National, State & Local Building Industry News

2016: Issue 11

10 Housing Trends to Watch

www.elpasobuilders.com
Nearly a decade after the real estate
crisis set off wild swings in the
housing market, most markets finally
stabilized last year. The election of
Donald Trump has brought
uncertainty into the industry, however.
While the President-elect built his
empire on real estate, he has said
relatively little about what policy
changes he might make regarding
housing. Thats not too unusual,
since when the housing market is
doing well it is generally not a
campaign issue.
Heres what the experts we spoke
with expect to see in 2017:

1. Rising prices will keep pushing

up homeowners net worth.
After a 6.3 percent increase over the
past year, home prices are poised to
rise another 5.2 percent through
September 2017, according to a
recent report from CoreLogic. Rising
prices have doubled the amount of
home equity held by Americans with
the average homeowner gaining
more than $11,000 in home-equity
wealth last year alone. If home prices
continue to increase as projected,
Americans would add $1 trillion in
home equity to their collective
balance sheets next year.

2. But mortgage rates are going

up.
Rates for conventional loans shot up
nearly a quarter of a percentage point
in the days following the election, the
fastest increase since the taper
tantrum of 2013. That could be just
the beginning; the Fed is expected to
continue raising rates on a strong
economy, and even before Trumps
election, the Mortgage Bankers
Association was predicting that rates
would reach 4.8 percent (an increase
of nearly two percentage points) by
the end of 2017.
That means that borrowers who are
looking to re-fi should do so earlier in
the year, and buyers should consider
locking in their rates during the
closing process. While some worry
that rising rates could dampen the
housing market, job security and
wage growth are larger factors on
home activity than interest rates.

3. Its getting easier to get a

mortgage.
Its easier to get a mortgage now than
at any time in the past eight years,
according to the Mortgage Credit
Availability Index. That reflects an
increased availability of both jumbo
loans and low down-payment loans.

Banks may also be more willing to

work with borrowers over the next
few years as they look to make up for
a decline in refinancing business
when interest rates go up. The
pendulum has been swinging toward
a loosening of the credit box a bit,
says Daren Blomquist, a senior vice
president with Attom Data Solutions.
I dont think well see a reversal of
that with the new administration. Well
likely see an acceleration.
4. Rents will continue to level off.
While rents in most large metro areas
will continue to increase next year,
theyll grow at just 1.7 percent next
year, following a similar growth this
year, according to Zillows rent
forecast. The modest gains follow
years of double-digit growths in many
places and reflect inventory finally
catching up with demand as builders
create new apartment buildings to
accommodate the nearly 40 percent
of Americans who are choosing to
rent rather than buy housing.

5. The share of cash buyers will

move closer to normal.
All-cash buyers fell below 30 percent
of home sales this year for the first
time since 2007, and theyre
projected to decline for the next two
years until they get back to their
historical average of about 25
percent, according to CoreLogic.
Thats good news for some
homebuyers who have struggled in
recent years to compete with all-cash
buyers in bidding wars.

6. New homes are getting smaller.

The median square footage for new
homes this year fell for the first time
since the recession. Smaller homes
are the product of several trends
driving the real estate market,
including higher demand for homes
close to city centers where space is
tight, and continued growth in the
tiny home movement.

The shift also reflects a renewed

focus by builders on the neglected
market of entry-level buyers. Theyre
building smaller homes because
people cant afford to buy the larger
homes anymore, Chief Economist at
Texas A & Ms Real Estate Center.

7. Inventory will remain tight.

While builders have increased
production, theyre still only putting
homes up at about 60 percent of the
normal pace. Total housing inventory
at the end of September increased
1.5 percent to 2.04 million existing
homes for sale, but thats still 7
percent lower than last year. Unsold
inventory in September was at a 4.5
percent-month supply, down from 4.6
percent the previous month. (A sixmonth supply is considered a healthy
market.)
That continued lack of inventory is
one of the main factors behind rising
prices. Its driven by supply and
demand, says Sam Khater, deputy
chief economist at CoreLogic. The
lack of affordable supply is really
driving up home prices.

8. Foreign buyers will play a

smaller role.
Foreign buyers, who have helped fuel
the luxury real estate market in recent
years, backed off a bit this year amid
rising prices and an appreciated
dollar and increased scrutiny from the
Treasury Department. That trend may
accelerate as foreign investors weigh
the impact of a Trump presidency on
their purchase.

9. Its getting easier for first-time

buyers.
After years of shutting them out, the
market has become slightly more
welcoming to first-time buyers. On
the supply side, builders are finding
business models to provide the level
of product, such as townhouses, that
first-time buyers are looking for, says
Robert Dietz, chief economist with
the National Association of Home
Builders. And on the demand side,
wage gains and the demographics of
todays millennials who are marrying
and having kids later, will help.
Millennials are more secure in their
jobs, so theyre better qualified for
mortgages, particularly the low down
payment options. While inventory is
still tight, many institutional investors
have left the market, which makes it
easier for first-time home buyers to
compete for entry-level properties.

REUTERS/Mario Anzuoni

Builders Outlook

GIVE THANKS FOR

MOMENTS LIKE THESE.
Home is where traditions begin and memories are made, and a natural gas home is
instantly more attractive to potential buyers.
Natural gas kitchens sell themselves, and natural gas furnaces, water heaters and clothes
dryers offer greater efficiency and lower operating costs than their electric counterparts.
Let us help you plan for natural gas right from the start.
For more information:
ElPasoNewBusiness@TXGas.com
William Nieves: 915-496-6126
Jorge Sejera: 915-680-7216
Please continue to direct service line and meter set requests to the Texas Gas Service
Builder Hotline at slimgas-metroElPaso@onegas.com or 1-866-206-9587.

