevent the approval and vesting of additional development projects that lead to new sewer connections until capacity becomes available in the city’s sewer system.”
While the current moratorium is set for 6-months, the city’s own report admits that the timeframe for improvements will take longer, stating that “it is anticipated that additional capacity will not be demonstrated within that time.” The resolution also allows the city to extend the moratorium up to three additional times, if desired. This could potentially block all new development in the city for nearly 2 years—a blow not only to the building community, but also to housing affordability in the city.
During the freeze, Development Services staff will not be allowed to accept or process any residential or commercial applications that lead to new sewer connections. This includes banning all annexations, subdivisions, partitions, replats for new lots, ADUs, comp plan and zoning map amendments, or any specific area plans. However, applications that do not involve new sewer connections, like remodels, will still be accepted.
Especially for the landowners and builders who’ve already installed sewer systems on projects with the city’s explicit approval, this moratorium is demonstrably unjust and potentially illegal. HBA is currently talking with our members in Sandy about potential legal challenges to recover forgone profits, investments, or carrying costs for existing developments that may be adversely impacted by the moratorium. Given that the entire philosophy behind System Development Charges were to have development help pay for growth to prevent these types of moratoriums, there is little justification for any city’s irresponsible approach towards its own growth. The end result will be exacerbated unaffordability for the people in Sandy who need new housing the most.
The HBA’s local Government Affairs and Political Action Committees recently voted to endorse a selection of candidates in the November general election on November 8, 2022. Over the last two months, HBA members participated in roughly thirty interviews with candidates who will appear on the November ballot, spanning across 12 jurisdictions. Head to the election guide on our website for full list of endorsed candidates.
HBA Releases its Candidate Endorsements for the General Election on November 8th
improve with feedback and input from our members.
Building our workforce and creating a culture that motivates the younger generation of workers, giving them a future career path
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The slowing economy projected during the upcoming year will challenge our industry with a lot of uncertainty and speculation on where to cut and where to invest in our future. One topic that continues to come up in conversation is education, training, and workforce availability. Sometimes it takes just small tweaks to go from good to great.
Simplify your quality control or Best Practice Program so it can be implemented in the field
Often, I am asked to review Quality Assurance Programs that have checklists that are too long, repetitive and do not focus on the most common items that slip through the cracks. Those items get lost in the list and the list tends to get skipped over or ignored all together.
The Best Quality Assurance Program is one that is simple, informative and can be implemented with minimal management. If you don’t have time or resources to create your own QA Program, I have posted templates on the HBA website under the Building Science Program (www.hbapdx. org/buildingscience) that can get you started with that process. They are posted as a word document and can easily be adapted to your business. These are open source and intended to be updated and
The industry is going through a major shift right now. During the slowdown in housing demand, our biggest challenge will be to retain and train the staff we have as we make business decisions based on the economy. We know that there are anywhere between 300,000 - 400,000 open positions in construction now, and 40% of the current workforce will retire within the next few years. Stopping hiring and training processes now is a death sentence for this workforce and industry. Branka Minic, CEO of the Building Talent Foundation gives some great insight into this subject in her interview in a recent article, Branka Minic’s Plan to Build and Retain a Talented Workforce. Read it for yourself at www. probuilder.com/interview-minic.
Reevaluate your branding, mission statement and customer experience: Do they align?
Your marketing and branding strategies are setting the expectations of your customers. Are you delivering what they are expecting?
Our customers and our employees are changing, and we need to keep up with innovation and efficient processes that meet our customers expectations. For more insights, find an article by Melissa Galland, HBA of Metro Portland’s Professional Women in Building Vice Chair titled 7 MustHaves of a Results-Driven Brand Experience Strategy – found in the September/October edition of 2022 PROBUILDER magazine.
BuildRight Road Show hosted by Parr Lumber
Where: Parr Lumber Five Oaks Location 5630 NE Century Blvd, Hillsboro OR 97124
When: November 16, 2022. 8am – Noon Presenters: Larry Oenning, Greg Lasher, Carol Eisenlohr
The HBA Building Science Program is a technical resource available to HBA members free of charge, funded in part by Energy Trust of Oregon, Home Certified, OrePAC, Portland General Electric and NW Natural. If you would like to utilize the Building Science Program to create a continuous improvement plan focused on your building challenges or a plan to prepare for future code changes, contact Carol Eisenlohr, HBA’s Building Science Consultant at carole@hbapdx.org or call to schedule an appointment at 503-710-2910.
