Builders

utlook

www.elpasobuilders.com

2015: issue 8

HOUSING:
Pending home sales rose just 0.5%
Diana Olick CNBC
U.S. home buyer demand remained
steady in July, although consumers did
not react significantly to easing
mortgage rates. An index of so-called
pending home sales from the National
Association of Realtors, which
represents signed contracts, not
closings, was basically flat, rising 0.5
percent from an upwardly revised June
reading.
The index is now up 7.4 percent
from one year ago. Pending sales
slipped in June but had otherwise
been rising for five months.
"Contract activity in most of the
country held steady last month, which
bodes well for existing-sales to
maintain their recent elevated pace to
close out the summer," said Lawrence
Yun, chief economist for the NAR in a
release. "While demand and sales
continue to be stronger than earlier
this year, Realtors have reported since
the spring that available listings in
affordable price ranges remain elusive
for some buyers trying to reach the
market and are likely holding back

sales from being more robust."

Closed sales of existing homes,
based on contracts signed in May and
June, increased two percent in July,
according to NAR, as the number of
homes for sale remained stubbornly
low, and higher home prices continued
to sideline first-time home buyers. Yun
said he had expected to see more firsttime buyers return to the housing
market this summer and was surprised
by their poor showing.
Mortgage rates, which had been
rising in May and June, pulled back in
mid-July, which may have brought
more buyers to the table. Also, the
expectation in July was that the
Federal Reserve would begin raising
interest rates in September. That may
have pushed some buyers into the
market, fearing higher rates.
A roller-coaster ride on the U.S.
stock market, due to fears of China's
economic woes, has more now
believing the Fed will not raise rates
this fall. It has, however, also added
uncertainty for some home buyers.
"In light of the recent volatility in the
stock market, it's possible some

STAR AWARDS:
Tropicana Homes scores
big at Texas Builder gala
The annual awards presented by
the Texas Association of Builders took
place at the summer TAB/Sunbelt
Show in Grapevine. The Star Awards
honor the best of the best in TAB
membership and are considered a
premier acknowledgment of
performing to the highest standards.
Tropicana Homes won two awards,
The Best Custom Home built by a
Volume Builder and The Sales
Professional of the Year Award
presented to Sylvia Sandoval. At the
ceremony Tropicana Homes Randy
Bowling accepted the congratulations
from the gathered goers. I have to
say that this award speaks of the
commitment we have as a company
to provide El Paso quality custom
homes built by a company with a long
history of building in El Paso,
Bowling told the Outlook.
Additionally how great is it to have
the honor given to Sylvia for her
outstanding work with us, he
continued. We are so proud to have
her represent Tropicana Homes.
As for the Texas Association of

Builders Executive Director Scott

Norman praised the winners for their
hard work and dedication. Every
year we comb through the nominees
and its as tough to choose a winner
as in any competition. This year for
Tropicana to win in two separate
categories is extra special and we
thank them for what they represent as
Texas builders, Norman said.
The news filtered into El Paso
nearly as fast as it happened making
the celebration a company affair. I
have to say that everyones phone lit
up when we got the first award, but
getting two was something special,
Sylvia said. My family celebrated at
that moment and when we got back
home.
Tropicana Homes is an El Paso
based home builder with nearly 60
years of home building in El Paso.
The EPAB congratulates Randy
Bowling, Bobby Bowling IV, and
Sylvia Sandoval for their Star Awards.

A roller-coaster ride on the U.S.

stock market, due to fears of
China's economic woes, has more
now believing the Fed will not raise
rates this fall.
prospective buyers may err on the side
of caution and delay decisions, while
others may view real estate as a more
stable asset in the current
environment," said Yun. "Overall, the
prospects for ongoing strength in the
housing market remain intact for now.
The U.S. economy is growingalbeit
at a modest paceand the labor
market continues to add jobs."
Pending home sales in the Northeast
increased 4 percent July from June

and in the Midwest were unchanged.

In the South, sales increased 0.6
percent. The West was the only region
to see weakness, with pending home
sales down 1.4 percent for the month.
Added Yun: "Uncertainty in the
equity marketseven if the Fed raises
short-term rates in Septembercould
stabilize long-term mortgage rates and
preserve affordability for buyers."

