FOUNDATIONS NEWSLTR JULY

JULY 2022

ROCHESTER AREA BUILDERS, INC.

Thank you to everyone who Participated in the 2022 Golf Outing!

BUILDERS, BAGS & BREWS Registration Information

11

FALL SHOWCASE/ REMODELERS TOUR MAGAZINE Advertising Information

KITCHENS FOR KIDS We Need Builders!

13

14

D C

DEVELOPMENT COUNCIL a division of the Rochester Area Builders, Inc.

C OMMERCIAL C B UILDERS

OUNCIL

a division of Rochester Area Builders, Inc.

2 | JULY 2022

STAFF

EXECUTIVE DIRECTOR John Eischen, John@RochesterAreaBuilders.com Shelly Bahlmann, Shelly@RochesterAreaBuilders.com Golf Outing, Sporting Clays, Home Show, Directory, Newsletter, RAB Update, Member Plus App & RAB Events App Rebekah Fierst, Rebekah@RochesterAreaBuilders.com Ambassadors, Awards, Builders, Bags & Brews, Commercial Builders Council, Community Relations, Education, Membership, Fashion Show, Program, Remodelers Council, Executive & Remodelers Tour, 40 Below Elizabeth Sullivan-Burton, Elizabeth@RochesterAreaBuilders.com Builders Exchange Trustees and Showcase Committee, Website GOVERNMENT & PUBLIC AFFAIRS CONSULTANT Rick Dold, Rick@GodwinDold.com

BOARD OF DIRECTORS

PRESIDENT

Becky Holmen, Haley Lighting

VICE PRESIDENT

Jason Scrimshaw, Kimley-Horn & Associates, Inc.

SECRETARY

Jennifer Mitchell, Edina Realty

TREASURER

Jessica Markley, Elias Construction, LLC

PAST PRESIDENT

Luke Stier, Stier Construction, Inc.

DIRECTORS

Adam Giannini, Knutson Construction Adam Kramer, Kramer Contracting Jarett Jones, Merchants Bank Aaron Thompson, The Design Connection Austin Ryan, Ryan Windows & Siding Charlie Sweeney, Kraus-Anderson Construction Melissa Barbour, TLS Companies, LLC Vanessa Hines, Widseth Julie Herrera-Lemler, Rochester Area Economic Development, Inc. (RAEDI)

BUILDERS EXCHANGE COUNCIL CHAIR

Katie Reinhart, Kraus-Anderson Construction

COMMERCIAL BUILDERS COUNCIL CHAIR

Robbie Danko, The Boldt Company

DEVELOPMENT COUNCIL CHAIR

Hal Henderson, HGA Architects & Engineers

REMODELERS COUNCIL CHAIR

Krista Weisz, Stier Construction, Inc.

40 BELOW CHAIR

Adam Giannini, Knutson Construction

NATIONAL LIFE DIRECTORS

Steve Buss, Cornerstone Builders & Real Estate, Inc. (Rep)

NATIONAL DIRECTORS

Dana Hlebichuk, Widseth Levi Kaiser, Benike Construction Todd Severson, TLS Companies, LLC

STATE DIRECTORS

Mike Allen, Mike Allen Homes, LLC Jean DeWitz, DeWitz Home Builders, Inc. Kathy Einck, Maplewood Homes.LLC (Rep) John McGuine, JM Consulting Dan Severson, Dan Severson Builders, Inc., Kenneth Bush, Bush Companies

MISSION STATEMENT The Rochester Area Builders, Inc, chartered in 1953, is a professional organization of commercial & residential builders, remodelers, developers and associated businesses dedicated to advancing the building industry in Southeast Minnesota.

We are the trusted voice of the industry, providing leadership, education, networking, and information resources to our members, community and government officials.

3 | FOUNDATIONS NEWSLTR

11

9

10 13 RAB CALENDAR........................................... 4

JULY 2022

14

FALL SHOWCASE/REMODELERS TOUR MAGAZINE....................................... 13

2022 CALENDAR.......................................... 5

Advertising Opportunity

MEMBER REPORT........................................ 6

2023 Home Show Activity Registration

LETTER FROM RAB PRESIDENT.................... 8

Federal Reserve Accelerates Rate Hikes

ROCHESTERFEST......................................... 9

Weakening Builder Confidence

2022 SPORTING CLAY SHOOT.................... 10

Rochester & Pine Island

STUDS, STRUTS & STILETTOS.................... 10

April 2022

BUILDERS, BAGS & BREWS........................ 11

April 2022

FALL SHOWCASE....................................... 12

What Do Home Buyers Buy after Moving

RAB Events

Welcome New Members

Becky Holmen, Haley Lighting, 2022 RAB President Thank You!

Save the Date!

Design Entry & Sponsorship Information Event Information Event information

REMODELERS TOUR................................... 12

Event information

KITCHENS FOR KIDS.................................. 14 NAHB EYE ON HOUSING............................. 15 NAHB EYE ON HOUSING............................. 20 BUILDING PERMITS................................... 24 SEMR HISTORICAL OVERVIEW................... 24 OLMSTED BUILDING PERMITS ................... 25 NAHB EYE ON HOUSING........................ 26-27

4 | JULY 2022

Sunday

July 2022

Monday

Tuesday

3

Wednesday

4

5

Thursday

Friday 1

2

7

8

9

14

15

16

21

22

23

28

29

30

6

7:30 AM CBC Meeting

Saturday

12:00 PM Showcase Committee

10

12:00 PM Government Affairs Committee

11 8:30 AM Remodelers Council Exec.