Let HBA and its partners help you improve your bottom line through education.
Join the HBA Building Science Consultant, ETO and other experts every Thursday at 9am via Teams or Zoom. Talk through code questions, address specific building challenges and find resources for better building practices. To schedule your individual chat, contact HBA’s Building Science Consultant Carol Eisenlohr at 503-710-2910 or buildingscience@hbapdx.org.
Growing from good to great boils down to “management will”
Don’t forget to schedule your BuildRight Coffee Chat with industry experts!
“WHEN THE WILL TO CHANGE, IMPROVE, CREATE STRONG PROCESSES, AND FULLY SUPPORT THE TEAM IS CLEARLY PRESENT, BUILDERS GET BETTER AND BETTER.”
A quote from Scott Sedam, President of TrueNorth Development, a consulting firm that works with builders to improve their product, process, and profit in a recent article in PROBUILDER magazine.
With flu season expected to be severe, now is a good time to get vaccinated
BY REGENCECDC recommends everyone ages 6 months and older get a flu shot
Some years, flu season is less severe than others. The 2020-21 flu season was mild, partly because of the safety practices in place to avoid COVID-19, such as physical distancing and mask wearing.
Earth’s southern hemisphere—where winter flu season typically peaks between June and September—provides a preview of the kind of flu season we can expect north of the equator later in the year. And based on reports from Australia and New Zealand this summer, where flu season started earlier and hit much harder than usual, our 2022-23 flu season is expected to be severe. Both countries had what’s been described as the biggest surge in winter illness ever, with double the average number of flu hospitalizations, persistent COVID-19 infections and a massive rise in other viruses and respiratory illnesses.
Our flu season officially began on Sept. 1, and will stretch through March 2023. During this time, when more people stay indoors longer, flu will spread just as it does every year. It will likely cause many hospitalizations and an average of 20,000 to 60,000 deaths, mostly among people vulnerable to complications, including pregnant people, seniors and those with chronic health conditions.
The Centers for Disease Control and Prevention (CDC) recommends annual flu shots for everyone 6 months and older, with rare exceptions. Getting vaccinated can reduce the risk of serious illness and death, costly hospital and doctor visits, and missed work and school.
Yet fewer than half of U.S. adults get annual preventive flu shots; the majority take their chances and hope they don’t catch it.
Even those who don’t consider themselves to be at risk of flurelated illness or death should get vaccinated to help lower their risk of spreading the virus to others who may be vulnerable.
Flu vaccines are proven effective, but not all are recommended for every individual
Flu vaccines are updated each year to fight the latest strain of the virus, and more than one effective vaccine is available to most recipients. Recently the Advisory Committee on Immunization Practices (ACIP) has recommended people age 65 or older receive a new high-dose version of flu vaccine when it’s available. Ask your doctor or pharmacist for the vaccine that’s appropriate for your age.
COVID-19 is present year-round
The same conditions that can cause flu to spread—mainly people spending more time indoors—are expected to continue
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fueling COVID-19 surges. To help prevent serious illness and death, the CDC recommends that people age 6 months and older stay up to date on their vaccinations. People age 5 and older can get a booster dose as well. The CDC recommends people age 12 and older get boosted with the newest reformulated COVID-19 vaccine that targets the highly transmissible omicron variant of the virus. People are eligible for the latest booster when a minimum of two months have passed since they received their most recent booster. You can get your flu shot and COVID-19 vaccination at the same time.
If you or your loved ones have fallen behind on getting routine vaccinations since the onset of the pandemic, consider getting caught up while you’re receiving your flu shot and COVID-19 booster. With the polio virus being detected recently in New York, you may want to check with your pediatrician to make sure you’ve been vaccinated against it; similarly, people age 50 and older who’ve had chickenpox should get a two-dose series of shingles vaccines, which provide a high level of immunity for at least seven years.
Flu, COVID-19, polio and shingles vaccines are covered at no cost to most Regence members when received at an in-network pharmacy or provider office. Members can visit their account on regence.com or the Regence app, or call the number on their member ID card, to quickly find local in-network providers who stand ready to give them a flu-fighting poke in the arm, along with necessary boosters, to help keep them healthy this year and for years to come.
How do you determine when a contract has been fully performed? In the construction context, in the absence of a specific contractual standard of performance, the law will imply “workmanlike” performance. But what does that really mean? In the case of new home construction, Oregon generally defines “workmanlike” to mean that the house is fit for habitation. Oregon law also states that construction work is “substantially complete” when it is either accepted by the owner or used by the owner for its intended purpose. However, neither of these standards address more subtle issues such as fit and finish, nor product operation or maintenance.