2016 issue 11

2016 issue 11

Builders Outlook

Presidents
Message
Carlos
Villalobos

President,
El Paso Association
of Builders

As we approach the end of the year,

there are many variables that
potentially threaten home affordability
in our market. In anticipation of the new
President coming into the White House
in January and his agenda, markets
are already reacting to what is
expected to happen. I always like to
hear bad news first:
1. Rising Interest Rates Interest on
a 10 year Treasury note have
increased from 1.85% on Election Day
to 2.38% on Wednesday. This has
caused mortgage rates to climb over
4% for the first time this year. Higher
interest rates mean higher payments,
and in El Paso, many customers were
already barely qualifying, so this means
they might have to opt for either a
smaller home than what they were
looking for, or simply go for a more
affordable resale/used home. However,
interest rates are still at historically low
levels and its not healthy for any
economy to artificially maintain interest
rates near zero through quantitative
easing indefinitely.

Affordability Threatened by Future Market Conditions

2. New Energy Code: We have
been talking about this all year so I
dont want to beat a dead horse, but
the new Energy Code is calculated to
add at least $2,000 to $3,000 to a
typical home built to 2009 Energy Code
Standards. On the bright side, the new
code will reduce utility bills and should
be able to offset the homes more
expensive price tag.
3. Rising Inflation: The new
President Elects plans to reduce taxes
and spend on infrastructure are
expected to raise inflation to about
2.2% in 2017. If in fact Trump is able to
pull off his proposed One Trillion dollar
infrastructure plan, inflation will be sure
to follow, especially in commodity
prices, i.e., construction materials. This
is not to say that inflation is entirely
bad, a healthy inflation rate is needed
to keep the economy growing at a
healthy pace.
And now for the (potential) silver
lining:
1.Deregulation: Our new President
elect is promising to untangle and

dismantle a lot of our current

overregulation on business. One must
admit that our current environment
sometimes suffocates business with so
much laws and regulations that it is
hard to operate profitably, hopefully the
simplification and revocation of many of
our current laws will help ease the
burden of doing business.
2. Tax Cuts: Trumps promises to
simplify the tax code and offer tax cuts
for the lower and middle classes would
cause a short term stimulus to the
economy, especially if not
accompanied by spending reductions.
However, he needs to quickly find out a
way to grow the economy at the 3.5%
he claimed he could conservatively
attain or else these tax cuts will
produce a worse deficit than what we
already have.
3. Job Creation: Our new President
Elect claims that he will create 25
Million new jobs by fostering a
dynamic booming economy, if this
can be accomplished, then I believe
my first three concerns (interest rates,

inflation, energy code) would not be an

issue after all as home building is
driven by job creation, however, this is
yet to be seen.
Fortunately, apart from the National
scene, El Paso seems to be taking on
a life of its own as we see more
investment and growth everywhere we
go. Hopefully with the recent sale of a
local oil refinery, the recipient of which
has shown an inclination to invest in El
Paso real estate and is now flush with
cash, we will continue to see strong
investments and job creation in the
downtown area, which will in turn help
us mature and keep growing as a city.
Please join us on December 2nd at
the Marriot for the installation of our
new President of The El Paso
Association of Builders, Mr. Don
Rassette of Rassette Homes.

Builders Outlook 2016

Executives
Message
Ray Adauto,
Executive
Vice President
EPAB
November is here and gone, and
December is rearing up. All said and
done its either a wonderful thing or not.
Frankly for me I really like Thanksgiving a
lot and not necessarily for the food
although its a part of liking this holiday. I
like the turkey, I like the fixins, but most
of all I like the recipe for stuffing that
Margaret makes for me. She learned
and adapted my mothers recipe and
when I bite it I remember my mom. No
for me its about family and the one time
when we can get together to share and
give thanks for all the blessings. I repeat
what Mike Santamaria always says: My
worst nightmare is somebody elses

Issue 11

Optimistic outlook for our industry

dreams! Yep I feel exactly that way

especially when I see my grandkids, my
daughters, and son in laws, and of
course my extended family including my
in-laws. We have more than 99% of the
worlds population does right here in the
USA and sometimes we forget that.
Thats what Thanksgiving is for me.
To almost everyones surprise the
national election was won by Donald
Trump and honestly I think that should
work out well for the industry. Heres why
in my opinion. If Mr. Trump can get the
Congress to move on issues of taxation
and reduce corporate taxes, eliminate the
death tax, and reduce or simplify the
Internal Revenue Code then he will put
money back to work. I remember that
what seems eons ago there was a
junker rebate, remember when the
government said they would buy your car
and the reason was that the auto industry
was nearly bankrupt? At the time there
was so much money being allocated that
it worked out to nearly $100,000 per
adult, something I said then would have

cured a lot of the ills if they had handed

out the checks instead of doing a rebate.
Many of us could have used an infusion
of cash to pay off some debt and buy
something new making the economy
work again. They didnt do that and so
the fix was temporary. Now if Mr.
Trump can get Congress to act on taxes
this could be a really really big deal,
something that could stimulate the
economy for a long term rather than a
short term. Its going to impact home
buying. The other thing is Mr. Trump
hates big government and hes said to
the NAHB that he would work on
reducing the amount of regulations a
builder has to navigate in order to build a
house. That would help housing. The
one area that will be a concern has to do
with immigration. Our industry has
workers from all over the world in
construction (yes, not just Mexico) and so
Mr. Trump needs to heed the industries
that depend on that workforce. I for one
am excited that we are actually talking
about taxes, regulation, and immigration.

Its about time. I hope that we give him

and his new administration a chance to
succeed.
Finally we attended the fall TAB board
meetings in Austin in mid-November.
The big news is that the upcoming
legislative session is going to be jammed
with anti-builder legislation (no surprise
here) and that TAB is going to target
particular bills that would cause you great
harm if they were to pass. This is also
where you come in as we prepare to
meet our legislators on February 22 at
the Capitol. We need a good contingent
from El Paso to go enjoy that trip and
learn about whats going on in Austin. If
youve never been then may I suggest
you go this time. I can assure you that
you will come back amazed at how much
goes on there and how much your
association protects you. More
information on that trip will be
forthcoming. Stay tuned to your emails
and info in the Outlook.

Insurance developed for builders.

