Builders Outlook
www.elpasobuilders.com
Markets in 146 of the approximately 340 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the second quarter of 2016, according to the NAHB/First American Leading Markets Index (LMI) released today. This represents a year-over-year net gain of 66 markets. The index’s nationwide score ticked up to .97, meaning that based on current permit, price and employment data, the nationwide average is running at 97% of normal economic and housing activity. Meanwhile, 91% of markets have shown an improvement year over year. “This gradual uptick is in line with NAHB’s forecast for a slow but steady recovery of the housing market,” said NAHB Chairman Ed Brady. “With a strengthening economy, solid job growth and low mortgage interest rates, the market should continue on an upward trajectory throughout the rest of the year.” “Among the LMI components, house prices are making the most far-reaching progress, with almost 97% of markets having returned to or exceeded their last normal levels. Meanwhile, 78 metros have reached or exceeded normal employment activity,” said NAHB Chief Economist Robert Dietz. “Single-family permits have edged up to 50% of normal activity, but remain the sluggish element of the index.” “More than 85 percent of all metros saw their Leading Markets Index rise over the quarter, a signal that the overall housing market continues to move
New Home Sales Climb to Highest Level Since October 2007
National, State & Local Building Industry News 2016: Issue 8
Housing Markets Continue Gradual Climb
“More than 85 percent of all metros saw their Leading Markets Index rise over the quarter, a signal that the overall housing market continues to move forward,”
forward,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report. Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.61 – or 61% better than its last normal market level. Other major metros leading the list include Austin, Texas; Honolulu; and San Jose, Calif. Rounding out the top 10 are Houston; Provo, Utah; Spokane, Wash.; Nashville, Tenn.; Los Angeles; and Oklahoma City. Among smaller metros, both Odessa and Midland, Texas, have
LMI scores of 2.0 or better, meaning that their markets are now at double their strength prior to the recession. Also at the top of that group are Manhattan, Kansas; Walla Walla, Wash.; and Grand Forks, N.D.; respectively. The LMI examines metro areas to identify those that are now approaching and exceeding their previous normal levels of economic and housing activity. Approximately 340 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual
average over the last period of normal growth. For single-family permits and home prices, 20002003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.
Sales of newly built, single-family homes rose 12.4 percent in July from a downwardly revised June reading to a seasonally adjusted annual rate of 654,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the highest reading in almost nine years. “This rise in new home sales is consistent with our builders’ reports that market conditions have been
improving,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “As existing home inventory remains flat, we should see more consumers turning to new construction.” “July’s positive report shows there is a need for new single-family homes, buoyed by increased household formation, job gains and attractive mortgage rates,” said NAHB Chief Economist Robert Dietz. “This uptick in demand should translate into
increased housing production throughout 2016 and into next year.” The inventory of new homes for sale was 233,000 in July, which is a 4.3-month supply at the current sales pace. The median sales price of new houses sold was $294,600. Regionally, new home sales rose by 40 percent in the Northeast, 18.1 percent in the South, and 1.2 percent in the Midwest. Sales remained unchanged in the West.
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Builders Outlook
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2016 issue 8
2016 issue 8
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Builders Outlook
President’s Message Carlos Villalobos
President, El Paso Association of Builders
Energy Code implementation begins Big news in the builder world is the implementation of the 2015 Energy Code for housing permits submitted on or after September 1st 2016. We had been running on 2009 Energy Code Standards for a while since we altogether skipped the 2012 Energy Code Implementation, so now we need to pole vault our way to the 2015. There are many ways to achieve the new required standard, and it will be up to each of us to come up with ways to comply. The sky is the limit as there are so many combinations of products and construction methods out there can be used to improve a home’s performance, the scary thing is, however, that the time for test runs is over and a home will not be eligible for a Certificate of Occupancy if it does not meet the new Energy Code Standards. The fact that our median home price in El Paso hovers around $153,900 (according to Zillow) makes it especially challenging for us given that most of the required
changes are pretty costly. Builders that were building their houses at the 2009 standard might see a price increase of at least $3,000 per home, maybe even more. In a 30 year amortization at 4.5%, this roughly translates to a $15 increase in the monthly payment of a home. Fortunately, the energy savings should more than offset this, the problem, especially for us in El Paso, will be getting people to qualify and appraisers to understand the new normal. But there is no way around it, it is real and it is here. Another challenge that we’ll be facing is the lack of energy rating companies, since all houses will now require duct leakage and blower door tests, we can only hope that our current raters will be able to absorb the workload. All in all the new code aims at making houses at least 35% more energy efficient than the previous code. So one must look at the bright side and figure it is good for consumers, it will reduce energy consumption (and thus energy
dependence) and it is also great for the environment, so we might as well embrace it because we have no other choice. Last but not least, one has to conclude that even though it will increase new home prices, it will definitely make them more competitive against resales, which quite frankly have been kicking our butts in the last couple of years, almost at a 2 to 1 ratio. As we move into this new era, it will be equally important to educate our sales teams as well as our customers about the energy saving benefits they will see reflected in their monthly electricity and gas bills if they buy new. So it is up to us to raise awareness in our community on this very important issue. Let’s keep building El Paso.