Builders Outlook

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2015 issue 8

2015 issue 8

Builders Outlook

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Builders Outlook

2015 issue 8

Perspective
Ray Adauto,
Executive
Vice President
EPAB

Earlier in August the circus that

sometimes is city council really irked me
when Representative Lilly Limon
introduced and agenda item that would
have classified contractors as wage
thieves. The idea that Representative
Limon had was to help protect those
workers who end up either not being
paid for the work theyve done or at the
scale required by law or contract. What
she said was this: contractors, subcontractors, flea market operators and
restaurateurs are the biggest employers
in the wage theft allegations and so
therefore contractors, restaurateurs and
flea market owners would be denied
permits if an allegation of wage theft
was presented to the city against that
employer. Read it again, just to make
sure you understand what she was
implying. All that would be needed to
trigger a permit denial would be an
allegation, not a confirmed adjudicated
case, simply an allegation that you as
the employer didnt pay someone. How
absolutely absurd is that?
The good news is that several city
reps werent at all happy with what Ms.
Limon was saying and with good cause.
Most vocal was Representative Emma
Acosta to whom I fired off an email with
my concerns on the agenda item. She

The city council circus continues,

vote for less meetings
read my concern into the official record
(much to my surprise) and was
immediately attacked by Ms. Limon
saying that Mr. Adauto doesnt know
what hes talking about. The problem
is that I do know and I was really irate
that they would lump all our members
as thieves. Can you imagine? When
the agenda item was summarily
dismissed I had the time to compose an
email to the council members, Mayor
and City Manager. In it I told them in no
uncertain terms that I thought it much
more useful if the city cleaned up its
own house first before looking for dirt in
ours. My point was illustrated by the
screw ups at the city Engineering
department and how that department
repeatedly issued the wrong wage
scales to contractors doing city jobs
(there by stealing wages from the
workers because of the misapplication
of scale) and then penalizing the
contractors for using the wage scale
they issued them. So in effect what Im
saying to Ms. Limon and the city council
and Mayor, look at cleaning up your
sins before looking elsewhere for
blame. I also told them that our
association has always supported and
asked our members to pay prevailing
wages (or better) to employees. We

support the Fair labor standards act and

we hope that the city does as well.
Two other notes on the council: 1.
they gave the city manager a raise then
(guess who) a small vocal group of
dissenters wanted to take it back.
Absolutely wrong in so many ways,
regardless of the size of the raise. I did
speak at the council meeting on that
point as did other business leaders and
even LULAC. 2. There will be a vote in
November on dropping at least one
weekly city council meeting a month. I
wish it were just two a month because

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2015 issue 8

Builders Outlook

industry
news
Single-Family Gains
Push Housing Starts
Led by a strong jump in single-family
production, nationwide housing starts inched up
0.2 percent to a seasonally adjusted annual rate
of 1.206 million units in July, according to newly
released data from the U.S. Department of
Housing and Urban Development and the
Commerce Department. This is the highest level
since October 2007.
Single-family starts rose 12.8 percent to a
seasonally adjusted annual rate of 782,000 units
after an upwardly revised June reading while
multifamily production fell 17 percent to 424,000
units.
Our builders are reporting more confidence in
the market, and are stepping up production of
single-family homes as a result, said NAHB
Chairman Tom Woods, a home builder from Blue
Springs, Mo. However, builders are still
reporting problems accessing land and labor.
This months drop in the more volatile
multifamily side is a return to trend after an
unusually high June, said NAHB Chief
Economist David Crowe. While multifamily
production has fully recovered from the
downturn, single-family starts are improving at a
slow and sometimes intermittent rate as
consumer confidence gradually rebounds.
Continued job and economic growth will keep
single-family housing moving forward.
Regionally in July, combined single- and
multifamily starts rose by 20.1 percent in the
Midwest and 7.7 percent in the South. The
Northeast and West posted respective losses of
27.5 percent and 3.1 percent.
After several months of permit gains, overall

permits fell 16.3 percent in July. Single-family

permits dipped 1.9 percent to a rate of 679,000
while multifamily permits dropped 31.8 percent to
440,000.
All four regions posted permit losses in June.
The Northeast, Midwest, South and West posted
respective drops of 60.2 percent, 4.6 percent,
1.7 percent and 9.9 percent.