Developed for builders with the backing of the strongest insurance
carriers serving the Texas building industry, our insurance program
offers flexible coverage options and rates that are more competitive
than ever. As an authorized member of Builder Agent Network, were
dedicated to providing builders and contractors with the best-in-class
insurance programs, pricing, underwriting, resources and service.
Product Portfolio Highlights

Affordable
quality
by

t
A rated carriers, several available

t
(-
PFSJOH
Doverage for property damage that results from faulty, defective,
or poor workmanship in your work.
t
(-
-JNJUT
PG
VQ
UP
...
Bvailable
t
Expanded policy form for commercial projects
t
Builders Risk master policies, monthly reporting, annual and one shots
t Workers Comp - Two highly cost-effective programs
t
ExDFTT
-JBCJMJUZ
GPS
$PNNFrcial (eneral Contractors
t
$PNNFrcial Umbrella
El Paso, Permian Basin and Surrounding Area
HUB International Insurance Services
-VJT
3PTBT
915-206-6047
www.hubinternational.com

www.builderagentnetwork.com

Semi-Custom Homes
Large Lots
3 Car Garages & RV Parking Available

9155853330
www.rassettecommunities.com

ShaawwnnWee
eekks
ee

P
Preferred
Lender
Rassette Homes
R
All clients welcome
A

(915) 581-4930

sweeks@insightmortgagecompany.com
sweeks@insightm
m
mortgage.com

JuliaW
Wee
eeks

Helping you buy or sell

the home of your dreams

(915) 525-4119

Juliaqweeks@gmail.com
co
om

Proud to represent
Rassette Homes

EXIT REAL TY EL PASO

2016 issue 11

Builders Outlook

National
Builder News
Housing Starts Jump
25.5 Percent

n Led by impressive gains in both

single-family and multifamily production,
nationwide housing starts surged 25.5
percent in October to a seasonally
adjusted annual rate of 1.32 million units,
according to newly released data from the
U.S. Department of Housing and Urban
Development and the Commerce
Department. Single-family starts reached
their highest level since October 2007
while multifamily production jumped 68.8
percent from the previous month.
These robust figures correlate with
strong builder optimism in the housing
market, said Ed Brady, chairman of the
National Association of Home Builders
(NAHB) and a home builder and developer
from Bloomington, Ill. A firming job market,
a growing economy and rising household
formations will keep the housing recovery
on track into next year.
Multifamily production bounced back
after an unusually weak reading last month
while single-family starts exhibited
unusually strong growth as well, said
NAHB Chief Economist Robert Dietz.
Though Octobers single- and multifamily
production rates are clearly unsustainable,
we expect continued growth in the housing
sector in the months ahead.
Single-family starts rose 10.7 percent in
October to a seasonally adjusted annual

rate of 869,000 units while multifamily

production climbed 68.8 percent to
454,000 units.
Combined single- and multifamily starts
posted double-digit gains in all four regions
in October. The Northeast, Midwest, South
and West increased 44.8 percent, 44.1
percent, 17.9 percent and 23.2 percent,
respectively.
Overall permit issuance edged up 0.3
percent to a seasonally adjusted annual
rate of 1.23 million in October. Singlefamily permits rose 2.7 percent to a rate of
762,000, while multifamily permits fell 3.3
percent to 467,000.
Permit issuance increased 12.1 percent
in the Midwest and 7.5 percent in the
West. Meanwhile, the Northeast and South
posted respective losses of 21.1 percent
and 2.4 percent.

New Home Sales

Down 1.9 Percent

n Sales of newly built, single-family

homes fell 1.9 percent in October from a
downwardly revised September reading to
a seasonally adjusted annual rate of
563,000 units, according to newly released
data by the U.S. Department of Housing
and Urban Development and the U.S.
Census Bureau.
Though slightly down from last month,
new home sales have been on an upward

BUILDING

trend since last year, said Ed Brady,

chairman of the National Association of
Home Builders (NAHB) and a home
builder and developer from Bloomington,
Ill.
Builders are adding to inventory based
on consistent gains in sales, solid builder
confidence and ongoing job and economic
growth, said NAHB Chief Economist
Robert Dietz.
The inventory of new home sales for
sale was 246,000 in October, which is a
5.2-month supply at the current sales
pace. The median sales price of new
houses sold was $304,500.
Regionally, new home sales fell 9.1
percent in the Northeast, 13.7 percent in
the Midwest and 3 percent in the South.
Sales increased 8.8 percent in the West.

NAHB Congratulates
Donald Trump

n Ed Brady, chairman of the National

Association of Home Builders (NAHB) and
a home builder and developer from
Bloomington, Ill., issued the following
statement on Tuesdays national elections:
The National Association of Home
Builders congratulates Donald Trump on
his election as the 45th President of the
United States of America and all the
lawmakers who were elected to the 115th
Congress.

El Pa
aso

When President-elect Trump takes the

oath of office in January and the 115th
Congress convenes, NAHB looks forward
to working in a bipartisan manner with the
incoming administration and Republican
and Democratic congressional leaders to
tackle critical issues facing the housing
industry.
Specifically, policymakers need to
reform the regulatory process, ensure
creditworthy home buyers and small
businesses can get mortgages and loans,
protect the mortgage interest deduction
and expand the Low Income Housing Tax
Credit. It is also essential to enact
comprehensive housing finance reform that
safeguards the 30-year mortgage. This
pro-housing legislative and regulatory
agenda will spur job growth and keep the
housing and economic recovery moving
forward.

SINCE 1950

Builders Outlook

2016 Issue 11

IBSS 2017

NAHB In
nternational Builders Show

#I

BS

RL

JANUARY 1012 ORLAND0 BUILDERSSHOW.COM

GROW YOUR BUSINESS HERE

Highlights revealed! Get a sneak peek of wha
at youll experience at the building industrys premier
e
e
eventthe 2017 NAHB International Build
ders Show (IBS).

Not Registered?
Make plans now to join us in Orlando in Janu
uaryregister by November 11 to save. Options st
s art at
$50 for NAHB members and $100 for non-m
members!