Local student wins national poster contest scholarship “What does home building mean to you? If you are a kid, NAHB wants to know.” So that’s how it started for Cesar A. Cervantes, the son of El Paso Association of Builders member Antonio Cervantes of BIC Homes. Cesar wanted to enter the contest and thought he could showcase exactly what it meant to him. The rules were laid out by the National Association of Builders (NAHB). The contest was asking the children and grandchildren of home builders, remodelers, developers, trade partners and anyone else involved in this great industry to design a poster that shows what Mom or Dad’s job means to them. We know you’re making an impact in your communities through the great work you do in housing, and we’re sure your kids know that too. Whether they are part of our business or just in our hearts, home
building is about family. Let’s capture the great work our craftsmen and innovators do through the eyes of our children (12 or younger) to design a poster with the words “We Are NAHB. Welcome Home”. Judges voted on the submissions, and out of the submissions Cesar won the grand prize of a $1000 scholarship. In addition the EPAB was awarded $1000. NAHB will share this winning poster with other Home Builders Associations across the country to use in their recruitment efforts. In commenting about his son’s winning entry Antonio beamed like the proud father he is. “I’m very happy that Cesar won and so glad to have his poster be used around the country to help the NAHB and local associations recruit new members. After all we are really an important part of the American Dream,” Cervantes said.
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Builders Outlook 2016
Executive’s Message
Issue 8
Vietnam Vets honored
Ray Adauto, Executive Vice President EPAB At last, a fitting welcome HOME I wish this column didn’t need to be written but it does. The pain that has been felt by my generation has just been rekindled but with a different flame. I’m talking about the long overdue welcome home to our Vietnam Vets, a reality check for the decades of feelings kept inside so many for way too long. For those of you too young to remember Vietnam I’m here as a witness of what the USA was going through and the demands put on the youth of that time whether you were for the war or against it. The politics of the time brought with its ugliness a war that frankly cost too much, way too much in suffering and death on all sides. It made heroes out of the ordinary men and women, while making money for the war machine. It caused mothers to bury their sons and daughters, and for families to cope with what we now call PTSD. It caused the premature death of many especially those who came in contact with Agent Orange or an enemy or friendly bullet. It caused death on America’s campuses, and imprisonment for dissenters. It gave
power to others and it caused power to be taken away. It murdered a President and then his brother, shut down the mouth of a preacher who more than anything wanted a peaceful end to the war and racism. It brought with it a movement I saw firsthand while visiting San Francisco during my high school years. It polarized positions on all sides. The mighty fell as politician after politician came tumbling off the highest seats in the country. It affected music, movies, television and newsprint. It was the first war to come directly into the living rooms of the average Joe. The sights and smells must have been terrible while there, but no one knew for sure if they would be coming home whole, or at all. It also
gave rise to an ugliness against those who served, leaving scares deep into their soul and into the soul of the country. It made heroes out of ordinary men, like two of them I consider true American heroes, both of them friends. One hung out a Huey until it was shot down. It earned him medals and accolades much to his surprise. After all how could a kid from Canutillo be a hero? So too a friend who because of his small body frame became a “tunnel rat”, a soldier who was told to crawl belly first into holes the company would find in that dark and damp jungle underground. He carried his knife, a .45 and guts. He lives quietly now right here in El Paso, but I think he would be the first to say he wasn’t a hero,
just did his job. I beg to differ. And so we tried to say thank you in the only way we know. We held a parade and asked the survivors and their families to march in in, ride in it, or stand on the sidewalks to wave. It’s a long time a coming, and yet I’m glad it did. To our members and their families who served either in the war zone or at home during Viet Nam, God Bless you. Thank you. From a civilian who feels guilt for not being allowed to participate the emotions of that time are also hidden deep inside. At least now I can have a little less guilt knowing that you have been officially welcomed home. Above Photos by Kelly Sorenson, more can be found on page 9.
2016 issue 8
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Builders Outlook
National Builder News Multifamily Uptick Pushes Overall Housing Starts Up
n Nationwide housing starts rose 2.1 percent in July to a seasonally adjusted annual rate of 1.21 million units, according to newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department. This is the highest reading since February. Multifamily housing was up 5 percent to a seasonally adjusted annual rate of 441,000 units in July while singlefamily production edged up 0.5 percent to 770,000 units. “New household formations are upping the demand for rental housing, which in turn is spurring the growth of multifamily production,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “Meanwhile, single-family housing continues to hold firm.” “Single-family starts, on a year-todate basis, are up 10.6 percent and builders are cautiously optimistic about market conditions,” said NAHB Chief Economist Robert Dietz. “However, the permit trends indicate that supply-side
headwinds, such as shortages of lots and labor, continue to affect the housing sector.” Regionally in July, combined singleand multifamily starts increased in the Northeast, Midwest and South, with respective gains of 15.5 percent, 2.3 percent and 3.5 percent. The West registered a 5.9 percent loss. Overall permit issuance inched down 0.1 percent to a seasonally adjusted annual rate of 1.15 million. Multifamily permits increased 6.3 percent to a rate of 441,000, while single-family permits fell 3.7 percent to 711,000. Permit issuance increased 10.5 percent in the Midwest and 2.6 percent in the South. Meanwhile, the West and Northeast posted respective losses of 8 percent and 10.2 percent.