3:30 PM Builders Exchange Board of Trustees

17

12

13

7:30 AM Green Building Committee

12:00 PM Sporting Clays Committee

3:00 PM Board Meeting

18

19

11:30 AM Fashion Show Committee

12:00 PM Ambassadors Committee

20

7:30 AM Membership Committee

4:30 PM 40 Below Exec Committee

24

11:30 AM Home Show Committee

25

4:30 PM Member Appreciation Night

26

3:00 PM Development Services Advisory Committee

27

11:30 AM Community Relations Committee TBD 40 Below @ Rochester Honkers

31

MEETINGS ARE NOW BEING HELD IN PERSON UNLESS NOTIFIED DIFFERENTLY BY JOHN

5 | FOUNDATIONS NEWSLTR

Rochester Area Builders 2022 Calendar of Events

JUNE JULY

28

Networking Night @ Knutson Construction

4 TBD 26

Office Closed for Independence Day NAHB Mid-Year Board Meeting – TBD Member Appreciation Night @ Mayowood Stone Barn

AUGUST 13 30

Builders, Bags & Brews @ LTS Brewing Company Networking Night @ Valor Mechanical & Tulip Tree

SEPTEMBER 5 Office Closed – Labor Day 15 Sporting Clay Shoot 17 Sporting Clay Youth Shoot 17-18 Remodelers Tour 17-18, 24-25 Fall Showcase of Homes 27 General Membership Meeting @ DoubleTree OCTOBER 13 25

Studs, Struts & Stilettos @ Mayo Civic Center Networking Night @ Warners’ Stellian

NOVEMBER TBD 24-25

Past Presidents Dinner Office Closed – Thanksgiving Holiday

DECEMBER 2 23-26

Holiday Party @ The Hilton Office Closed – Christmas Holiday

FUTURE DATES International Builders Show RAB Home Show

January 31 – February 2, 2023 @ Las Vegas, NV February 3-5, 2023 @ Mayo Civic Center

6 | JULY 2022

ROCHESTER AREA BUILDERS, INC.

MEMBERSHIP REPORT JUNE 2022

Membership Total: Retention rate:

400 92.9%

WELCOME

JUNE 2022 NEW MEMBER

MEMBER NIGHT

As of May 31, 2022 ONE TO FOUR YEARS Peak Remodel & Design Solutions......2021 Harmony Insurance Group...................2020 Johnson Printing...................................2018 Schluter Systems..................................2018 FIVE TO NINE YEARS Hy-Vee Stores........................................2017 Reagan Outdoor Advertising................2017 City of Elgin............................................2015 City of Lewiston.....................................2015 MBT Bank................................................2014 Altra Federal Credit Union...................2013 Stewartville EDA....................................2013 West Bank...............................................2013 TEN TO 14 YEARS Priority Construction Services............2012 Elias Construction, LLC.........................2011 Energy Panel Structures......................2011 Salas O’Brien .........................................2010 Wildwood Sports Bar and Grill............2010

Tuesday, July 26th 4:30pm - 7:00pm Mayowood Stone Barn

JAKE LARSON

Fencing (507) 993-2744 apexfence.us

15 YEARS TO 19 YEARS Allegra Marketing-Print-Mail...............2007 Legends Concrete, Inc...........................2007 Schoeppner, Inc.....................................2006 20 YEARS TO 24 YEARS Todd Eidem Construction, Inc..............2002 Two Rivers Habitat for Humanity........2000 Home Improvement Professionals, Inc....1999 25 YEARS OR MORE Hentges Glass Company.......................1991 Radcliffe Homes & Remodeling...........1988 Kreofsky Building Supplies..................1985 R&M Development Company...............1970 Alexander & Sons Builders..................1962 Palmer Soderberg, Inc..........................1958

JOB FREE

POSTINGS ABETH A S E N D E L IZ ED FORM COMPLET

D HERE N U O F S FORM

7 | FOUNDATIONS NEWSLTR

RAB JUNE

28

NETWORKING NIGHT

4:30PM - 6:30PM

Hors d’oeuvres | Refreshments | Yard Games

KNUTSON CONSTRUCTION

5985 Bandel Road NW | Rochester, MN

Knutson Construction has just completed their interior building remodel, come tour the building and join us for drinks, hors d’oeuvres, yard games, and socializing!

8 | JULY 2022

FROM THE PRESIDENT

BECKY HOLMEN President Rochester Area Builders, Inc Hello Wonderful People,

construction and building have been very busy in SE Minnesota.

The delay in receiving products is causing us all a lot of stress. I wish you all the best of luck in getting your homes finished.

Restrictions are getting lighter and lighter, and this Showcase will be a prime time to show off the quality of homes available from you, our members. It is important to keep your building expertise in the public eye, so when times are not as busy you will be in the forefront of people’s minds when they are ready to build or remodel.

Being active within this association is important to your business even when you are busy, so when you do need new projects, you will have the resources and contacts to make your business grow.

presentation. One of our more popular outings for the young, and not so young, is the Sporting Clay Shoot. There will be an adult shoot on September 15th and a youth shoot on September 17th.