Even where a construction contract states that the work should be performed “in accordance with industry standards,” the parties are left with little guidance as to how to objectively measure the performance of the work. Generally, “industry standard” is considered performance in accordance with the degree of efficiency and knowledge possessed by those of ordinary skill, competency and standing in the particular trade or business in which the contractor is employed. Again, not the most objective standard by which to measure a contractor’s performance.
Construction contracts can expand on these more subjective standards by requiring performance in accordance with specific written documents. For instance, a contractor can be required to perform its work in accordance with the plans and specifications, product manufacturer installation instructions and/or applicable building codes. When a project involves new home construction, wherein the homebuyers may use federally backed mortgages or other such financing, federal regulatory standards may also apply. However, it is important to make sure that any such references are clear. Therefore, I recommend that plans, specifications and instructions are attached to the contract where feasible. The contract should also refer to specific versions or effective dates of such documents.
Yet, even these written documents often do not address the various types of fit and finish issues that can arise at the punch list and warranty stages, such as drywall and concrete cracks, nail pops, out of plumb framing, cabinet alignment, appliance operations, etc. While a contractor may want to address such issues in its contract and/or warranty, it is next to impossible to anticipate and list all of the potential situations that might arise without turning the contract into a tome.
As such, in the residential context, when determining when a given punch list or warranty item is satisfactorily completed, the contract should again refer to objective metrics, such as when the item is
completed pursuant to the plans, specifications and/or manufacture installation instructions. When the item in question is not addressed in these documents, I often recommend that the contract also refer to the National Association of Homebuilders’ Residential Construction Performance Guidelines, which is a publication available to owners and contractors alike, listing standards by which the parties can measure a contractor’s performance on a myriad of issues. The parties can refer to these standards when determining when punch list and warranty work has been performed in accordance with the contract, thereby avoiding more subjective standards such as completed to the “owner’s satisfaction” or the “contractor’s discretion.” Note that it is important to refer to a specific version of the Guidelines, as they are updated periodically. Ideally, the contract should reference the version applicable at the time the work was performed, as opposed to the version applicable when a dispute arises, which may include a more stringent standard given the passage of time.
Where a contractor offers a third-party warranty, such as those available from 2-10 Home Buyer’s Warranty Corporation and the Residential Warranty Corporation, such warranties typically include various standards by which fit and finish type issues can be measured. Additionally, a contractor may also want to reference in its warranty and require the owner to abide by applicable product manufacturer operating and maintenance instructions so as to avoid warranty issues related to improper operation and/or lack of maintenance. Indeed, I often recommend that contractors provide owners with specific written instructions regarding how to operate, clean, care for and otherwise maintain their homes, the contractor’s work and the various products included therein. These materials can include the applicable product manufacturer operating and maintenance instructions, as well as exterior maintenance instructions, whether those available from the Oregon Construction Contractors Board or of the contractor’s own drafting.
Ultimately, the parties to a construction contract should be clear as to the applicable standards so that performance, and ultimately substantial completion, can be measured objectively. As always, contractors who are considering making changes to their contract, warranty and/or other processes should consult with experienced legal counsel.
Bill Joseph is a partner at Portland law firm Dunn Carney, LLP and the leader of the firm’s Construction & Design Team. He also serves as the HBA’s general counsel. His practice focuses on business litigation and transactional law with a specific emphasis on helping those in construction and related industries.
BY JOE SEIFERT, DELAP
The 179D deduction is a tax deduction available to owners of energyefficient commercial buildings or owners that made construction expenditures to install energy-efficient systems. This tax credit benefits designers and contractors of government owned properties, although privately owned commercial real estate owners may qualify for this tax deduction. For tax years beginning in 2021, the maximum tax deduction for fully qualifying property is $1.80 per square foot. Each year
the tax credit increases to account for inflation.
The Consolidated Appropriations Act of 2021 made the 179D commercial buildings energy-efficiency tax deduction permanent. With this tax deduction here to stay, it has allowed real estate owners, architects, and construction contractors the opportunity to plan and generate significant tax savings by considering designing and building projects to qualifying standards.
Similar to the 45L energy efficient home tax credit, the Inflation Reduction Act of 2022 is bringing major changes to the 179D
tax deduction for tax years after 2022. The maximum tax deduction will increase from $1.80 per square foot to $5.00 per square foot. In addition to the increased maximum tax deduction, the deduction will now be calculated based on the amount of energy savings compared to the ASHRAE 90.1 standard and certain prevailing wages and apprenticeship requirements.