Results Show 55+ Housing Market Remains Positive
n Builder confidence in the singlefamily 55+ housing market remains in positive territory in the second quarter with a reading of 57, up one point from the previous quarter, according to the
BUILDING
National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today. This is the ninth consecutive quarter with a reading above 50. “Builders and developers for the 55+ housing sector continue to report steady demand,” said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council and president of Jim Chapman Homes LLC in Atlanta. “However, there are many places around the country facing labor and lot shortages, which are hindering production.” There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic). An index number above 50 indicates that more builders view conditions as good than poor. One of the three index components of the 55+ single-family HMI posted an increase from the previous quarter: traffic of prospective buyers increased
El Pa aso
four points to 42. Present sales held steady at 61 while expected sales for the next six months dropped two points to 69. The 55+ multifamily condo HMI dipped one point to 47. The index component for expected sales for the next six months rose three points to 54, while present sales remained even at 49 and traffic of prospective buyers fell seven points to 38. Three of the four indices tracking production and demand of 55+ multifamily rentals decreased in the fourth quarter. Present production fell nine points to 51—from a record-high reading in the previous quarter—while current and future demand for existing units both dipped one point to 68 and 67, respectively, and expected future production rose three points to 56. “Much like the overall housing market, this quarter’s 55+ HMI results show that this segment continues its gradual, steady recovery,” said NAHB Chief Economist Robert Dietz. “A solid labor market, combined with historically low mortgage rates, are enabling 55+ consumers to be able to sell their homes at a favorable price and buy or rent a home in a 55+ community.”
SINCE 1950
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Builders Outlook
The Future of Housing Home Building
BY ROBERT DIETZ
After increasing and leveling off in recent years, new single-family home size declined during the second quarter of 2016. This change marks a reversal of the trend that had been in place as builders focused on the higher end of the market during the recovery. As the entry-level market expands, including growth for townhouses, typical new home size is expected to trend lower. According to second quarter 2016 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area declined from 2,465 in the first quarter to 2,392 square feet for the second. Average (mean) square footage for new single-family homes fell from 2,658 to 2,616 square feet for the second quarter. On a less volatile one-year moving average, the recent trend of declines in new home size can be see on the graph above, although current readings remain elevated. Since cycle lows (and on a one-year moving average basis), the average size of new single-family homes has
2016 Issue 8
New Single-Family Home Size Declining
increased more than 11% to 2,649 square feet, while the median size has increased 16% to 2,435 square feet. The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as some home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions. This pattern was exacerbated during the current business cycle due to market weakness among first-time homebuyers. But the recent small declines in size indicate that this part of the cycle has ended and size should trend lower as builders add more entry-level homes into inventory. In contrast to single-family patterns, new multifamily apartment size is down compared to the prerecession period. This is due to the weak for-sale multifamily market and strength for rental demand.
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2016 ISSUE 8
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Builders Outlook
Bowling named president of Texas Affiliation of Affordable Housing Providers The Texas Affiliation of Affordable Housing Providers (TAAHP) has elected Bobby Bowling president of the organization’s board of directors. Bowling is a third generation homebuilder in El Paso and one of the city’s top developers of affordable housing. He has long been an advocate of ensuring adequate access
to quality affordable housing for Texans. TAAHP is a recognized and respected voice for affordable housing providers at the state Capitol. The nonprofit affiliation of developers and other affordable housing providers works to increase the supply and quality of affordable housing for those with limited income and special needs. “I am honored to be serving as the president of TAAHP and to help guide the organization’s efforts as we respond to the challenges of providing affordable housing opportunities.” Bowling said. “It is our goal to educate state leaders and the public on the
importance of affordable housing to our communities and our society.” “Expanding quality affordable housing opportunities increases financial stability and economic mobility among individuals and families. It improves children’s school performance and has been shown to enhance the health of a population,” added Bowling. Bowling is president of Tropicana Building Corporation, one of El Paso’s oldest and largest home builders. The company also manages about 3,000 affordable housing units and invests in its communities by providing residents with free GED and ESL classes.
Bowling graduated from the University of Texas at Austin in 1992 with a BBA in Real Estate and Urban Land Development. He is currently chairman of the El Paso Civil Service Commission and past president of the Texas Association of Builders. TAAHP was founded in 1997 and represents housing industry professionals involved in the financing, design, development and management of affordable housing communities in Texas through public/private partnerships.