Registration for this event opens on July 18th. All of these events are a great way to get your business recognized and do something nice for the community!

The Builders, Brats and Building Safety in Stewartville was hosted

by Valor Mechanical on Tuesday.

There were several people in attendance, and I want to say thank you to Valor for hosting and supplying the amazing potato salad.

Thank you to the 40 Below crew, they made the building of bird I hope you are all enjoying the There are many opportunities for feeders with the kids at heat and able to spend quality Rochesterfest a wonderful networking and sponsorship. time with friends and family. I success. What a great way to get Builders, Bags & Brews is a have been busy here at Haley your face in front of the people of community event that RAB is Lighting but have been able to hosting for the Jeremiah Program our community. sneak away and do some fun of SE MN on Saturday, August 13th things with friends and family. I Let’s keep the momentum going at LTS Brewing Co. The early went to a Twins game and saw my and keep spreading the word of registration deadline is July 14th. first GRAND SLAM in person-that what RAB is doing for our You can register your teams now was amazing, TWINS WIN! I have wonderful communities and and sponsorship opportunities are been able to go to some of Carter’s legislative recommendations! still available. Studs, Struts and Legion Baseball games and I am Stilettos, which benefits the Two looking forward to going to some Rivers Habitat for Humanity, is of the Jackpot Pig Shows with coming up in October. We are in Ryan and Carter. search of creative people to enter a design for this event, and there I thought I should send out a reminder that it is time to get your are several levels of sponsorship still available. At the 2021 show, registrations in for the 2022 Fall we had a record amount of money Showcase of Homes and raised for the “People’s Choice” Becky Holmem Remodelers Tour. The 1st award, which included all of the Haley Lighting deadline for the Fall Showcase is donations made during the runway 2022 RAB President coming up on July 7th. I know

9 | FOUNDATIONS NEWSLTR

RAB

FORTY

BELoW CONNECTING. BUILDING. ENGAGING.

Thank You! 40 Below was back at RochesterFest this year providing bird feeder kits for Family Fun Day. We appreciate our volunteers who helped 137 kids with construction.

Thank You!

Thank you to the following for building and sponsoring a playhouse/Pergola to benefit Family Service Rochester.

Heartwood Homes of Rochester, Inc. Peak Remodel & Design Solutions Schmidt Carpentry, LLC

10 | JULY 2022

SAVE THE DATE Rochester Area Builders Sporting Clay Shoot SEPTEMBER 15, 2022 Stay tunned for information about an additional opportunity on September 16th

Overall Event Sponsor

11 | FOUNDATIONS NEWSLTR

SILENT AUCTION

d o o F s k c Tru Team Prizes $50 - $200

REGISTER YOUR TEAM TODAY! Presented By

August 13, 2022

Beneficiary

Headlining Sponsor

LTS Brewing Co.

Visit Rochesterareabuilders.com for more information

12 | JULY 2022

SEPTEMBER 17 - 18 & 24 - 25, 2022 11 AM - 5 PM The 2022 Fall Showcase will be here before you know it! Get your latest and greatest homes, townhomes, developments, and townhome communities out in front of the public.

DEADLINES:

1st Deadline: July 7 - $200 discount 2nd Deadline: July 28 - $100 discount Final Deadline: August 18 Entry information and forms can be found HERE

Remodelers SEPTEMBER 17 - 18, 2022 11 AM - 5 PM Do you have a remodeling project you would like to have open to the public so they can see the finished results firsthand?

The Remodelers Tour has been created to offer you this great marketing opportunity. It’s an excellent way to gain exposure for your company and your projects.

All remodelers are eligible to participate, including designers, landscape contractors, exterior contractors, and more.

DEADLINES:

Discount Deadline: July 28 Final Deadline: August 18 Entry information and forms can be found HERE

13 | FOUNDATIONS NEWSLTR

2022 FALL SHOWCASE OF HOMES /REMODELERS TOUR MAGAZINE ADVERTISING INVESTMENT Sixth Page Quarter Page Half Page Half Page Full Page Inside Front Page Back Page

2.333 x 4.875 ......................................... $500 3.625 x 4.875 ......................................... $700 (v) 3.625 x10 .......................................... $900 (h) 7.5 x 4.875 ........................................ $900 8.5x11 (bleed size 8.75 x 11.25) ............. $1200 8.5x11 (bleed size 8.75 x 11.25) ............. $1500 8.5x11 (bleed size 8.75 x 11.25) ............. $1500

The 2022 Fall Showcase of Homes features new homes, townhomes, and subdivisions; and the 2022 Remodelers Tour features recent home renovations.

Together, they are featured in the Rochester Area Builders-produced magazine which is the official program that includes details, descriptions, and photos for each home/subdivision. Participation to showcase a project is exclusive to RAB members, and members of the community are invited to enjoy the event.

The digital magazine produces over 10,000 views, and the RAB Events app receives over 33,000 views during the event weekends. Limited printed copies will be available and also available at showcase entries during showcase hours.

RAB will promote the digital magazine across multiple digital platforms with over 500,000 impressions. RAB has contracted with Tulip Tree Studios for ad sales and

design services. For more information on how to advertise in our magazine, contact Crystal at 507-218-8401 or at Crystal@ tuliptree-studios.com.