AD2217

2016 ISSUE 11

Guest
Outlook
Elliot Eisenberg
Economic & Policy
Blog

The current US economic expansion

is one of the longest on record, and,
come March, will become the third
longest in US history, dating back to
the start of record keeping in 1854.
As such, there is increasing concern
that we are due for a recession. That
concern has only heightened, given
that the last downturn was particularly
nasty. This fear is weighing not only
on household spending, but, more
importantly, on corporate spending on
plant and equipment, holding back
GDP growth and labor productivity.
Fortunately, this concern is misplaced.
Simply put, age is not what kills
expansions. Rather, it is an
overheating economy that generally
results in a recession. When wages
start rising swiftly, investment activity
starts taking off, debt levels grow
rapidly, asset prices become
untethered to reality, commodity prices
remain high, and inflation rises rapidly,

Builders Outlook

A Recession is Unlikely
the Federal Reserve invariably
intervenes. In the attempt to cool
things down, all too often the Fed
raises rates too quickly or too much
and accidently drives us into a
recession.
However, there is currently little
evidence of any pre-recessionary
economic exuberance. As a matter of
fact, most of the economy is still
behaving as if we were recovering
from the recession rather than
enjoying the boom times that come at
or near the peak of an economic
expansion. Growth, be it domestic or
international, is subdued. Commodity
prices are, with few exceptions, at or
near cyclical lows, and bank lending is
probably best described as solid.
Moreover, inflation, while slowly rising,
remains below the official Fed target
rate of 2%. Lastly, while the
unemployment rate is just 5%, wage
gains are much weaker than they
have been before previous economic
downturns. This suggests that there is
still slack in the labor market and that
the Fed will not have to start raising
rates quickly anytime soon.
Spending by households and
businesses is also not signaling a
recession. Purchases of durable
goods such as cars and dishwashers
averaged 7.5% of GDP in Q2 2016,
well below the 8.5% average that has

...the current economic expansion that

started in July 2009 looks increasingly
likely to become the longest economic
expansion ever.
persisted in years preceding
recessions. Private investment
spending on new home construction,
business related software and
equipment and so on is equally low.
Moreover, the household debt-service
ratio, or how much after tax income
Americans are devoting to debt
payments, is near its lowest level ever
and personal savings rates are near
their highest level in twenty years.
Lastly, corporate profits are once
again on the rise, reducing slightly
elevated stock market valuations.
The above notwithstanding, a
recession is always a possibility due to
economic shocks emanating from
abroad that can dramatically raise
energy prices, or a war or an election
that can hurt household spending and
business confidence. However, other
than that, it would probably take much
stronger economic growth for a
prolonged period before the Fed felt

compelled to raise interest rates

quickly enough to meaningfully slow
down the economy and, in the
process, possibly bring on a
recession.
In short, the current economic
expansion that started in July 2009
looks increasingly likely to become the
longest economic expansion ever.
Increasing this potential is that even
though wages and inflation are finally
rising, the Fed has communicated its
interest in seeing wages and inflation
rise further as they have been too low
for too long. So, enjoy the current
expansion; it may well last a lot
longer!

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.

Buildeers Outlook
On the Scene

PRO AM Golf Tournament

November 2016

EPAB Pro-am proves to be a challenging but rewarding golf event

The clouds were looming and the
weathercaster was saying that wed
have a 60% chance of rain, mixed with
thunder and lightning. Its not the kind
of thing you really want when you have
a golf outing planned, certainly when
youve selected the date well in
advance and you hope all goes well.
Thats precisely what happened this
year when our friendly weather folks
were saying that it was going to be a
rainy Veterans Day. So like every year
we hunkered down and prayed for
good weather and just like so many
times in the past we were blessed with
clear skies and a slight breeze for our
StrucSure Home Warranty Presents
Pro Am Golf tournament. Our golf day
was complicated with picking a date
we thought would be a tribute to our
Veterans and allow our entrants to
take some additional time off on a

Presented by

Friday. Unfortunately we found that

some of our regulars were going on a
three day weekend since they would
celebrate Veterans Day with family or
friends in a different location than on
the course. But like always we had
great support from our teams and the
Sun Country Pros who came from as
far away as Santa Fe to play.
The event has been a big deal to the
pros and a big deal to the association
as it earns revenue for us and gives us
an opportunity to have some fun. As
evidenced in the pictures we did both.
StrucSure Home Warranty was our
presenting partner and as such Scott
Whisenant told the crowd that
StrucSure loves to do this and more.
We enjoy meeting new friends at this
event and it has helped me as a
Greater San Antonio Builders
Association board member to plan for

our first pro-am, from what Ive learned

here in El Paso, Scott told the
Outlook. We enjoy coming out and
look forward to many more
opportunities in the future, he
continued.
Our host was Painted Dunes and
General Manager Anthony Bellow.
Were glad to have brought the Pro
Am back to Painted Dunes and to host
the EPAB, Anthony said. The
challenge for the players is that they
are playing a club pro and yet at the
same time the pro is in competition
with the other pros. We have to
balance the play because the pros are
in a season long competition so they
have to concentrate on their play while
also helping the team players,
Anthony said.
Our outing couldnt have happened
without our partners including HUNT

as the breakfast partner and Haskins

Electric as our lunch/awards partner.
I love coming to the association golf
tournament and were honored to be a
part of this and other events, said
Chuck Haskins, owner of Haskins
Electric. The golf was tough but
overall this is a great event, he said.
Winners were announced in the first,
second and third place team winners,
and also in the longest Drive and
closest to the pin awards. An
opportunity was given those winners to
shoot for a million dollars hole in one
and a $5000 putting challenge.
Neither was won this year but we hope
to offer the challenge next year. We
want to make sure we let our members
know to look for our Pachanga (party)
golf outing in April, so stay tuned, said
golf chair Sam Shallenberger.

Photos by
Patrick Tuttle

10

Builders Outlook

2016 issue 11

Lending Mortgage rates keep rising after election

threatening home affordability
Long-term U.S. mortgage rates
continued to surge this week in the
aftermath of the election of Donald
Trump as president.
Mortgage giant Freddie Mac said
Wednesday that the average rate
on a 30-year fixed rate loan shot up
to 4.03%, the highest since July
2015 and up from 3.94% a week
earlier. The rate on 15-year home
loans climbed to 3.25%, up from
3.14% last week and highest since
January.
Long-term U.S. interest rates
have climbed since Trump was
elected Nov. 8. That is largely
because bond investors believe the
president-elect's plan to cut taxes
and spend massively on roads,
bridges, airports and other
infrastructure could ignite inflation.
When they foresee rising inflation,
investors demand higher long-term
rates and pay lower prices for
bonds. The expectations of
economic stimulus from tax cuts
and higher infrastructure spending
that are driving up interest rates
have also pushed stocks higher. On
Wednesday, the Dow Jones
industrial average closed above
19,000 for the first time.