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Builders Outlook Issue 8 On the Scene
Parade ‘Wrap Up’ Lunch
An official wrap up meeting for the 2016 Parade of Homes was recently held at Famous Dave’s for the builders and partners of the Parade. The group was told of how the Parade worked for them and revealed that the success of the Parade was felt beyond the site, Enchanted Hills. “ It seems that all of us have had customers and contracts for presales in our other subdivisions from visitors to the Parade,” said Antonio Cervantes, President of BIC Homes. As the builders sat down they recounted tales of the days building the Parade home, the struggles and some of the rewards. All in all the Parade was deemed a financial success for both the builders, the partners and the association. Plans for the 2017 Parade of Homes are ongoing. “We hope to build on the success of this Parade and move to a larger one in the coming year, most probably on the eastside,” said Ray Adauto. Builders interested in the 2017 Parade should contact Ray to be placed on the list.
August General meeting
The August general membership meeting was held at the Marriott Hotel and featured a presentation by Sam Trimble of Lone Star Title. His talk wasn’t on the virtues of title insurance or the need for due diligence. Instead Trimble offered a quick class on how a business could use video to enhance or upgrade their messages to clients, or in our case, to members. Sam started by saying that he wasn’t an expert in video messaging but as his talk went on this was clearly not the case. “One of the very best ways to get someone to pay attention to you is to be different, in a good way,” Trimble told the group. He went on to share ideas with a variety of applications and programs that are simple to use and effective. “I want people to try it because you’ll find out several things: first that people will actually open up your emails; secondly that you can get your message done in a minute, minute and a half tops; and finally people can be made to feel special because you can direct that message directly to them,” Trimble told us. The El Paso Association of Builders has taken that challenge and sending out video messages and getting confirmation that they’re being seen. “I want to say thanks on behalf of the membership and the association to Sam for his timely and important message to us,” said President Carlos Villalobos.
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Lending How Private Mortgage Insurance Cuts Real Estate Costs
The private mortgage insurance industry is doing well these days and that's good news for borrowers. The major private mortgage insurance companies all reported solid second-quarter profits and that's a result borrowers should celebrate. By Peter G. Miller
Builders Outlook
ou might be wondering, why should mortgage borrowers care about insurance companies? The answer has a lot to do with your ability to borrow cheaply. When lenders originate mortgages, they will readily finance borrowers with 20 percent down. The obvious problem is that not every borrower has such cash. In June, for example, the typical existing home sold for $247,700 while the median price for a new house was $306,700. Twenty percent of these prices ranges from $49,540 to $61,340. And – don't forget – closing costs are extra.
If people really had to pay 20 percent up front with each and every home purchase, the real estate market would have no hope of either solid sales or rising prices. Fortunately, there is a way around the 20 percent barrier, the use of FHA, VA and private mortgage insurance, what's commonly called PMI. By using a second-party insurance program, lenders have less risk – and when lenders have less risk, financing is available with less down and at a lower cost. As an example, following the 2007 financial meltdown, private mortgage insurance companies paid out $50 billion to lenders. PMI companies can do this because they are regulated at the state level and no state wants unpaid mortgages, something which would reduce the availability of real estate financing. Also, mortgage insurance companies are "monoline" insurance firms. That means they are only allowed to sell one form of coverage; there are no surprise policies waiting to gobble reserves if they fail.
Private Mortgage Insurance vs the FHA Most borrowers know about the FHA and VA programs, but PMI is something of a mystery. The difference between FHA and PMI – the two most direct competitors – generally breaks down in several ways: First, the minimum FHA down payment requirement is 3.5 percent. PMI has traditionally required 5 percent down, but financing with 3 percent down – a 97percent loan-to-value mortgage – is increasingly available. Second, FHA financing now requires a 1.75 percent up-front mortgage insurance premium. This sum is typically added to the mortgage amount, meaning the borrower does not have to bring extra cash to closing. However, a larger loan means a bigger monthly payment and more to payoff when the house is sold or the loan is refinanced. Many PMI options do not require an up-front fee. Third, depending on your credit score,
2016 issue 8
the monthly insurance fee for PMI can be lower than with the FHA program. Fourth, new FHA rules keep monthly insurance payments in place for the life of the loan for most borrowers. With private MI, it's possible to cancel in as little as two years, and sometimes even less. To cancel early you need to pay down the loan, an investment to consider given the minimal returns available today with CDs and savings accounts. Lenders can tell you more about FHA and alternative programs backed by PMI. As you consider your options, ask these questions: • How much will it cost to settle with each program? • What is the up-front cost of each option? • What is the monthly payment for each program? • At what point can you can cancel insurance coverage given your down payment?