If you have any questions regarding the 179D Commercial Buildings Energy-Efficiency Tax Deduction, please feel free to reach out to Joe Seifert, CPA at Delap. 503-974-5687
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On a pleasant September day, close to forty Mountainwood Homes staff members gathered at the property of Project Homeless Connect’s Day Center in Hillsboro for an all-day renovation blitz. This was not their first effort in helping out at a Home Builders Foundation project site. This year the team tackled a number of issues for a small but growing shelter in Hillsboro. At the entrance, a group of carpenters worked to dismantle and completely rebuild a stair case that was collapsing and dangerous to guests. Another small team built a new perimeter privacy fence with working gates. A dozen or so team members painted worn interior walls to make it more presentable to guests. A man on a mini-excavator removed eight-foot-tall blackberry brambles that swallowed up much of the backyard. At the end of the day, the event was a great success in helping launch HBF’s newest shelter project.
Planned well in advance, HBF project manager Chris McDowell coordinated material deliveries and work scope decisions with
owner Robert Wood, and talent manager Heidi Augee who in turn matched up staff member skills to the tasks on the job site. The idea of the company-wide work party was to enlist both skilled and unskilled workers to tackle a laundry list of easily accomplishable tasks that would improve the ailing and highly-used day center both aesthetically and functionally. As the saying goes, “many hands make light work.” While HBF has long term plans to replace the roof, add two bathrooms and build a wheelchair ramp for the century-old Craftsman house, this volunteer event helped HBF save more than $10,000 worth of work.
At the end of the four-hour event, the building and grounds looked dramatically different with fresh mulch, new cedar fencing and front steps, and a freshly painted front porch. Halfway during the push, a half dozen of the Mountainwood team worked to drag a large shed from one side of the property to the other, freeing up a large space in the side yard. For the Day Center staff, the work meant a lot. The improved exterior appearance of the shelter was much needed in making inroads with
neighbors who have increasingly become worried about the numbers of houseless people in downtown Hillsboro. The newly built staircases with railings made it easier to get guests with mobility challenges into the building. And the perimeter fence helped to secure the property for staff members.
Robert and Heather Wood, co-owners of Mountainwood Homes have long supported the Home Builders Foundation acting as builder captain on two projects at the Good Neighbor Center in 2017 and in 2022 as well as being a regular fixture at the annual Trap Shoot fundraiser. Service projects, are also a big part of the Mountainwood tradition. Mountainwood Homes assisted HBF in the Just Compassion Resource Center project back in 2019 with a company-wide work party. In October, HBF will present Mountainwood Homes with the Company of the Year award at the Foundation Builders Breakfast, a fitting honor and testament to how much HBF appreciates the Mountainwood Homes commitment to its shelter projects.
For more information about how you or your company can be involved in a shelter project, contact HBF Project Manager Chris McDowell at chrism@hbapdx.org.
Accidental fires are an unusual occurrence in most workplaces. It is easy to take for granted some of the everyday hazards that, if overlooked, can contribute to the occurrence of these fires. Here are some general tips to help prevent accidental fires at work, as well as at your home:
• Dispense flammable liquids only in areas free from sparks, flames, and other sources of ignition.
• Keep all containers of flammable liquids closed or covered when they are not in use. And return them to their designated storage area when you are done using them.
• When dispensing flammable liquid from one container into another, bond the two containers together and ground one. This helps prevent the build-up of static electricity, which can create a spark and ignite the vapors.
• Discard all rags and waste materials that are impregnated with flammable or combustible liquids, oil, or grease in covered, self-closing metal containers (should be colored red) and empty these containers into designated receptacles at the end of your shift.
• Keep all wastepaper, cardboard, and similar combustible materials cleaned up and placed in designated waste receptacles. Letting these items accumulate on the floor or other work areas creates an unnecessary fire hazard.
• Only use flame or spark-producing equipment, such as welders, torches, and grinders, in designated areas. Special approval of management must be obtained to use this type of equipment in areas where it is not normally used (discuss your company’s “hot-work permit”, if you have one).
• Smoking is allowed only in designated areas. Always dispose of butts in designated receptacles (if you have implemented a smoking ban at your site, discuss that instead).
• Make certain to avoid stacking materials too close to fire sprinkler heads, as doing so can affect their ability to disperse water adequately when activated; usually we must maintain a minimum of 18 inches of clearance below the level of the sprinkler heads.