Some minor help to home buyers

did come Wednesday when the
Federal Housing Finance Agency
raised the loan limits on so-called
conforming mortgages purchased
by Fannie Mae and Freddie Mac,
which tend to have cheaper rates
than other loans.
In high-cost counties, including
Los Angeles and Orange, the loan
limit rose from $625,500 to
$636,150. In lower cost counties,
including Riverside and San
Bernardino, the limit climbed from
$417,000 to $424,100.
Still, many homes in Southern
California cost far more than those
ceilings and rising mortgage rates
pose a threat to the housing market.
Low rates had fueled a rally in
home sales. The National Assn. of
Realtors said Tuesday that sales of
existing homes rose 2% in October
to a seasonally adjusted annual rate
of 5.6 million the strongest pace
since February 2007. Higher
interest rates, along with rising
house prices, could reduce demand
for housing.
For the moment though, it
appears that rising rates are having
the opposite effect as buyers rush

to purchase a home, fearful that

rates will only climb further.
The Mortgage Bankers Assn. said
Wednesday that mortgage
applications for new sales jumped
13% in the week ended Nov. 18,
compared with the previous week.
People are panicked and jumping
in to buy, Richard T. Cirelli, head of
RTC Mortgage Corp. in Laguna
Beach.
To calculate average mortgage
rates, Freddie Mac surveys lenders
across the country between Monday
and Wednesday each week.
The average doesn't include extra
fees, known as points, which most
borrowers must pay to get the
lowest rates. One point equals 1%
of the loan amount.
The average fee for a 30-year
mortgage was unchanged at 0.5
point. The fee on 15-year loans
stayed at 0.5 point.
Rates on adjustable five-year
loans climbed to 3.12% this week
from 3.07%. The fee was
unchanged at 0.4 point.

HERES TO 70 YEARS OF SERVICE!

WE LOOK FORWARD TO FUTURE SUCCESS

WORKING TOGETHER!
6068 Gateway East (915) 782-2400 | 2290 Trawood Dr. (915) 782-2470 | 7015 N. Mesa St. (915) 782-2485
WWW.PIONEERBNK.COM

2016 issue 11

Builders Outlook

Advertise your OBuilders

utlook
business to S
the home
building
industry
www.elp

asobuild

ers.com

teady em
ployment
demand
, afforda and economic gro
ble hom
mortgage
wth, pen
e prices
rates wil
gradual
and attract t-up
l kee
upw
ive
headwind ard trend in 201 p the housing ma
s related
6. Howe
rket on a
ver,
and labor,
to
along wit shortages and ava persistent
impeding
h rising
ilability of
materials
a
to econom more robust rec
prices are lots
overy, acc
ists who
participat
ording
ed in a Na
of Home
tional As
Bu
sociation
Construc ilders (NAHB)
Fall
tion Forec
astWebin
ar.

