NAHB Fall Board

Good Morning COHBA Members,

Once again, it was an honor to represent you and our great association at The National Association of Home Builders (NAHB) Fall Board Meeting held in Austin TX. Located in the Texas Hill Country, Austin is a beautiful city with an interesting mantra, “Keep Austin Weird”. Maybe it has something to do with the fact that Austin is the home of the University of Texas and the Longhorns???

I had a full schedule of NAHB meetings and education opportunities. This year’s NAHB Fall Board was tied in with the Sunbelt Builders Show, which is the largest residential building industry trade event in the Southwest.

I had the opportunity to attend the NAHB President’s Council. This council focuses on issues that affect local and state presidents. Many issues were discussed, but a common concern was membership. How to improve both new member recruitment and member retention. NAHB studies have shown that new membership lags as much as 18 months behind surges in new home starts. Knowing this, we should start seeing membership on the rise, which is good news. However, new member recruitment is still a grass roots effort by HBA’s members. The NAHB has one last campaign this year called Beat the Surge. COHBA will certainly be involved with the Beat the Surge campaign as well.

The Area 11 Caucus meeting led by our fellow Oklahoman, Phil Rhees, as always, provided a good deal of insight as to how other states within our area are doing. Here is a brief overview of the reports by the State Representatives.

It now appears that all states are reporting fairly good increases in new home starts over 2011 numbers and that unemployment has also improved. The general consensus was that the home building recovery is moving in the right direction. Now on a disappointing note, one of our Area 11’s states, Nebraska, had issues with the Nebraska state HBA and two of its major local HBA’s. Unfortunately, they did not find common ground and were unable to work out the issues, in-spite of Phil’s trip to Nebraska to mediate and help bring the parties together. The result of this was the two local HBA’s pulling out of NAHB. On a more positive note, Brandon Perkins reported on BuildPAC. He reported that Area 11 has met and surpassed its BuildPAC goal set by the NAHB, with Oklahoma leading the way. As a matter of fact Oklahoma is ranked 10th in the nation for the number of combined Gold Key, Platinum and Capital Club members. With respect to the Area 11 leadership, Carl Harris of Kansas was voted in as our 2013 National Area 11 Chairman.

The NAHB Fall Board meeting was accomplished in “world record” time, as stated by Chairman Barry Rutenberg. Chairman Rutenberg’s opening remarks were brief and to the point. Rutenberg reiterated that the NAHB remains firmly committed to appraisal reform as well as lending reform. The NAHB remains steadfast in it’s efforts to push for guidelines and the revamping of existing guidelines regarding policy and lending. This would ultimately allow the availability of much needed capital for production loans involving land acquisitions, land developments and new home construction. Furthermore, the NAHB will continue to lobby for legislation that ensures the Federal Government will continue to provide a backstop for a reliable and adequate flow of affordable housing credit in all economic and financial conditions. Rutenberg reported that the Fed has announced an effort to accelerate the winding down of Fannie Mae and Freddie Mac. Also that the Fed is considering spending 40 million to buy up bad mortgages.

Rutenberg also announced that due in some part to NAHB’s efforts, OSHA ‘s Fall Protection Standards implementation and grace period has been moved back another three months to Dec. 15, 2012.

Rutenberg wrapped up his opening remarks by saying that it appears our industry has turned the corner but that we still have a long way to go to get back to normal levels.

The NAHB Fall Board meeting, in my opinion, seemed to be primarily centered around the the NAHB’s financial condition. We were presented a serious look at the present financial condition and the 2013 budget as well as a 5 year budget forecast.

The current 2012 budget was estimated to end up with a 5.9 million dollar shortfall. Thats 1.1 million better than the original 2012 budget.

The 2013 budget was presented and passed with a 11.9 million dollar shortfall. The 5 year budget plan showed annual losses thru 2016 and a positive cash flow in 2017.

With the budget projections showing losses, the Executive Board proposed a gradual dues increase plan over a 4 year period that amounted to as much as an additional 48.00 a year by the 4th year. This plan will be refined and presented for a vote in January’s NAHB Board meeting.

Dr. David Crow, the NAHB economist’s remarks definitely showed a slightly improved forecast, over his report at the NAHB Board Meeting in Washington last June. Here are some of his main observations.

Dr. Crow opened by stating that housing is leading the economic expansion. The third quarter looks like it will end up being the best quarter thus far this year and should continue to see slow economic growth through this year. Dr. Crow also stated that this recession recovery is shaping up to be the second slowest in recent history. So we are seeing a slower recovery than in past recessions. Currently as it stands, from the so called the normal levels, remodeling is at about 98%, multi family is about 64% and single family is about 42% of their respective normal levels. It should be noted that single family took the hardest fall, losing about 80% of the normal level, before rebounding to its current level, according to Dr. Crow.

Dr. Crow, however, estimated that we should be back to the normal full production levels in 2016 and that those levels should remain high through the next four years.

Dr. Crow put together what he calls The “UN” Markets that affect our growth. Here is his creative way of looking at what directly is affecting our recovery.

* UN-employment – high unemployment, about 8.1%, correlates to unpaid mortgages

* UN-paid – seriously delinquent mortgages, down to approximately 7.3% from 9.7%

* UN-inhabited – vacant or abandoned homes that are on the market

* UN-derpriced – lost value, upside down, short sales thus affecting appraisals

The good news with respect to Oklahoma:

* Oklahoma is the 6th best state with respect to the UN-employment

* Oklahoma is ranked 21st among the states with the lowest UN-paid rate

* Oklahoma is below the national average in UN-inhabited

* Oklahoma shows being almost back to the normal levels and has remained one of the top 5 states leading the nation in home building recovery thus leading the nation with respect to the economic recovery.

On another positive note, Dr. Crow also showed home pricing increasing on a national average at the rate of about 6.9% annualized for the last 6 months. More good news!

Lastly, NAHB’s Brett Diggs gave a membership update and forecast. Here is what Diggs reported.

Membership has been significantly down since the recession started and although the drop has slowed, membership has continued to show losses in 2012. The good news is that retention is showing an increase of about 3.5%. Diggs reiterated that typically membership lags about 18 months behind the increase in new home starts. With that being said, Diggs anticipates membership to start increasing at the approximate rate of 3.2% through 2013 and at a rate of about 6.2% in 2014. Albeit slow, that is good news for our NAHB Federation.

This week at the NAHB Fall Board went by fast. Over the last three NAHB Board Meetings that I have had the privilege to attend, I have met and gotten to know not only NAHB leaders, but also many other other local and state presidents. In doing so, I have learned from other leaders across the country about what has worked and has not worked for their respective HBA’s. This forum has allowed me to develop positive relationships that can help our association. Oklahoma traditionally has maintained a fairly strong presence within the NAHB over the last decade. We need to continue this presence within the NAHB. I have been asked to serve on some NAHB committees and would hope to have the opportunity to do so.

Once again, this was a truly amazing week. What an honor it was to have the opportunity to represent you and COHBA this week at the NAHB Fall Board Meeting.

Kurt Dinnes
Your President
Central Oklahoma Home Builders Association