2016 issue 8
Builders Outlook
El Paso Development News
11 Builders Outlook 2016 Issue 8 www.elpasodevnews.com
32-Acre Mixed Use Center Planned for West El Paso By Armando Landin A new 32-acre shopping center is planned for Northwest El Paso and could be the first along the Transmountain corridor west of the Franklin Mountains. The Legacy at Cimarron is billing itself as a mixed-use community that will offer space for retail shops, restaurants, and office uses. It also includes two hotels, with a total of 228 rooms. The center will be located along the southern side of Loop 375, along Transmountain Road between Resler Drive and Northwestern Drive. In all, the Legacy at Cimarron will have 380,000 square feet of space for retail, medical, and office uses. Restaurant, retail, fitness, and entertainment space makes up 180,000 square feet, with the remaining 200,000 square feet dedicated to medical and "wellness focused services," according to a property brochure from RJL Real Estate Consultants. The site plan for the property shows several uses spread throughout, with the majority of retail and restaurants concentrated towards the center. This area will have four restaurants surrounding a fountain and plaza area, oriented toward San Felipe Drive, the street that travels along the southern boundary of the center. A market, entertainment space, and
fitness center make up the rest of this area. The "entertainment" area on the site plan states it will have 980 seats, an indicator that it may include a movie theater.The western end includes two hotel buildings situated closer to Transmountain Road, with two nearby larger restaurant spaces. A group of medical office buildings will sit on the other side of the main retail area. The current site plan shows two-level structures, with parking located on the first floor in two of the buildings. And the eastern end of the center includes two restaurants, a small retail building, and a pharmacy. This section is located nearest to Resler Drive. The property brochure for the project highlights the Legacy at Cimarron's proximity to Loop 375 and Interstate 10, as well as nearby "large scale" employers such as ADP, Hewlett Packard, and Helen of Troy. Also nearby are multiple burgeoning residential developments to the north. These include Enchanted Hills, with a planned 2,500 to 3,000 single family and multifamily units, and Desert Springs with 526 homes and 160 apartment units. The Cimarron master planned community is also nearby, to the south, which will have 2,200 homes and 500 apartment units when built out. Across Resler Drive from the Legacy is the new Hospitals of Providence
Downtown Arena Aims for 2020 Opening
By Armando Landin
Transmountain Campus, a 140 bed teaching hospital that will operate in conjunction with the Texas Tech University Health Sciences Center. It is scheduled to open in early 2017. Interestingly, a senior living facility with the same name is under construction at the corner of Paseo del Norte and Northern Pass Drive. It's unclear if these projects are related or if either will undergo a name change to avoid confusion. This is the latest in a string of retail projects that have come to light that are planned for the Northwest area of El Paso. Two major nearby projects The El Paso City Council is set to consider approving a "Owner’s Representative Services" contract for the $180 million Downtown Arena that would essentially assign a management company to the project. This contract includes managing the Arena project through all of its phases, officially known as the MultiPurpose Cultural and Performing Arts Center. This includes site selection, choosing the design team, and overseeing construction. International Facilities Group (IFG) of Chicago submitted the favored bid, a contract worth $4.76 million. IFG served in the same role for development and construction of Southwest University Park in El Paso, home of the Triple-A Chihuahuas baseball team. ECM, LLC, of El Paso is listed as subconsultant on the contract. According to the tentative contract, the entire project should take 39 months, or just over three years to complete. This would now put the opening date in late 2019 or early 2020. This timeline is preliminary and could be extended due to land acquisition delays. Voters approved the Arena project as part of the Quality of Life election in 2012, the largest single project on the ballot.
include the 500,00 square foot West Towne Marketplace and 92,000 square foot Canyons at Cimarron. There is no timeline for construction of the Legacy at Cimarron mixed-use center, and, as always, its site plan is subject to change. ESmith Legacy of Dallas is listed as the developer on the site plan with O'Brien Architects in charge of design.
In January 2015, HKS, Inc. of Dallas presented its findings regarding a study commissioned by the City to determine possible sites for the Arena and the most feasible size. The firm did not present specific sites but did highlight the large amount of surface parking lots spread throughout Downtown. HKS did recommended a seating capacity of 13,250 for basketball games and 14,500 for "center-stage" events for the Arena. In comparison, the Don Haskins Center at the University of Texas at El Paso seats 12,000 for basketball games and 12,567 for "center-stage" events.\ Then in September 2015, the City selected two law firms with expertise in arena projects to assist in acquiring land for the Arena project. No possible sites have been announced by the City nor a concrete timeline. "Because of the complexity and uniqueness of this project, it is premature to commit to an exact date for a groundbreaking or ribbon cutting for the facility," the City's website states.