Fall Showcase Weekends September 17-18 & 24-25, 2022 Remodelers Tour Weekend September 17-18, 2022

Remodelers

14 | JULY 2022

ROCHESTER AREA BUILDERS HOME SHOW 2023

We want your talent to be a part of supporting single moms and their children.

The 2023 RAB Home Show will be featuring “Kitchens for Kids” – play kitchens for young children made by members of our community. Proceeds benefit Jeremiah Program. We invite you to be a part of this exciting activity!

A raffle will be held during the event. The people’s choice winner will be determined by the largest number of raffle tickets for each project.

These great mini-kitchens will be for children’s use but the raffle profits will go toward Jeremiah Program in Rochester MN. Jeremiah’s proven, holistic approach begins with establishing a supportive community for single mothers to pursue a career-track, college education. Through a combination of quality early childhood education, a safe and affordable place to live, and empowerment and life skills training, families find stability and a path out of poverty.

You can also be a part of the Home Show and connect with customers by securing a 10’x10’ booth for the entire weekend (Friday, Saturday, and Sunday). Display, educate, and/or promote your business! Cost starts at $730. Open Registration begins in late summer, early fall.

February 10-11-12, 2023 Mayo Civic Center

Presented by

Benefit For

Find the registration form at rochesterareabuilders.com/Kitchens-for-Kids-Registration

Questions about the project?

Contact Shelly@RochesterAreaBuilders.com Ph 507-282-7698

15 | FOUNDATIONS NEWSLTR

Federal Reserve Accelerates Rate Hikes

BY ROBERT DIETZ on JUNE 15, 2022 To fight persistent inflation, the Federal Reserve has committed to significantly cooling demand. This approach reflects a non-monetary policy failure to fix underlying supply-side challenges that are pushing up inflation. The Fed lacks policy tools to make these supply-side fixes, so it must rely on demand-side impacts to bring down inflation by reducing economic growth.

Consequently, at the conclusion of its June meeting, the Fed raised the federal funds target rate by 75 basis points, increasing that target to an upper bound of 1.75%. This is the largest increase for the funds rate since 1994 and is a clear response to elevated inflation data from May. Moreover, the Fed’s forward-looking projections indicate on a median participant basis an additional 205 basis points of tightening through 2023. Without convincing evidence of moderating inflation, the Fed is likely to continue to raise the target rate at each meeting by 50 basis points or more. The Fed’s target is a 2% inflation rate.

The Fed’s June statement also confirmed its existing plan to reduce its balance sheet, including net reduction of $35 billion of mortgage-backed securities a month when fully phased in.

The lack of change for the balance sheet reduction plan is a positive element of today’s news for housing, as there was a risk of a planned faster pace, which would further increase mortgage interest rates.

Given signs of slowing economic activity, including six straight months of declines for home builder sentiment, a clear risk is that by falling behind the curve, the Fed will overshoot on tightening and bring on a recession as it fights inflation. This would not be the soft landing the Fed is attempting to orchestrate. Indeed, the NAHB economic forecast now includes a 2023 recession as financial conditions tighten. Chair Powell noted in his press conference that housing market conditions are slowing given higher mortgage rates.

The Fed notes that inflation remains elevated, citing the Ukraine war and global supply-chain issues, among other factors. Their revised economic projections find slowing economic growth, with a GDP outlook for 2023 of 1.7%. This will be very difficult to achieve. The Fed’s unemployment projection sees that rate increasing to 4.1% through 2024. So even under this optimistic outlook, this increase for joblessness would qualify as a growth recession.

As this economic slowing occurs, the Fed’s projections indicates inflation will decline. Using the core PCE measure, the Fed sees a 4.3% rate for 2022, then 2.7% in 2023 and falling to 2.3% in 2024.

This too will be difficult to achieve given the lagged impact on inflation from increasing residential rents, which materialize in inflation readings on a lagged basis when leases are renewed.

This shelter impact on inflation is also a reminder that tightening interest rate conditions can affect supply, not just demand. Higher rents are due to a lack of housing supply. And higher interest rates will make it difficult to finance the development of additional housing supply.

It is important to note that there is not a direct connection between federal fund rate hikes and changes in long-term interest rates. During the last tightening cycle, the federal funds target rate increased from November 2015 (with a top rate of just 0.25%) to November 2018 (2.5%), a 225 basis point expansion. However, during this time

mortgage interest rates increased by a proportionately smaller amount, rising from approximately 3.9% to just under 4.9%.

Previously, the Fed noted that inflation is elevated due to “supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.” While this verbiage may incorporate policy failures that have affected aggregate supply and demand, I do think the Fed should explicitly acknowledge the role fiscal, trade and regulatory policy is having on the economy and inflation as well.

Given today’s projections, we reiterate our policy recommendation with respect to any possibility of a soft landing.

Clearly, elevated inflation readings call for a normalization of monetary policy, particularly as the economy moves beyond covid-related impacts.

However, fiscal and regulatory must complement monetary policy as part of this adjustment. Yet, many of these measures are simply beyond the Fed’s control.

For example, higher inflation in housing is due to a lack of rental and for-sale inventory and cost growth for building materials, lots and labor.

Higher interest rates will not produce more lumber. A smaller balance sheet will not increase the production of appliances and materials. In short, while the Fed can cool the demand-side of the economy (reducing inflation and growth), additional output on the supply-side is required in order to tame the growth in costs that we see in housing and other sectors of the economy. And efficient regulatory policy in particular can help achieve this goal and fight inflation.