Nationa

l, State
& Local
Building

Industry
News
2015: Issu
e 10

2016: H
ous
Recovery ing
to pick
up steam
amid
challeng
es

This reco
NAHB Chie very is all abou
t jobs, said
people can f Economist Dav
id Crowe.
they have
get good
incomes
,
If
, the hous jobs that pay
about purc the more comforta
dece
to move
ing mark
hasi
ble they
forw
et will cont nt
feel
And while ng a new hom
inue
The good ard.
e.
mortgage
expected
news, Crow
total U.S.
to rise over interest rates
e adde
employm
averagin
are
well abov
g 4.5 perc the near-term
ent of 142 d, is that
,
e
percent
ent in 2016
Single-F
that occu the previous peak million is now
in
amily Con
rred in 2008
expected 2017, Crowe said and 5.5
of 138 millio
tinu
Turning
to have
The one
this is not
.
to the forec es to Post Gain
n
an
reco
cave
projecting
impa
very. As
ast, NAH
s
at is that
ct on the
been conc
719,000
the econ
B is
job grow
housing
and wag
entrated
2015, up
single-fa
omy gets
th has
sector, whic
e growth
heavily in
mily start
11 percent
bette
shou
even thou
r, job
the serv
produced
s in
than good h tends to pay
gh mortgage ld keep pace.
last year from the 647,000
lower wag ice
s producin
will still
So
productio
. Single-fa
units
rates will
be low by
es
g jobs.
Meanwh
n
mily
rise, they
historical
very affor
additiona is projected to
doubled ile, home equity
standard
dable.
increase
l 27 perc
since 2011
has near
s and
an
ent
units
in
.
ly
2016 to
$12.5 trillio
and now
914,000
Supply
n.
stands at
On the mult
Headwin
The sing
ifam
ds
le
ily
354,
Crow
biggest
side
000 units
e noted
peoples
asset in
several
last year , production ran
portfolio
hindering
331,000
factors
, slightly
at
is the hom most
said Crow
a
level that
above the
e they own
e. Thats
NAHB surv more robust reco that are
level of
primary
productio is considered a
very. Citin
,
ey of its
purchase important beca
normal
builders
n. Multifam
expected
use
rs of new
sellers of
reported members, 13 perc g an sam
to rise 9
ily starts
homes are the
the
existing
labor was
ent
e
this year
percent
are
homes.
a significa cost and availabil of that concerns rega
to 387,000
and post
The more the
rding lots
that conc
decline
nt problem
ratio shot
ity of
units
equity
ern
to 378,000 a modest 3 perc
in 2011
up to 58
and
Concern
ent
About one- jumped to 61 perc in 2011 and
percent
units in
Residen
2016.
in 2014.
tial remo
ent in 2014
fifth of build
at 58 perc s over building
forecaste
deling activ
materials
.
ers shar
ent amo
d
ity is
ed the
stoo
from 33
ng build
over last to increase 6.8
ers in 2014 d
percent
perc
year and
in 2011.
, up
No doub
percent
rise an addi ent in 2015
in 2016.
tional 6.1
ideas that t that the home
brought
really mad
together
that muc
e the show
h
case hom
of actually more interesting.
e
Continu
The proc
ed Page
setting up piecing the walls
ess
6
together,
the floor
The annu
a
and the
wall or in
al Fall Hom
all that goes
brought
the ceilin
e and
the faint
thousand
g is not
hearted.
s of peop Garden show
somethin on
Judson
Habitat
We were
Willi
le
g
for
asked by for
show kicke ams Convention into the
could from Humanity to dona
te
people wered off October 9. Center as the
could, Torrethis build, and Im what we
The
greeted
presente
proud that
s told the
by a very throngs of
the
d show
show
we
Outlook.
nicely
com
case was
producer
waiting for
quickly take The rest of
Show Tech pliments of the
Antonio.
nology out
parts that some of the fram n to a lot
of San
e
could be
The show
waste.
used so and other
Ove
to
showcase featured a spec
showcase rall a very beau not go to
tacu
tiful
Metro Homhome by new build lar
for years home that will cont green
to come.
was mad es. The design er member
inue to give
e
of
The Fall
site in orde to be partially cons the display
Home and
show
Garden
of its
establish r to meet the time tructed off
some time
center was kind this year sinc was the only
ed
lines
, said Asso
that even for the show.
e
take
the civic
n over for
Sam Sha
Bowling
I have to
ciates Cha
with that
llenberge
the
Champio
tell
hustled
additiona
irman
and exhi
r.
nship (ABC Mens
to make
l time we you center turne
bitors and We had new
bring to
sure we
product
really
disp
have.
the
that was
had
complete d into a large bow). The civic
to
a nice thinglays whats hot consumer beca
with state
CTU Metr show, said Fern a great
ling alley
use
run into
The pres
in the worl
ando Torre
of
to
o Homes.
the
said.
art lanes.
situations
enting attra
staged the
d of walls I know
s
Beautifu
Wizard,
center or
like this
We
ction was
, Santos
l and eleg of
Brian San
when the
halls we
Our sinc
the show house became
the Wall
antly
tos who
dem
civic
that
use
the favo
winning
onstratio
can fit
are the
did seve
and all the ere thanks to CTU
rite of
Best of
efforts.
ns durin
ral
I really
Show for
of Show our shows, said only ones
We
g the three
suppliers
Metro Hom
love com
Acos
Technolo
the
Tommy
and the
off our mod are excited to
day
es
ta Rea
ing to El
so many
gy. We
Mantini
flexible but
be able
Paso and event.
folks for
of gratitude l Estate. We also staff of David
have to
to show
estate agenels to the public
the first
seeing
the Outl
be
we would then again I know
owe
to the exhi
and to the
ts
time
ook.
beca
civic
,
have pent
market and
The El
use wer
that this
bitors who a debt
center
Builders
showed
Paso Asso Brian told
e new to real
we think
filled the
has help
things for with good prod
during this up demand and year
product
the
ciation of
we have
ed
othe
ucts
the
me
to offer
it
even
r
Wha
and
visito
asso
get othe
a very
t.
t impr
lots of
Home and
the cons
ciations
r to see.
continue
r gigs with
recomme
and Im
umer, Torre good
Our Spri
aisles and essed many was
d.
grateful
ndation,
11-13, 2016Garden Show is
ng
s
the
the
for
amo
carp
who
he
on
the
comforta
unt of room
cont
eted
has auth
reach pote . Dont miss this for March
bly mov
ored seve inued. Santos,
to
and is an
e around.
was one
ral how
inventor
Technolo ntial customers. opportunity to
of the nice
I thought
to book
compani
and
gy today
Visit Sho
this
st shows
s
es including innovator for
at
www.sho
w
weve had
several
relations
wtechnol
Home Dep
in
hip
ogy.com
informati
Depot and with Rubber Maid ot. My
to get
on on the
Spring show
Lowes is
and Hom
really a
.
great thing e
to
See Mor
e Photos
Page 8

Fall Hom
e and
Garden
Show
attracts
thousand
s

The Builders Outlook is the official publication of the El

Paso Association of Builders. Our award winning
monthly newspaper is the only publication to target El
Paso home builders and related businesses.

Widely distributed throughout the city and available to

readers online, the Builders Outlook is an important
advertising medium for any business that want to reach
this valuable market.

Call 778-5387 today for

more information

11

12

EL PASO
BUILDERS
A S S O C I AT I O N O F

Builders Outlook

2016 issue 11

EPAB Celebrates 70 Years

Association continues tradition of serving the home building industry

and housing the El Paso community.

Join us as we take a look back at the housing market inEl Paso in our special 12 part editorial series. Our
first article appeared in the October Issue of Builders Outlook and is available online. at:
https://issuu.com/snappypublishing/docs/outlook2016issue10r

Part 2
The 1950s
By Ray Adauto

he 1950s brought about some

serious changes to the housing
markets in the U.S. and frankly
around the world. Since the United States was
sparred the type of fighting that took place in
Europe and Asia the neighborhoods here were
not completely destroyed and therefore didnt
require a complete rebuild. What did happen
however is that there was such a huge demand
for rebuilding in Europe and Asia that significant
manpower and materials were sent overseas
while the supplies in the United States were kept
at a minimum. It was complicating an already

complicated situation because the returning

veterans were eager to start families and get
civilian life back on track.
El Paso had seen a big growth spurt during
the war and quickly became one of the
Southwests most prominent cities. El Paso was
a business hub outmaneuvering cities like San
Antonio, Austin, Tucson, Phoenix and
Albuquerque. El Paso was expanding its size
but unfortunately in the late 50s and early 60s
we started to lose our status as a go to city. But
in the 1950s it was a good time to be a builder
in El Paso as housing and commercial real
estate took off.
The main arteries into and out of the city were
streets like Alameda, North Loop, Montana,
Mesa. There was no I-10 but there was talk of
one coming on the heels of President Dwight
Eisenhowers plan for a strategic road system to
link the east coast to the west coast. El Paso
had a history of the railroad doing that and also
including traffic from Mexico and into Canada. In
a nutshell El Paso would be in line for part of
the Eisenhower plan and that would mean
growth.
The Home Builders Association of El Paso
was a fledgling association as were every other
builders association across the USA. It was
policies after WW II that had significant impact
on what housing would look like in the second
half of the 20th century. I Washington, D.C. the
talk was about housing returning vets in