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Builders Outlook
Expert Advice
Driverless Cars
Elliot Eisenberg Economic & Policy Blog
At present there are 240 million cars and light trucks in the USA, most of which are parked 23 hours a day or more. This idleness makes owning and driving a car expensive. If cars could just be used more, automobile transportation costs would fall. That is the promise of Uber, Lyft and all the other assorted ride hailing services. But, what about the next step, driverless cars? With no driver to pay,
2016 issue 8
travel becomes even cheaper. What does the promise of cheaper transportation mean for cities, commutes, sprawl, and more generally how we live? I suggest it will encourage sprawl by increasing the distance of our commutes. Here’s why: As goods and services get cheaper we generally consume more of them. For example, long distance phone
calls were once prohibitively expensive and we made them rarely. Today, they are free and we make lots of them. Televisions used to be very costly; a house had just one. Now, every room has a TV. Several years ago, gasoline was $4/gallon and owning a Prius was a status symbol. Now, with gasoline at $2.25/gallon, we are buying gas guzzlers by the gross and driving more too. In short, as something gets cheaper, we generally consume more of it. Returning our attention back to driverless cars, as new technologies and roads are built to specifically accommodate these vehicles, their transformative potential will become apparent. They will not only be safer than existing cars, but will travel faster and get much better gas mileage. And, shared self-driving cars are expected to easily take 50% of existing cars off the road. Suddenly the cost of conveying a passenger is likely to be not much more than double or triple the cost of public transit. Better yet, hailing such a vehicle from the permanent circulating fleet will take little time and no more than a swipe or two on your smart phone. As a bonus, on-street parking and most off-street parking would completely disappear. In short, we are on the verge of faster, safer, and cheaper travel. Add to this the twin observations that
people generally are willing to commute about 30 minutes to get to work, and that (possibly as a result), urban population densities have generally been declining by about 1%/year since about 1890, and you have a strong likelihood that the cost and time savings these new modes of travel promise will result in longer distance commutes, and thus continued sprawl. In short, the easier it is to get from “Here” to “There”, the farther away from “There” people are apt to live. Moreover, this outcome is highly likely no matter how things turn out. If we enthusiastically embrace ridesharing technology, something Americans have never done, we will all be whisked speedily to our now everdistant places of work and sprawl continues. By contrast, if few of us ride-share and we instead use our own self-driving cars, which is probably more likely, it would mean more cars on the road and thus slightly slower speeds than what could be achieved via mass ride-sharing and thus longer commutes. But we would all be watching TV or reading so who cares!\ Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70 word economics and policy blog can be seen at www.econ70.com.
2016 Issue 8
Association News & Events
13
Builders Outlook
If you have an event or meeting that you would like to share with EPAB members, please submit your information to: margaret1@elpasobuilders.com Condolences to Scott Norman, TAB Executive Officer on death of his father Michael S. Norman
UPCOMING EVENTS SEPTEMBER 14 BOARD MEETING 12 NOON EPAB OFFICE OCTOBER 7-9 FALL HOME & GARDEN SHOW EL PASO CONVENTION CENTER
SODA SPONSOR
CONGRATS
LONE STAR TITLE
LESLIE D. AND MATTHEW HOARD ON THE BIRTH OF THEIR SON JOSEPH ALOYSIUS
Michael S. Norman 1944-2016 Mike, born in Houston on November 18, 1944, passed away August 23, 2016, in Austin, TX surrounded by his loving family, after a courageous battle with cancer. A proud fifth generation Texan whose ancestors date to the days of the Republic, Mike was the second child of Mabel Douglass and Finley Norman after his late brother Douglass F. Norman. Those that knew him will undoubtedly remember his warmth and generous heart. Mike graduated from St. Thomas High School in 1962, and attended the University of Houston. He was proud to serve his country as a medic in the U.S. Army Reserves, and thereafter enjoyed a successful career in industrial chemical sales. Mike and the love of his life, Elizabeth Donoho, recently celebrated their 41st wedding anniversary. "Pops" is survived by sons M. Scott Norman, Jr., wife Monique and their sons Jack and Ben; Shane Norman, wife Sasha and their son Sebastian; and Dax Norman, wife Karen, their daughter Eppe and son Bo. Services will be held at 2:00 p.m. on Saturday, September 3, 2016, at Forest Park Lawndale Cemetery, The Chapel of Angels in Houston (6900 Lawndale St.). In lieu of flowers, donations may be made to The Seton Fund, Hospice Austin or Texas Builders Foundation.
14
Builders Outlook
Expert Advice
Joe Bernal
Employer Benefits of El Paso Republican presidential candidate Donald Trump has vowed to repeal the Affordable Care Act if elected. Democratic candidate Hillary Clinton would only make slight changes. As the presidential elections get closer, how could these scenarios play out?
What Repeal Would Mean
In January, Congress passed a bill for the first time that would repeal the Patient Protection and Affordable Care Act (the ACA or “Obamacare”) without a replacement. President Obama vetoed the bill. Although the ACA has many faults, repealing it would have consequences. A new report by the Washington-based Urban Institute found the number of uninsured people would rise by 24 million by 2021, an increase of 81 percent. Overall, 53 million Americans would be uninsured, compared to 30 million if the law was left intact. The Committee for a Responsible Federal Budget found Trump’s plan to repeal Obamacare
What’s New Demetrio Jimenez has been named the President of the El Apartment Paso Association (EPAA). two-year The was appointment announced earlier in is and August through effective 2018. EPAA is a trade regional organization whose mission is to promote, employ and maintain a high standard of integrity in the performance of all rental obligations and services in the operation of the area apartment communities. The Association represents over 45,000 rental units within El
Associates Council
John Dorney
\
Associates Council Chair
I am proud to be an El Pasoan and a member of the Builder Association. This past month I participated in an association sponsored Energy Code training from the Texas Association of Builders. They covered paths to the 2015 energy code compliance, which goes into full enforcement starting 1
2016 issue 8
How Elections Could Affect Employer Health Plans would cost nearly $550 billion over the next decade and would nearly double the number of uninsured, causing nearly 21 million people to lose health insurance coverage. The Urban Institute found repeal of the ACA would reduce federal government spending on healthcare for the nonelderly by $927 billion between 2017 and 2026. However, those savings would come at a steep cost. The authors found 81 percent of those losing coverage would be working families. About 66 percent would have a high school education or less and 40 percent would be young adults. By 2021, there would be 15 million fewer people with Medicaid coverage. About 9 million people who would have received tax credits for private health coverage would no longer receive assistance.