16 | JULY 2022

REAL ESTATE LENDING Bank on ONB Bank for all of your Real Estate Lending needs.

Construction Purchase Refinance Improvements

contact us today

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Stewartville 1960 1st Ave NE 507-504-1060

bankonONB.com

17 | FOUNDATIONS NEWSLTR

Goodin Company carries a full complement of products for the markets we serve.

Are you in need of products for plumbing, HVAC, industrial, or pump and well applications?

PLUMBING

HVAC

INDUSTRIAL

PUMP & WELL

We are your Source of Supply, serving the industry since 1937.

www.goodinco.com MINNEAPOLIS | ST. PAUL | DULUTH | DETROIT LAKES | ST. CLOUD BRAINERD | ROCHESTER | FARGO | SIOUX FALLS | OMAHA EAU CLAIRE | WAUSAU | MADISON | MILWAUKEE | GREEN BAY

18 | JULY 2022

GET UP TO $5,400 TO GET THE JOB DONE Shown with equipment from independent suppliers which is not covered by the GM New Vehicle Limited Warranty.

GM is not responsible for the safety or quality of independent supplier alterations.

USING THE PRIVATE OFFERS1 FOR NAHB MEMBERS IS EASY:

1. Get your NAHB proof of membership.

2. Visit your local Chevrolet, Buick or GMC dealer and mention this Private Offer.

3. Select an eligible vehicle(s) to purchase or lease and present your NAHB proof of membership.

For even more value, combine this offer with the National Fleet Purchase Program and Business Choice Offers. For full details on the Private Offer, NAHB members should visit nahb.org/gm.

Example offer for NAHB members who are business owners purchasing a 2021 Chevrolet Silverado 2500 HD Crew Cab 1LT 4WD. Up to

Up to

Up to

$1,000 + $3,400 + $1,000 = $5,400 Private Offer 1

National Fleet Purchase Program (FVX)2

Eligible Accessory Cash Allowance3, 4

In Potential Value

1 Private offer amount varies by model; up to $500 offer for retail delivery and up to $1,000 offer for fleet deliveries. Valid toward the purchase or lease of eligible new 2020, 2021 and 2022 model year vehicles. Customer must take delivery by 1/3/2022. Not compatible with some other offers. Not valid on prior purchases. Excludes all Cadillac vehicles; 2020 Buick Cascada, LaCrosse, Regal and Verano; Chevrolet Colorado 2SA, Sonic, Trax, Volt and GMC Canyon 2SA; 2020-2021 Encore 1SV; Chevrolet Blazer, Camaro, Corvette, Equinox 1SM, Malibu 1VL, Traverse 1L0; GMC Acadia 1SV and Terrain 2SA. Additional GM models may be excluded at GM’s sole discretion. See dealer for details. 2Offer available to qualified fleet customers through 1/3/2022. Not compatible with some other offers. Take delivery 1/3/2022. See dealer for details. 3To qualify, vehicle must be used in the day-to-day operations of your business and not solely for personal/ non-business-related transportation purposes. Must provide proof of business ownership. For complete program requirements, including information regarding offers, vehicles, equipment, options, warranties and ordering, consult your dealer or visit gmbusinesschoice.com. 4Eligible purchases must be equal to or greater than the amount of the cash allowance. Accessory Cash Allowance requires purchase of the eligible accessories from your dealer.

©2021 General Motors, LLC. All rights reserved. The marks appearing in this ad are the trademarks or service marks of GM, its subsidiaries, affiliates or licensors.

19 | FOUNDATIONS NEWSLTR

20 | JULY 2022

Weakening Builder Confidence Points to Economic Troubles Ahead

BY ROBERT DIETZ on JUNE 15, 2022 Rising inflation and higher mortgage rates are slowing traffic of prospective home buyers and putting a damper on builder sentiment. In a troubling sign for the housing market, builder confidence in the market for newly built single-family homes posted its sixth straight monthly decline in June, falling two points to 67, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This marks the lowest HMI reading since June 2020.

Six consecutive monthly declines for the HMI is a clear sign of a slowing housing market in a high inflation, slow growth economic environment. The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates.

months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI indices posted declines in June. The The housing market faces both demand-side and supply- component charting traffic of prospective buyers fell side challenges. Residential construction material costs five points to 48, marking the first time this gauge has fallen below the breakeven level of 50 since June 2020. are up 19% year-over-year with cost increases for a The HMI index gauging current sales conditions fell one variety of building inputs, except for lumber, which has experienced recent declines due to a housing slowdown. point to 77 and the gauge measuring sales expectations in the next six months fell two points to 61.

On the demand-side of the market, the increase for mortgage rates for the first half of 2022 has priced out Looking at the three-month moving averages for a significant number of prospective home buyers, as regional HMI scores, the Northeast fell one point to 71, reflected by the decline for the traffic measure of the the Midwest dropped six points to 56, the South fell two HMI. points to 78 and the West posted a nine-point decline to 74.

Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current singleThe HMI tables can be found at nahb.org/hmi. family home sales and sales expectations for the next six

21 | FOUNDATIONS NEWSLTR

FOUNDATIONS NEWSLETTER ADVERTISING Rochester Area Builders Newsletter is an unbeatable opportunity to advertise to members and individuals associated with RAB. It is a source of valuable association and industry information, and is published and emailed monthly. Foundations is sent to over 1600 connected industry professionals.