apartment like structures and FHA was being

told that their lending practices would only
encompass multifamily housing. Across the
country and including El Paso it was clear that
the private sector, led by the now infamous
Levittown in Pennsylvania, single family housing
was what the returning soldiers wanted for their
family. It created another new phenomenon
called the suburbs. It was based on the theory
that Levittown professed, build a home cheap
enough to sell enough. The actual thought was
this: "Any fool can build homeswhat counts is
how many you can sell for how little." Said
William J. Levitt. In 1950, Time Magazine
estimated that Levitt and Sons built one out of
every 8 houses in United States. Levitt remained
the nations largest home builder through most
of the 1950s.
Yes and that sentiment rose in El Paso as
well. It was during the 1950s that some of the
more familiar parts of El Paso were developed
including Manhattan Heights, Mission Hills,
Beaumont, Logan Heights and Clardy Fox.
William J. Elliott one of the founders of the HBA
El Paso was instrumental in those
developments. The land east of Concordia
cemetery was for the most part growth areas
until the early 60s while Logan Heights was the
home of the soldiers. Why is really everything
to do with being near Fort Bliss and easy terms

for military. In Manhattan Heights there had

been some older areas being developed but
Dyer Street became the gateway to the base
and that area exploded. There is some older
historic homes around Memorial Park but up
around the Grandview Park area most of those
homes were built in the 1950s, including the
house I was born into.
The decade for the association began when
George Hervey, prominent El Paso
businessman took the helm as President for two
years, 50 and 51. He was followed by Walter
Driver (1952), Charles Foster (1953), Ross
Borrett (1954), William Mayfield (1955), Harry
Buckley (1956), Tony Passero (1957), Irwin
Brand (1958), and closing the decade by Joe
Yarbrough (1959). Some of these men have
relatives active in todays association. If youre
wondering when you go east and get on
Yarbrough guess who its named after? Right, it
is Joe Yarbrough. Wed like to hear some
stories from the descendants of the leadership
from the 1950s, and hope that we can publish
some of that.
The 1950s saw lots of changes for El Paso
but the biggest change was coming just into the
new decade of the 60s. Well tackle some of
that history in the next installment of The 70th
Anniversary of the El Paso Association of
Builders.

2016 Issue 11

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

UPCOMING
EVENTS
DECEMBER 2
INSTALATION
MARRIOTT HOTEL
JANUARY 11
BOARD MEETING
12NOON
EPAB OFFICE
FEBRUARY 8
BOARD MEETING
11:00
GENERAL MEETING
12:00
El Paso Club
FEBRUARY 22
RALLY DAY
AUSTIN, TX

NEW MEMBERS
Loyalty Homes, LLC
Contact: Gustavo Loy
866 Silent View Place
El Paso, Texas 79928
(915) 471-1894

SODA SPONSOR
BUILDERS SOURCE
APPLIANCE GALLERY

We mourn the loss of a

longtime member
Larry A. Baskind.
Condolences to his family
and law partner.

14

Builders Outlook

Expert Advice

Joe Bernal

Employer Benefits of El Paso

Affordable Care
compliance,

Act

along with benefits
cost management
and employee wellness programs, are
emerging as the top issues affecting
small business health plans.
As
2017
approaches,
small
businesses should reevaluate their
employee health insurance needs and
what they need to do to comply with
new health insurance laws.
Although businesses with fewer than
50 full-time equivalent employees do
not have to provide health insurance for
their employees, they must comply with
the ACAs reporting requirements. All
businesses with employees must:
Withhold and report an additional
0.9 percent on employee wages or
compensation that exceed $200,000.
Report the value of health insurance
coverage you provided to each
employee on his or her Form W-2.
File an annual return reporting
certain information for each employee
covered under a self-insured health
plan.
In an effort to help small businesses
comply with the Affordable Care Act, a
new study by HUB International
explored ACA compliance, along with
benefits cost management and
employee wellness, by surveying over
400 senior-level human resources and

Is your health plan ready or 2017

finance executives at companies with
50 to 1,000 employees.
HR leaders are operating in an era
of unprecedented disruption brought on
by ACA, rising health care costs and
the increasing demands of a multigenerational workforce, wrote the
authors of the HUB International report
titled, Employee Benefits Barometer:
SMB Perspectives and Priorities in an
Era of Disruption.
Era of Disruption
The survey found nearly two in three
business owners employing between
50 and 99 people are concerned about
remaining in compliance with the ACA
regulations. Other findings included:

69 percent of employers plan to

change their benefit plan structure
and/or operations to avoid ACA
reporting fines and penalties.
61 percent expect IRS fines for ACA
reporting to be negligible to their bottom
line in 2016.
60 percent believe ACA reporting is
primarily an HR issue.
64 percent have optimized design
and operations strategies to eliminate
the fines/penalties, but will struggle to
stay in business.
54 percent say ACA reporting is
primarily a finance issue.
As this survey shows, employers
perceive themselves to be on top of
ACA reporting issues, but nearly twothirds say that their businesses will
struggle to stay afloat despite efforts to
optimize plan designs and operations
an indication that employers are
exhausted by ACA compliance, the
authors of the HUB International report
wrote.
Due to the potential audit
implications
of ACA reporting,
organizations need to be able to defend
and manage the decisions they made
and reported on, the authors noted.