New Home Sales Up

5.4 Percent
Sales of newly built, single-family homes
rose 5.4 percent to a seasonally adjusted
annual rate of 507,000 units in July,
according to newly released data from
HUD and the U.S. Census Bureau.
Our builders are reporting higher traffic
and more serious buyers, and are adding
inventory in anticipation of future
business, said Tom Woods, chairman of
the National Association of Home Builders
(NAHB) and a home builder from Blue
Springs, Mo.
Todays report is in line with other
government data and improving builder
sentiment and shows a gradual but
consistent housing recovery, said NAHB
Chief Economist David Crowe. As job
growth and consumer confidence continue
to strengthen, the housing market should
make additional gains this year.
Regionally, the Northeast, South and
West posted respective gains of 23.1
percent, 5.8 percent, and 6.7 percent. The

BUILDING

Midwest registered a 6.9 percent decline.

The inventory of new homes for sale
was 218,000 units in July. This is a 5.2month supply at the current sales pace.

Builder Confidence
Rises One Point
Builder confidence in the market for
newly built, single-family homes in August
rose one point to a level of 61 on the
National Association of Home
Builders/Wells Fargo Housing Market
Index (HMI). This is the highest reading
since November 2005.
The fact the builder confidence has
been in the low 60s for three straight
months shows that single-family housing is
making slow but steady progress, said
NAHB Chairman Tom Woods, a home
builder from Blue Springs, Mo. However,
we continue to hear that builders face
difficulties accessing land and labor.
Todays report is consistent with our
forecast for a gradual strengthening of the
single-family housing sector in 2015, said
NAHB Chief Economist David Crowe. Job
and economic gains should keep the
market moving forward at a modest pace
throughout the rest of the year.
Derived from a monthly survey that
NAHB has been conducting for 30 years,
the NAHB/Wells Fargo Housing Market
Index gauges builder perceptions of

El Paso

current single-family home sales and sales

expectations for the next six months as
good, fair or poor. The survey also
asks builders to rate traffic of prospective
buyers as high to very high, average or
low to very low. Scores for each
component are then used to calculate a
seasonally adjusted index where any
number over 50 indicates that more
builders view conditions as good than
poor.
Two of the three HMI components
posted gains in August. The index
measuring buyer traffic increased two
points to 45 and the component gauging
current sales conditions rose one point to
66. Meanwhile, the index charting sales
expectations in the next six months held
steady at 70.
Looking at the three-month moving
averages for regional HMI scores, the
West and Midwest each rose three points
to 63 and 58, respectively. The South
posted a two-point gain to 63 and the
Northeast held steady at 46.
Editors Note: The NAHB/Wells Fargo
Housing Market Index is strictly the
product of NAHB Economics, and is not
seen or influenced by any outside party
prior to being released to the public. HMI
tables can be found at nahb.org/hmi. More
information on housing statistics is also
available at housingeconomics.com.

SINCE 1950

Builders Outlook

2015 issue 8

The Economy

Rate Rise in September?

imagination did
they think that
seven years later
the rate would still
be zero. Of late,
reasons the rate
remains low include
a rapid slowdown in
Chinese growth, a
tumbling Chinese
stock market, the
ongoing Greek
crisis, and closer to
Elliot Eisenberg
home, very weak
inflation and slow growth. Despite these
problems, the Fed will raise rates soon, quite
possibly in mid-September.
While Chinas GDP is now growing at a
sub-7% rate for the first time in decades,
outside of a small reduction in American
exports to China and slightly weaker raw
material prices, the impact of the slowing will
be little felt by us. As for the stock market

swoon, its important to note that equities

play a minor role in the Chinese economy.
Fewer than 15% of Chinese household
financial assets are in the stock market, and
the value of all tradeable shares is about
30% of GDP, compared to 125% here. As a
result, just as the run up in prices had little
impact on the real Chinese economy, the
bust will be no different. Also, the recent
stock market sell-off, just like the previous
one, is not a harbinger of economic decline.
Looking to Europe, while Greece is likely
to roil the EU for years, it is no larger
economically than Oregon. Moreover,
because 83% of Greek debt is held by other
European nations, the IMF and the ECB,
only 17% is held by private banks. Thus,
even a complete Greek bankruptcy would do
little damage to the rest of Europe. This was
evidenced during the run up to the snap
referendum Prime Minister Tsipras recently
called to improve his bargaining position. It
backfired as there was virtually no increase