Ad sizes are listed under Display Ad Dimensions, and prices are located above.

Ads may be changed from month to month.

Our prices are for full color ads. We will gladly work with you to design your ad.

Please send digital files for all ad copy, logos, and artwork. We use PC format.

We accept Illustrator and Photoshop files.

Convert all fonts to outlines. We also accept the following high resolution file types: .tif, .eps and .pdf (with all graphics and fonts embedded). If you have any other formats please contact us.

RETURN TO: ROCHESTER AREA BUILDERS

Shelly Bahlmann Shelly@RochesterAreaBuilders.com 108 Elton Hills Ln NW Rochester, MN 55901 507-282-7698

Newsletter Advertising Rates

Per Issue

12 Issues

New Member 12 Issues

Full color 1/2 Horizontal

c $70.00

c $650.00

c $490.00

Full color Full Page

c $90.00

c $900.00

c $675.00

Full Color Full Page Press Release

c $25.00

Newsletter Display Ad Dimensions 1/2 Horizontal Full

8-1/2 x 5-1/2 8-1/2 x 11

Send artwork to Shelly@RochesterAreaBuilders.com by the 15th of the month to be included in the upcoming Foundation Newsletter.

An event to support construction educational opportunities.

28TH ANNUAL GOLF OUTING

Willow Creek Golf Course

AUGUST 12

1700 48th St SW Rochester, MN 55902

FRIDAY | 2022

11 am | REGISTRATION & LUNCH 12 pm | SHOTGUN START 5 pm | APPETIZERS, AWARDS, PRIZES Registration Includes

$125

Early registration received before July 22

$150

Final registration received between July 23 - August 5.

Click HERE for Registration & Sponsorships.

• 18 Holes of Golf • 1/2 Cart • Golfer Gift • Lunch & Appetizers

nawicsemn.org

For questions, contact: Jessi Hanson | 507-272-8232 | info@nawicsemn.org

@NAWICSEMN

23 | FOUNDATIONS NEWSLTR

24 | JULY 2022

ROCHESTER BUILDING PERMITS

NEW RESIDENTIAL Single Family Dwelling Townhome Dwelling

2022

VALUATION

2021

MAY 2022 2014 2015 2016 2017 2018 2019 2020 2021 2022

VALUATION

13

5,884,064

24

8,489,082

0

0

2

600,000

January

11

20

25

15

19

February

14

19

15

20

28

30

31

44

6

17

23

9

16

5

25

27

13

8

11

32

35

21

Two-Family Houses

2

290,000

0

0

March

Manufactured Home

0

0

0

0

April

25

22

33

45

40

23

19

19

28

May

35

19

56

43

28

27

19

26

13

113

110

160

167

128

88

100

111

82

June

47

51

41

52

38

31

21

30

July

38

29

44

45

36

26

26

25

August

60

33

47

30

31

24

17

24

September

23

27

52

35

39

12

30

20

October

35

49

25

36

29

27

28

16

November

26

23

12

41

21

47

23

19

December

27

42

37

33

25

34

21

8

369

369

418

429

347

289

266

253

Multi-Family Bldgs (Units)

9

1,422,000

127

14,800,000

TOTAL

EXISTING RESIDENTIAL Deck Addition

19

261,962

34

69,136

Room Addition

3

183,791

0

0

Porch Additions

2

53,000

4

69,000

Other Additions

2

8,100

3

23,100

Basement Finish

20

458,199

30

548,288

Alterations

53

1,208,898

51

649,826

Multi-Family Addition

1

6,500

0

0

Multi-Family Alterations

7

759,234

5

70,500

TOTAL

YEAR TO DATE STATISTICS

NEW COMMERCIAL

2022 NO.

BUILDING PERMITS ISSUED TO DATE

Assembly (Church)

0

0

0

0

Assembly (General)

0

0

0

0

Assembly (Restaurant/Bar)

0

0

0

0

Business

0

0

0

0

Education

0

0

1

23,476,142

Factory/Industrial

0

0

0

0

Institution

0

0

0

0

Mercantile

0

0

1

1,300,000

Miscellaneous

0

0

0

0

Electrical (Temp. Service)

Residential (Apartment)

0

0

0

0

Mechanical (HVAC)

Residential (Care/Assisted Living)

0

0

0

0

Mechanical (Gas Piping)

Residential (Care/Hotel/Motel)

0

0

0

0

Mechanical (Fireplace)

Storage (General)

0

0

0

0

Mechanical (Hydronic)

Storage (Parking Garage)

2

112,000

0

0

Plumbing

Storage (Warehouse)

0

0

0

0

Utility (General)

0

0

2

329,500

Utility (Private Garage)

0

0

1

75,000

799

273,455,745

910

207,212,927

72

29,960,858

101

34,680,569

Multi-Family Buildings Total Units: 276

4

33,175,115

1

14,800,000

TRADE PERMITS ISSUED TO DATE

3991

75,201,939

4324

52,736,631

Electrical

1549

34,912,223

1657

24,756,283

81

43,250

97

30,855

1036

15,593,917

1131

14,216,547

218

352,643

261

356,662

114

569,025

150

779,817

109

10,943,707

68

3,765,155

884

12,787,174

960

8,831,312

4790

348,657,684

5234

259,949,558

TOTAL PERMITS YTD

Information and downloads available at Rochester Building Safety Department’s website: Rochester Permits

Key metrics by report month and for year-to-date (YTD) starting from the first of the year.