What No Repeal Means
Critics of Obamacare say the ACA has caused health insurance premiums to skyrocket and resulted in millions of Americans losing their health plans. “In short, Obamacare is wrecking the private health insurance market,” wrote Jeffrey H. Anderson, a senior fellow at the Hudson Institute, in The Weekly Standard. “…. Obamacare’s proponents say the overhaul has greatly increased the number of people with health insurance coverage…. What they tend to omit is the fact that most of the ‘newly insured’—about 60 percent—have merely been dumped into Medicaid. According to the Congressional Budget Office, Obamacare has added only 8 million people—just 2.5 percent of the U.S. population— to the private insurance rolls.” The U.S. Chamber of Commerce weighed in last year in an article titled, “How Obamacare Will
Deliver Another Blow to Small Businesses in 2016,” arguing thousands of small businesses face higher premiums and fewer choices under the ACA and will be “hit hard unless federal agencies or Congress step into the ring.”
Republicans’ Alternative
Republicans in the House of Representatives have formed a task force to do just that. In June, the House Republican Task Force on Health Care Reform released a 37-page proposal. This template for a future law will give consumers more choices at lower costs, pave the way for more cutting-edge cures and treatments, and strengthen Medicare, according to proponents. It retains some of the most popular features of Obamacare, but eliminates others: Same • Allows children to stay on their parents’ coverage until age 26. • Prohibits insurers from denying coverage to people with pre-existing conditions. Different • Expands consumers’ ability to contribute to and use Health Savings Accounts (HSA). • Limits premiums for older individuals to no more than five times those of a younger person. The ACA mandates a three-to-one ratio (older adults charged only three times more than younger adults). Republicans believe this drives away younger Americans, since it makes their premiums proportionately higher as compared to their claim costs. • Allows consumers to buy health insurance across state lines. • Allows employers to offer wellness programs tied to a financial reward or surcharge. • Creates universal access programs funded by
innovation grants to give financial support for those who cannot afford coverage. • Gives states block grants to run Medicaid programs. • Gradually increases the Medicare eligibility age from 65 to 67. • Ensures taxpayer dollars are not used to for abortion services. Similar • Establishes a refundable tax credit for people who lack job-based coverage. Obamacare provides subsidies for people who do not qualify for Medicaid to buy insurance. • Eliminates the “Cadillac Tax” but caps the tax deductibility of employer-based plans based on the value of the benefits. The Cadillac Tax is an excise tax designed to reduce excessive healthcare spending by discouraging employers from offering overly rich health plans. Beginning in 2018, plans that cost more than $10,200 for an individual or $27,500 for a family plan will be subject to the tax, which is 40 percent of the amount that exceeds those thresholds. • Allows states that have already expanded Medicaid eligibility under the law to maintain the additional coverage, although it would prevent other from doing so. • Protects employers’ rights to self-funding their health coverage – a right they have now, although there has been some movement by the administration to impose more federal regulation. We will keep you informed of political and legal developments that affect your employee health coverage. To discuss your organization’s coverage needs or concerns, please contact us. Employer Benefits of El Paso 7501 Lockheed Dr., Suite B, El Paso, TX 79925 joe@employerbenefitsep.com www.joebernalinsurance.com
Jimenez Named President Apartment Association
Paso County and surrounding areas, including Culberson, Hudspeth, Jeff Davis and Presidio Counties. Demetrio Jimenez, a member of the EPAA Board of Directors since 2006, also served as Chairman of the EPAA Affordable Housing Committee. Demetrio was appointed to the Texas Apartment Association’s (TAA) Board of Directors and has also been named the TAA Chairman of the Affordable Housing Committee. “I am excited for the opportunity to serve and represent this outstanding organization” said Demetrio Jimenez of the appointment, “I look forward to work alongside EPAA’s members and partners to ensure continued growth and awareness of our association.” Demetrio has a degree in Architecture with an emphasis on Housing from the University
of Texas at Austin. He has worked for the Texas Historical Commission as a building consultant in both the Mainstreet Department and the Department of Architecture. These programs focused on the rehabilitation of historic structures for affordable housing, multi-family programs, and single family residences as the new construction affected a historic neighborhood. Demetrio also managed the El Paso Office of Colonia Initiatives with the Texas Department of Housing and Community Affairs. He provided technical assistance to units of local government, and non-profit organizations in over 30 Texas counties located within 150 miles of the US-Mexican border. He designed and built a community center in Sparks and also designed an affordable housing model for use in
September this year. The city of El Paso participated by taking questions and suggestion to consider improvement to code enforcement which should benefit the community as a whole. I want to thank the Associates who attended and help voice our concerns to the city. It's only through our involvement that we can achieve great things for El Paso. One thing that struck me is that there are still significant numbers of builders that aren’t in the EPAB, and that is really a shame for a number of reasons. At the training Ray Adauto asked for a show of members, and while there were a number of them there it was obvious how many didn’t stand up. The reasons we had the training was because of members and that was pointed out. Serious issues can arise when a builder, or for that matter a supplier or vendor is not aware of code changes or regulations. For the consumer the danger is having work done by someone who might
not build their house to code, or worse yet use old materials that won’t pass inspections. If there was something to be gained at the TAB sponsored training it was
Invite new members
underdeveloped areas, which is currently implemented throughout the Texas border. This unit allows the families of the colonias to finish out the interior as time and money permit while providing a safe, sound, and sanitary housing unit in the meantime.