in volatility in European stock, bond and

foreign exchange markets. In terms of
impact to the US, a slightly weaker euro will
hurt exports marginally but there will be few,
if any, other consequences.
As for our economy, the unemployment
rate is fast approaching 5% or full
employment, and the labor market has hit its
stride. Last year, monthly employment
growth averaged 260,000, the best since
1999, and so far this year it is averaging a
respectable 208,000. In 2013 it was 199,000
and in 2012 it was 188,000. As you can see,
monthly employment growth peaked in 2014,
suggesting that there will be no more
additional mass movement from the ranks of
the unemployed to the working. As for GDP
growth, it was 2.4% last year, 1.5% in 2013,
and has averaged 2% since the end of the
recession. Here too, there appears no
indication that rapid GDP growth is right
around the corner. Finally, inflation, while
very low, has stopped falling and is starting

to creep up and wage growth may see some

increases in the near future.
With foreign economic turbulence unlikely
to impact the US, domestic GDP and
employment growth not expected to
meaningfully improve, and inflation and
wages hopefully on the rise, there is no
longer any reason for the Fed to wait before
raising rates. Moreover, by raising rates this
September, the Fed will be able to wait
several quarters before tightening again. By
contrast, if they wait to raise rates, they may
be forced to increase rates rapidly, and that
could be disruptive.
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

Why Americans wait longer than ever to buy first homes

The Associated Press
Short of cash and unsettled in their
careers, young Americans are waiting
longer than ever to buy their first homes.
The typical first-timer now rents for six
years before buying a home, up from 2.6
years in the early 1970s, according to a
new analysis by the real estate data firm
Zillow. The median first-time buyer is age
33in the upper range of the millennial
generation, which roughly spans ages 18
to 34. A generation ago, the median firsttimer was about three years younger.
The delay reflects a trend that cuts to the

heart of the financial challenges facing

millennials: Renters are struggling to save
for down payments. Increasingly, too,
they're facing delays in some key
landmarks of adulthood, from marriage and
children to a stable career, according to
industry and government reports.
These shifts help explain why
homeownership, long a source of middle
class identity and economic opportunity,
has started to decline. The share of the
U.S. population who own homes has slid to
63.4 percent, a 48-year low, according to
the Census Bureau.

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These shifts help explain why

homeownership, long a source
of middle class identity and
economic opportunity, has
started to decline.

And when young adults do sign the

deed, their purchase price is now
substantially more, relative to their income,
than it was decades ago. First-time buyers
are paying a median price of $140,238,
nearly 2.6 times their income. In the early
1970s, the starter home was just 1.7 times
income.
Millennials are "still very interested in
buying a house, but they're delaying that
decision," said Svenja Gudell, chief
economist at Zillow. "Once they start
having kids, they begin looking for homes.
We're also finding thatgiven how much
rental rates are currently risinga lot of
folks are having a hard time saving for a
down payment and qualifying for a
mortgage."
Millennials increasingly find themselves
in a situation like that of Lou Flores, a 30year-old portfolio manager in San Diego.
He shares a one-bedroom apartment with
his boyfriend, paying $1,400 a month to
live within walking distance of Balboa Park
and the zoo.
Flores' parents had built their nest egg
by steadily upgrading their homes,
ingraining him with the notion that "renting
was a waste of money." But the median
home in San Diego costs more than a half
million dollars, according to the area's
association of Realtors.
So Flores figures ownership is at least a
few years away.
"Here in California, if you're not married
or with someone, it's impossible to buy a
home without financial backing from your
parents," Flores said.
Few first-timers around the country can
lean on their parents. Among homebuyers
last year under age 34, 14 percent
received down payment help from family or
friends, according to a Federal Reserve
survey.
Most first-timers still depend on personal
savings for at least some of their down
payments. But rising rental prices have
complicated the task of socking away
money for a down payment. Fueled by a
surge of renters across all age ranges,
rental prices nationally have grown at
roughly twice the pace of average hourly
wage growth, which was a paltry 2.1
percent over the past year.
A result is that those prices are