Key Metrics

5,823,204

0

0

27

11,323,184

24

7,380,956

Structural Shell

0

0

0

0

Pending Sales

“White Box”

0

0

0

0

Closed Sales

Interior Demolition Only

0

0

0

0

Days on Market

Other Phased Permits

VALUATION

Single Family Dwelling

4

Alterations

2021 NO.

Activity Overview

EXISTING COMMERCIAL Addition

VALUATION

82

0

0

0

0

OTHER CONSTRUCTION

Historical Sparkbars

New Listings 5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

5-2019

5-2020

5-2021

5-2022

Median Sales Price

Avg. Sales Price

Pct. of Orig. Price Received

Business Signs

9

123,575

11

190,040

Advertising Signs

0

0

0

0

Affordability Index

Footings & Foundations

1

172,040

0

0

Homes for Sale

Demolition

0

0

0

0

Months Supply

5-2021

5-2022

Percent Change

YTD 2021 YTD 2022

545

616

+ 13.0%

2,440

2,525

+ 3.5%

554

526

- 5.1%

2,386

2,335

- 2.1%

525

519

- 1.1%

1,915

1,923

+ 0.4%

32

25

- 21.9%

43

37

- 14.0%

$250,000

$290,000

+ 16.0%

$232,900

$265,000

+ 13.8%

$295,899

$326,041

+ 10.2%

$267,582

$306,493

+ 14.5%

101.1%

101.5%

+ 0.4%

99.2%

99.8%

+ 0.6%

170

118

- 30.6%

183

129

- 29.5%

461

533

+ 15.6%

--

--

--

0.9

1.1

+ 22.2%

--

--

--

Percent Change

Current as of June 4, 2022. All data from Southeast Minnesota REALTORS® and NorthstarMLS®. Provided by the Minnesota Association of REALTORS®. Report © 2022 ShowingTime. | 2

25 | FOUNDATIONS NEWSLTR

OLMSTED COUNTY PERMITS YTD NEW RESIDENTIAL

2022

VALUATION

2021

VALUATION

Single Family-Detached

26

11,002,927

15

4,174,945

Single Family-Attached

0

0

4

513,188

10

857,721

7

315,694

22

137,444

8

43,470

Garage

RESIDENTIAL Deck Addition Alterations Garage Addition

5

272,029

5

362,019

101

1,953,464

34

416,531

0

0

2

36,426

May 2022

CD Report BUILDING DIVISION

Commercial building plans submitted

Residential building plans submitted

Commercial inspections completed

28

61

2022: 748 Average:914

NEW COMMERCIAL/INDUSTRIAL Recreational

0

0

0

0

Church/Religious

0

0

0

0

Industrial/Warehouse

0

0

0

0

Service/Repair Station

1

1,101,813

0

0

Store/Restaurant

1

78,552

0

0

Nonresidential Building

1

616,530

1

134,573

COMMERCIAL/INDUSTRIAL

2022

Addition

VALUATION

2021

VALUATION

0

0

1

121,056

Alterations

10

406,509

2

61,000

Re-roofing

3

286,563

0

0

Pool, Retaining Wall, etc.

7

264,020

8

136,528

Manufactured Homes

0

0

9

0

OTHER STRUCTURES

MISCELLANEOUS PERMITS Mechanical

74

353,395

71

547,900

Plumbing

33

91,578

42

397,850

TOTAL PERMITS

294

17,422,545

209

7,261,190

OLMSTED COUNTY PERMITS - MAY

YTD NEW Housing Units

Residential inspections completed

2022: 1,631 2022: 84 Average: 1,754 Average: 100

Residential plan review time

Commercial plan review time

4 Weeks

2.5 Weeks

YTD Residential permits issued

YTD Commercial permits issued

YTD Trade permits issued

2022: 526 Average: 531

2022: 173 Average: 153

2022: 3,991 Average: 3,966

YTD Residential valuations

2022

YTD Commercial valuations

2022

YTD Alterations valuations

2022

YTD Trade valuations

2022

$64,150,949

$99,358,319

$96,926,710

$75,201,939

$52,619,880

$59,535,053

$81,907,312

$59,033,651

Average

Average

Average

Average

TOWNSHIPS/CITY

2022

City of Byron

VALUATION

2021

VALUATION

30

1,882,813

1

121,056

1

27,840

2

61,000

Marion Township

23

598,948

0

0

Oronoco Township

6

979,519

City of Stewartville

19

224,763

2

999,404

Eyota Township

Quincy Township

PINE ISLAND BUILDING PERMITS MAY 2022 NEW RESIDENTIAL

NUMBER

VALUATION

Single Family Detached

43

1,169,231

Single Family Attached

0

0

Basement Finish

1

25,000

Deck Addition

1

10,000

Existing Residential

PLANNING DIVISION

YTD Building permit plans reviewed

YTD Zoning Certificates submitted

YTD Type I Applications submitted

2022: 2731 Average: 2167

2022: 40 Average: 45

2022: 18 Average: 29

YTD Type II Applications submitted

YTD Type III Applications submitted

2022: 2 Average: 2

2022: 33 Average: 30

26 | JULY 2022

What Do Home Buyers Buy after Moving

BY NATALIA SINIAVSKAIA on JUNE 13, 2022

N

AHB analysis of Consumer Expenditure Survey (CES) data from the Bureau of Labor Statistics shows that during the first year after closing on a home sale, home buyers tend to spend considerably more money on furnishings, appliances and remodeling compared to non-moving owners. Buyers of new homes spend most, spending four times as much as non-moving owners and twice as much as buyers of existing homes. This post reveals particular items that are most popular with home buyers and help explain changes in their spending behavior triggered by a house purchase.