Currently, Demetrio is a partner at Tropicana Properties II, LLC along with Bob Bowling I.V. and Randy Bowling. He also serves as the managing arm for 28 multifamily developments in and around El Paso County. Demetrio and his wife Leticia reside in El Paso along with their two sons- Isaac, currently a sophomore at the Air Force Academy and Joshua, a sophomore at Coronado High School.
that our mission as members is to invite others to join to make our work the safest and best available to the consumer.
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Builders Outlook
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Issue 8
Product Portfolio Highlights
6046 Surety Dr. El Paso, TX 79905 915-778-5387 • Fax: 915-772-3038
■ EXECUTIVE OFFICERS
PRESIDENT
Carlos Villalobos
NATIONAL ASSOCIATION OF HOME BUILDERS (800) 368-5242
VICE PRESIDENT Don Rassette
TEXAS ASSOCIATION OF
SECRETARY/TREASURER
BUILDERS
Kathy Parry
(800)252-3625
ASSOCIATES CHAIR
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www.builderagentnetwork.com
John Dorney
ECECUTIVE VICE PRESIDENT Ray Adauto
PAST PRESIDENT Edgar Montiel
Membership Retentiion Patrick Tuttle
Finance Committee Kathy Carrillo
Henry Tinajero
■ ADVISORY TO THE BOARD
Jay Kerr, Firth, Johnston, Bunn & Kerr
James Martinez, Law Office of James Martinez
2015 Builder Member Of The Year Edgar Montiel
Palo Verde Homes 2015 Associate Of The Year Interceramic Tile
2015 John Shatzman Award Bradley Roe
Honorary Life Members Mark Dyer
Wayne Grinnell
Don Henderson
Chester Lovelady Cliff C. Anthes
■ BOARD OF DIRECTORS
Anna Gill
Antonio Cervantes, BIC Homes
Brad Roe
Leti Navarrete, Dream Homes/Bella Homes
Rudy Guel
Robert Najera, Joseph Custom Homes Walter Lujan, Dawco Home Builders
Leslie Driggers-Hoard, Homes By Design Edgar Garcia, Bella Vista Cutom Homes Jason Cullers, Cullers Homes
Samira Gonzalez, ICON Custom Homes Sal Masoud, DRE Development
Joe Bernal, Employer Benefits Of El Paso Linda Troncoso, TRE & Associates
Bret Thompson, Foxworth Galbraith Lumber Ted Escobedo, Snappy Publishing, LLC Patrick Tuttle, Legacy Real Estate Sam Trimble, Lone Star Title
Luis Rosas, HUB International Gilbert Pedregon, GECU
Gregg Davis, First Light FCU ■ TAB STATE DIRECTORS
Randy Bowling Greg Bowling
Sam Shallenberger ■ NATIONAL DIRECTORS
Bobby Bowling IV.
Demetrio Jimenez
Now more than ever, El Paso home buyers are planning for the future.
E H Baeza
Bud Foster, Southwest Land Development Services Fernando Torres, CTU Metro Homes
Give your customers the ‘option of the sun’
Past Presidents
Committed to Serve
Greg Bowling
Kelly Sorenson Mark Dyer
Mike Santamaria
Bobby Bowling, IV Rudy Guel Anna Gil
Bradley Roe
John Cullers
Bob Bowling, III
Doug Schwartz
Hershel Stringfield
Randy Bowling Robert Baeza
Edmundo Dena Pat Woods
EPAB Mission Statement: The El Paso Association of Builders is a federated professional organization representing the home building industry, committed to enhancing the quality of life in our community by providing affordable homes of excellence and value. The El Paso Association of Builders is a 501C(6) trade organization. © 2015 Builder’s Outlook is published and distributed for the El Paso Association of Builders by Ted Escobedo, Snappy Publishing, LLC ted@snappypublishing.com El Paso • Texas • 915-820-2800
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