consuming more income. A striking 46

percent of renters ages 25 to 34the core
of the millennial populationspend more
than 30 percent of their incomes on rent,
up from 40 percent a decade earlier,
according to a report by Harvard
University's Joint Center of Housing
Studies. (The housing industry generally
regards a figure above 30 percent as
financially burdensome.)
Some of the cost burden stems from a
shift toward people who envision
themselves renting for several years and
therefore seeking the kinds of amenities
more commonly associated with home
ownership. Based on searches for rentals
on RadPad in June and July, for example,
apartments with stainless steel appliances
and swimming pools were
disproportionately popular in cities with
lower homeownership rates such as Los
Angeles, Chicago and Washington.
Nearly a fifth of Washington-area
searches sought apartments with stainless
steel appliances, compared with 5 percent
nationwide. More than a third of
Chicagoans wanted an apartment with a
pool, versus 18 percent nationally.
Job security has become a more central
consideration for first-time buyers. The
Money Source, a mortgage lender and
servicer, examined applications from 5,404
millennial homebuyers. It found that the
buyers had averaged nearly 4.5 years in
their field of work and had held their
current job for slightly more than three
years. Those figures point to how critical
career stability has become for a
generation that entered the workforce
during the Great Recession and its slowgrowth recovery.
Housing industry experts note that
surveys still show a strong desire to buy
among millennials, but that their timelines
for purchasing depend on achieving more
stability in their careers.
"As long as there is the job market to
support millennialsjust as it has for
previous generationsI don't believe their
habits will change," said Darius
Mirshahzadeh, CEO of The Money Source.

2015 ISSUE 8

Builders

Builders Outlook

utlook on the scene |

Chief Economist: El Paso in very good spot

By Ray Adauto, EPAB
Cynthia Bilbe, President of Stewart
Title El Paso, told the Builders Outlook
how much she hoped Ted Jones would
be welcomed as a speaker for the
association. Clearly she had nothing to
worry about as Dr. Ted Jones, Chief
Economist for Stewart Title gave a
presentation during a lunch and learn
event at the EPAB office. Meeting Ted,
as he likes to be called, was a very
enthusiastic crowd wanting to hear what
this well versed man would say about El
Paso, Texas, and the world. His
confidence in El Paso was quick and to
the point. I am here to tell you that El
Paso is in a very good spot, right
between the second and fourth largest
cities in the United States (Los Angeles
and Houston) and that should excite
those of you here, Jones said. He went
on to explain that demographically and
geographically El Paso is sitting in a
good position for growth and business.
While the majority of the report
presented was positive there were some
areas of concern. El Paso will actually
be attracting about 15,000 more people
a year than what will be leaving, and
that means housing will be needed,
mostly rentals, Jones said. The other
concern is that these new Millennials
wont be able to buy because to buy
today requires a FICO of 740 or more,

and who knows any Millennials with that

high of a score? he quizzed. What Dr.
Jones table showed was that El Paso
has a low median priced home, nearly
$100,000 less than the national average,
but we also have less income making
even the median price out of place for
the majority. We have to work hard as
an industry to ensure we are building
towards the economics of the people
living here, so do that and youll make a
lot of money, Jones said.
Ted Jones was introduced by Ms.
Bilbe, who made her own presentation
on the CFPB TRID regulation

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SPECIAL REPORT

Builders Outlook Issue 8 2015

Long Term Market View:

Home Buyers to Make Comeback in
Next Decade, Mortgage Bankers Say

ByLaura Kusisto
By 2024, the U.S. will create between 14
million and 16 million new households, according to

the report to be released Tuesday by the

Mortgage Bankers Association.
Over the next decade, Americans will
emerge from their childhood bedrooms or
rental apartments and start becoming
homeowners again, a new report says.
Homeownership has plunged to its lowest
level in half a century. But over the next
decade the country will see a surge in new
household formation, with many of those
families choosing to own rather than rent.
By 2024, the U.S. will create between 14
million and 16 million new households,
according to the report to be released Tuesday
by the Mortgage Bankers Association. Of
those, as many as 13 million will be owners
and as few as three million will be renters, the
bankers say.
The report says that as many as 1.3 million
additional owner households will be created
each year. That is a significant pickup from the
recession, when the number of owner
households has been basically flat.
Its a huge amount of housing demand any
which way you cut this, said Lynn Fisher,
MBAs vice president of research and
economics.
The homeownership rate rose from less than
64% in the late 1980s to more than 69% in the
mid-2000s before dropping to below 64%
again in 2015.
If current homeownership rates by age and
race persist, the reports authors expect the
homeownership rate to grow modestly to
64.8%. If those rates of homeownership by