It might come as a surprise but the biggest outlay in the budget of recent new home buyers is alterations and repairs. During the first year after closing,

new home buyers spend close to $12,000 on these projects, while buyers of existing homes average less than half of that amount ($5,760). Non-moving owners spend even less on property alterations and repairs – under $3,000 in a typical year. The puzzle is easily solved by going over the list of the specific types of remodeling projects that homeowners engage.

New home buyers spend over $4,000 on building outdoor patios, walks, fences, pools, driveways and additional $3,167 on landscaping. In comparison, existing home buyers spend $512 on outdoor features and $335 on landscaping. The corresponding average spending by non-moving owners are $250 and $192 per year. Average spending is estimated for all households in the group regardless whether

27 | FOUNDATIONS NEWSLTR

they purchased a certain item or not. Thus, higher averages may point to larger and/or more frequent spending by the group.

dryers, followed by refrigerators/home freezers, lawnmowers, televisions, and computer hardware/ systems.

New home buyers also significantly outspend existing home buyers and non-moving owners when it comes to finishing a basement, attic, enclosing a porch ($1,740 vs $275 and $69, respectively) or building an addition or a new structure, including a porch ($1,003 vs $253 and $283).

New and existing home buyers spend even more on furnishings than appliances. During the first year after moving, new home buyers spend $5,122 on furnishings. This is nearly twice as much as existing home buyers spend and 5.6 times higher, compared to non-moving owners’ spending on furnishings.

The differences are not only large but also most consistent when comparing expenditures on furnishings. Compared to existing home buyers, new home buyers spend more on every single item the CES counts as furnishings. Existing home buyers, in turn, outspend non-moving owners on all furnishings with the only exception of non-electric cookware, where their annual spending is similar.

At the same time, existing home buyers spend more than new home buyers on remodeling rooms, painting, wallpapering, plastering, flooring, roofing, insulation, siding, window panes, screens, storm doors, and HVAC work.

New home buyers also spend more on appliances – $4,254, compared with $2,500 for existing home buyers, and $1,442 for non-moving owners. On average, new home buyers tend to spend most on various types of television. Even though new television sets may not be the most expensive appliance new home buyers invest into, these are unlikely to be included in the price of the new home.

As a result, buying television sets for multiple rooms in the new house can add up to the high level of spending, reflecting the high frequency of these purchases by new home buyers rather than a particularly high cost of the item.

The next biggest outlays in the appliance budget of new home buyers are clothes washers/dryers, lawnmowers/other yard equipment, and new refrigerators or home freezers. Coincidentally, new home buyers outspend existing home buyers and non-moving owners on all these big-ticket items.

The high level of spending by new home buyers may seem surprising considering that many new homes come with installed appliances but suggests that these purchases are nevertheless more frequent among these households. The Builder Practices Survey conducted by Home Innovation Research Labs shows that two thirds of new single-family detached homes built in 2019 came with no clothes dryers. At the same time, virtually all new homes came with cooking stoves, ranges, or ovens. This explains why new home buyers have lower spending on cooking stoves, ranges and minimal spending on built-indishwashers and microwave ovens. Rather, new home buyers spent most on items that are less likely to be included in the price of new homes.

The appliances that consume the largest share of the budget of existing homeowners are clothes washers/

The two biggest ticket items for home buyers are sofas and bedroom furnishings, including mattresses and springs. On average, new home buyers spend close to $860 on sofas and $718 on bedroom furnishings. The corresponding spending by existing home buyers on these items average just over $610 during the first year after moving. This is considerably higher than non-moving owners typically spend on sofas ($148) and bedroom furnishings ($204) per year.

A home purchase, especially when it is a new home, has a particularly large effect on expenditures on window coverings (blinds, shades), as well as curtains and drapes. During the first year after moving, new home buyers spend $516 on window coverings outspending non-moving owners and existing home buyers 22 and 4 times, respectively.

The differences in spending patterns are similarly large when comparing spending on dining room and kitchen furniture. New homebuyers outspend nonmoving owners 11 times over ($460 compared to $40), while existing home buyers (with an average annual spending on dining room and kitchen furniture of $207) outspend non-moving owners 5 times.

Even though during the first year after closing on the house, home buyers tend to spend on furnishings, appliances, and property alterations considerably more compared to non-moving owners, most of the demand for appliances, furnishings, and remodeling projects in a given year is generated by non-moving homeowners, because they outnumber home buyers by such a wide margin.

28 | JULY 2022

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Advertise on the RAB Website!

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Higher tiers come with priority placement in directory search results too. Contact us today to learn how you can start advertising, starting at $299.

Contact Elizabeth Elizabeth@RochesterAreaBuilders.com or 507-282-7698

29 | FOUNDATIONS NEWSLTR

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Contact Elizabeth for more information

30 | JULY 2022

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