In the survey, employers did not rate

ACA reporting as their top concern, but
because the survey took place prior to
completing
year-one
reporting
deadlines, it may be an indication that
employers dont know where they are
most vulnerable, the authors wrote.
Most responders ranked cost
management
and
health
and
performance issues as bigger priorities
over ACA reporting, the authors wrote.
This may be an indication that
employers have under-estimated the
complexity of ACA reporting.
Just over half of HR leaders (57
percent) cited accuracy in calculating
and reporting the affordability of
benefits as their top concern for ACA
compliance. While 55 percent of midsized and 56 percent of the largest
middle market companies ranked this
as their top concern, it was especially
an issue among the smallest players
(66 percent). Close behind, at 53
percent, were concerns over how
employee subsidy eligibility and
employer liability are tracked and
reported.
Wellness and Productivity Are Top
Priorities
Meanwhile, the survey also found
that
employee
wellness
and
productivity are top priorities, and twothirds of respondents are seeing a
return on investments in their
programs, specifically in improved
employee productivity and morale.
When asked to identify their top
benefits priorities, HR respondents
ranked improving employee wellness
and productivity (83 percent) and
managing benefit costs (76 percent) as
top priorities.
The report found that employers who
are implementing wellness programs
are reporting improvements in
employee productivity and morale.
Middle market employers are

2016 issue 11

starting to put more effort in longer term

benefits initiatives that support the
connection between healthy employees
and business performance, the
authors wrote. These programs are
the cornerstone of a long-term benefit
strategy that supports a healthier and
more engaged workforce.
Theres a reason health and
performance initiatives have gained
traction among middle market benefits
decision-makers. These strategies are
delivering a return on investment,
according
to
66
percent
of
respondents. How has it been
evidenced? More than a third of
respondents cite improved productivity
(35 percent) and morale (34 percent).
This is especially true among the larger
firms, at 40 percent and 38 percent
respectively.
Employers are reaping the benefits of
their cost-cutting initiatives, but there
appears to be many missed
opportunities to deploy proven cost
management strategies, the authors
wrote.
Are their efforts paying off? Sixty-five
percent agree that they are doing all
they can to contain rising benefit costs,
the authors wrote. Seventy percent
note that their strategies are
successfully reining in costs. In fact, a
significant percentage of the HR
respondents indicated they have
revamped their plan designs to reduce
costs. Leading that change, 51 percent
have implemented voluntary benefits
for the first time as part of their cost
savings strategy.
For more information on complying with
the Affordable Care Act, controlling your
costs or adding voluntary benefits to your
organizations offerings, please contact
us.visit:

 

 
! " "  
" """& 
 "  $ %!" #
 

 

"#

Builders Outlook

Issue 11 2016

6046 Surety Dr. El Paso, TX 79905

915-778-5387 Fax: 915-772-3038
Mark Dyer
Wayne Grinnell
Don Henderson
Chester Lovelady
Cliff C. Anthes
Anna Gill
Brad Roe
Rudy Guel
E H Baeza

ExEcuTivE OFFicERS
PRESiDENT
Carlos Villalobos
vicE PRESiDENT
Don Rassette
ASSOciATES cHAiR
John Dorney
ExEcuTivE vicE PRESiDENT
Ray Adauto
PAST PRESiDENT
Edgar Montiel
cOMMiTTEE cHAiRS
Membership Retentiion
Patrick Tuttle
Finance committee
Kathy Carrillo
Henry Tinajero

BOARDOFDiREcTORS
Antonio Cervantes, BIC Homes
Leti Navarrete, Dream Homes/Bella Home
Bud Foster, Southwest Land Development Services
Walter Lujan, Dawco Home Builders
Fernando Torres, CTu Metro Homes
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
Kathy Parry, HuntCommunities
TABSTATE DiREcTORS
Randy Bowling
Greg Bowling
Sam Shallenberger

NATiONAL DiREcTORS
Bobby Bowling IV.
Demetrio Jimenez
Honorary Life Members

2015 Builder Member Of The Year

Edgar Montiel
Palo Verde Homes

Greg Bowling
Kelly Sorenson
Mark Dyer
Mike Santamaria
John Cullers
Randy Bowling
Doug Schwartz
Robert Baeza
Bobby Bowling, IV
Rudy Guel
Anna Gil
Bradley Roe
Bob Bowling, III
Edmundo Dena
Hershel Stringfield
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.
2016
Builders 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

2015 John Shatzman Award

BradleyRoe

Congratulations on your 70th

Anniversary.
C
C
We were here when you started
back in
DQGZHUHKHUHZLWK\RXQRZ

W
F

For All Your Electrical Needs

Residential Specialists
Tract Homes Custom Homes
Total Customer
Satisfaction

915-208-9313
602-708-7560

2015 Associate Of The Year

Interceramic
Tile

772-7495

Past Presidents
committed to Serve

ADviSORYTOTHEBOARD
Jay Kerr, Firth, Johnston, Bunn & Kerr

El Paso Disposal

Give your customers

the option of the sun
Now more than ever,
ElPaso home buyers
are planning for the
future.

<RXYHEHHQDVVROLGDVEULFNIRUDOORIXV

J
B

ACME BRICK CO. 325 N. Americas Ave. El Paso, Texas 79907 915-859-9171
Brick * Stone * Pavers * Granite * Slate * Flooring * Glass Block
Baeza

-"/(,+$#

.-%,*,-!/

w Home
Your NNe
ueva
'+/&*.-/).

)+*-(3
#24&2 340/ '14$
,(12
+31340/.
403,3
0/)+13142.3 3,/
4!*4"
.2-%34-.

Su Casa R

Pick up our latest edition!

Helpful advice for buyers in
English and Spanish
Unique, easy to use glossary
of real estate terms
Available all over town

el tiempo
Ahora es
prar
para com
El Paso
nueva en
una casa
Informatio

Your New Home/Su Casa Nueva

A homebuyers guide for English or Spanish Readers

best time
NOW is the
me
ur new ho
to buy yo
so
in El Pa

Mortgage

Border Solar can help

you oer your
customers solar power
as a sensible
alternave.

The New Edition is Available Now

n de
Informaci
Hipotecas

line
Homes on
View New

Crossing to CleanEnergy

7365 Remcon Circle

El Paso, TX 79912
(915) 6134168

The future starts

today.
follow us on twier and
facebook:
BorderSolar