• Make sure portable fire extinguishers remain fully charged and accessible at all times.
• Never use or store around an open flame, pilot lights, portable heaters or other ignition sources!
• Never smoke or permit smoking while being dispensed or near storage location!
• Never use to start, restart or accelerate a fire!
• Never refill gasoline engines when hot!
• Never use as a hand cleaner!
• Never use as a solvent to clean things!
• Always store in proper safety cans that are rated for gasoline and DOT approved!
• Never store in glass or plastic bottle containers!
• Dispense in a well-ventilated area!
• Remove clothing that has been soaked by gasoline!
• Limit the amount in the workplace!
Metro’s economic forecast summary: Autumn 2022
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The US economy has shown signs of slowing, and recent developments increase the economic woes of consumers. FED re-commits to vigor ously fighting stubbornly high inflation and inflationary expectations. Monetary policy risks toppling the US into a recession by year’s end.
– A growing number of headwinds are rearing up to threaten the stability of the recovery, (e.g., a steep decline in the US stock market, jumps in interest rate, and weaker household spending). This is increasing the chance of the US tumbling into a recession later this year. Foremost is a persistently high CPI inflation rate that is moving the FED to take forceful action. The US suffered through moribund economic growth in the first-half of 2022 due to a surge in the Omicron variants of COVID-19. Recent BEA (Bureau of Economic Analysis) data postings reveal inflationadjusted annualized GDP growth fell -1.6% in Q1 and -0.6% in Q2. Although some would call two quarters of negative growth in a row a recession, official forecasters have said otherwise. It is being called a “growth recession” because other measures of economic growth in the US were seeing positive developments (e.g., industrial production, payroll employment, and personal income which remained robust during this span.)
The FED will continue raising interest rates in pursuit of reducing inflation and thereby throttling US growth, particularly in interest sensitive sectors, like home construction. We do anticipate a short-lived uptick in GDP growth on the order of about 2% in Q3. However, Q3 is now over, and we see Q4 as the start of a downturn for the US - a recession is expected. Consumer sentiments are also stacked against inflation and are a drag on spending and growth. This means that if the economy does dip, the downturn will be of sufficient depth (meaning all the broad measures of economic growth will turn down simultaneously) and duration (meaning, lasting at least two quarters or more) to qualify as a recession. Bottom line: A recession is likely
on its way in coming quarters, but it should be mild by historical standards. The FED, through monetary actions, is determined to lower inflation, even at the expense of tossing the US into a recession. Several large interest rate hikes testify to the FED’s commitment to taming inflation by any means.
• Fiscal stimulus – The latest US outlook now incorporates growth stimulus and inflation assumptions associated with the so-called Inflation Reduction Act (IRA) plus approval of debt forgiveness of up to $20,000 of student loans per borrower. Other pandemic-era spending supports have come to an end and offer very little stimulus. Bottom line: The added stimulus at this point is likely unwarranted given heightened inflationary pressure on a macro level, but certainly helps targeted households with debt relief.
The overall economic impact (less than 0.1% to the level of real GDP) is estimated to be de minimis on macro growth but is still counter-productive (though slight) to monetary policy that is aimed at reducing current inflation.
– Headline CPI price increases have yet too really waned, falling to 8.2% in August from a seasonally adjusted peak of 9% in June. Lower consumer prices could be on the way as encouraging signs at the producer level indicate with the easing of delivery delays, improving material supplies and dropping crude oil prices. Supply disruptions continue to persist in some industries and throttling output still, but the easing of aggregate demand will go a long way to reducing future inflation.
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The US economy has shown signs of slowing, and recent developments increase the economic woes of consumers. FED re-commits to vigor ously fighting stubbornly high inflation and inflationary expectations. Monetary policy risks toppling the US into a recession by year’s end.
THIS ARTICLE IS WRITTEN BY METRO STAFF AND DOES NOT NECESSARILY REPRESENT THE OPINIONS OF METRO OR THE METRO COUNCIL.Bottom line: Elevated inflation levels will be with the US economy through year’s end. The FED will act forcefully with unwavering determination to restore price stability with tighter monetary policy. Interest rate hikes will eventually weaken job opportunities and reduce consumer demand – resulting in the easing of inflationary pressures.
• FED monetary policy – The Federal Reserve emphasized its commitment to taming inflation. The goal is to lower the US inflation rate to about 2%. For the 3rd time in a row, the FED raised the target for the fed funds rate by 75 basis point to a range of 3% to 3¼% and said it will continue to shrink its balance sheet to achieve its goals. This means the cost of borrowing will continue going up for consumers and business entities alike. The likely peak rate for federal funds has been elevated to a target range of 4½% to 4¾% according to the FED. Bottom line: The tone at the FED has changed recently to one in which they now acknowledge that its policies will necessarily inflict harm to the broader economy through easing of demand, slower economic growth, and steeper borrowing costs.
• Mortgage interest rate - Rates continue to escalate at the beginning of October, inching towards 7% for an average 30-year fixed rate mortgage according to Freddie Mac. The surge in rates is directly in response to FED rate hikes. Rates have risen to their highest level in more than 15 years, a new high since the Great Recession. With higher rates, some would-be homebuyers have left the market and have instead remained as renters. Bottom line: Mortgage rates are expected to rise steeply as the FED continues to ratchet up the benchmark for the federal funds rate - its primary tool for raising (or lowering) borrowing costs for business investment and
household loans. Mortgage rates influence affordability and with steeper rates, a new homebuyer’s monthly house payments have shot up.
• US Employment outlook – The US finally surpassed its pre-pandemic job peak sometime in late-July. The labor market continues registering robust nonfarm payroll employment growth on a month-over-month basis and has added 22.5 million jobs since the deepest point of the pandemic, and most recently added 263,000 jobs in September. The national unemployment rate was 3.5% (SA) in September, the same between May - July. Although unemployment claims and the unemployment rate have yet to trend higher, other reports and surveys suggest job opportunities are beginning to narrow. Employment tends to trail behind other indicators and many of these other indicators are only now starting to point down. Bottom line: US employment growth remains solid for now, but the consensus forecast is eventually for it to start to taper and unemployment rates to rise in coming months.
• Housing and Construction –Residential construction spending continued its late-summer decline for the third month in a row and will likely extend through the current cycle. Single family home construction has begun to tail off from its torrid pace of a year ago, although apartment construction has remained strong. The price of homes remains elevated, but price increases have begun to decelerate in some markets. There are fewer buyers in the market bidding up prices. Since mortgage rates started climbing, purchasing a home has become pricier and less affordable. Consumer expectations to buy homes decreased in the September Conference Board survey, reflective of the steep increase in mortgage rates Bottom line: Higher interest rates are sharply adding to monthly mortgage
payments for recent homebuyers. Both residential and nonresidential construction spending are expected to slow because of higher interest rates. Home prices are likely to remain elevated unless the housing market collapses, but a crash is unlikely in a mild recession.
• Regional trends – MSA payroll employment in Aug. (BLS SA) finally poked above its pre-pandemic job peak. Increases were broad-based as both total manufacturing and nonmanufacturing job sectors crested above this milestone. Comparing major industries to pre-pandemic levels, private education and health care were still lagging. Comparing private sector trends for this year alone, industry y/y growth was also generally solid across the board, with notable slowing in Finance and Insurance, perhaps responding to drag caused by rising interest rates.
Bottom line: The recovery in the region is intact but is likely to experience slower growth going forward while coinciding with broader nationwide slowing. Heightened interest rates haven’t broadly impacted regional employment yet, particularly in construction employment. However, there is evidence that Portland area homebuilders have begun to respond by curtailing the number of permits being taken out.
• Forecast risk – Economic alternatives have turned decidedly cloudier as the US faces stiffer headwinds. The FED will do what it does to wring inflation out of the economy, but in so doing, it risks tipping the US into a recession. Financial conditions may worsen, which will bring the US closer to a recession. Oil prices could reverse and rise again.
Bottom line: Metro’s macroeconomic advisor, IHS Markit, is now anticipating a recession in the US for its baseline outlook.
– 7:30
Enjoy an evening cocktail hour and heavy appetizers, followed by a shorter, receptionformatted recognition program recognizing incoming and outgoing HBA leadership as well as our annual member award presentations. The program wraps up early enough for attendees to stay and connect socially, head out for dinner after, or get home at a decent hour for the start of your weekend.
WHERE: HBA Conference Center 15555 SW Bangy Rd., Lake Oswego – First Floor
TICKETS: $ 45 Early registration $55 after November 11 Purchase tickets online at www.hbapdx.org/events
Fall is busy at the HBA! Members gathered for the annual Fall All Member Lunch, an All Member Happy Hour, the Portland Fall Home & Garden Show, and a Behind the Walls educational tour at the second annual Homes of Tomorrow Today Tour presented by Portland General Electric.