group revert to higher long-term trends, they

expect the homeownership rate to rebound to
66.5%.
Some economists have predicted that the
homeownership rate will continue to decline
given that Hispanic families are expected to be
the largest share of new households and they
tend to have low rates of homeownership.
Millennials in their 20s and 30s have also been
slow to transition from renting to buying.
But experts at the Mortgage Bankers
Association say that downward spiral will level
off or reverse in part for a simple reason: The
U.S. population is growing older and those
older people are much more likely to own than
to rent.
Four out of five households headed by
someone age 25 or younger rented their home,
compared with just 44% of those ages 35 to

39. Two-thirds of the projected population

growth among Hispanics will be among people
40 years old and older.
Indeed, most of the new households formed
over the next decade wont be young people
striking out on their own but those over the age
of 60. Baby boomers are expected to form
nearly 13 million new households, netting 10
million additional owner households. That is
compared with just over five million households
formed by the younger millennial generation,
netting an additional four million owners.
Ms. Fisher said that some of that is driven by
people over the age of 60 living longer and
healthier lives. Some are likely to choose to
stay in their current homes but others may
choose to sell and become renters or divorce
and form separate households, driving growth
in housing demand.

10

Builders Outlook

2015 issue 8

DEVELOPMENT

City to Extend Westin Hotel/Retail Complex Deadlines

www.elpasodevnews.com

The stalled Westin Hotel and retail

complex that is planned near the El
Paso International Airport is not dead,
according to a City Council agenda
item. City Representatives will
consider extending deadlines to the
incentives package and lease
agreement that was approved for the
project in 2013 due to an active
lawsuit brought by nearby hotels.
Acequia Park, the name given to
the complex by the developer, EP
Vida, will consist of a 220-room hotel
and attached retail complex on nine
acres at the corner of Airway
Boulevard and Boeing Drive.
The $64 million project was
supposed to commence construction

An artistic rendering of the Acequia Park hotel and retail

development planned for El Paso International Airport land.
(Ronkot Design Vimeo Channel)

within twelve months of the

incentives package approval, or by
May 2014. The project has since
been delayed due to a lawsuit filed
by a group of nearby hotels. (Story:
Airport Hotels Suing City of El Paso
and Westin Developer)
An amendment that will be
considered by City Council this week
states that the incentives agreement
will be extended due to the pending
litigation. This will allow the developer
to receive the same amount of time
for incentives and reimbursements.
However, the developer will still need
to begin paying rent as originally
scheduled.
Construction must be completed
within 24 months of the date the
lawsuit is finalized.

ECONOMY
Sales slightly less
than expected

g g
Merchant Services
Internet & Mobile
Banking
eS
Statements
Online Bill Pay
Remote Deposit

N. M
esa S
t.

Trawood
awood Dr.

S. Re
sler D
r.

S. Re
sler D
r.

esa S
t.

Gateway

East

Lee Trevino Dr.

N. M

Lee Trevino Dr.

New U.S. single-family home sales

rose a bit less than expected in July, but
the trend pointed to housing market
strength that should underpin economic
growth for the rest of the year.
The Commerce Department said on
Tuesday sales increased 5.4 percent to
a seasonally adjusted annual rate of
507,000 units. June's sales pace was
revised slightly down to 481,000 units
from the previously reported 482,000
units.
Economists polled by Reuters had
forecast new home sales, which account
for 8.3 percent of the market, rising to a
510,000 unit-rate. Sales were up 25.8
percent compared to July of last year.
The housing market is gaining stream,
with data last week showing home
resales jumped to a near 8-1/2-year
high in July and groundbreaking on new
home building climbing to its highest
level since October 2007.
The recovery in the sector, which
touches almost all spheres of the U.S.
economy, is being driven by a tightening
labor market. Solid job growth is
boosting confidence among Americans
and encouraging young adults to move
out of their childhood homes.
Housing is expected to contribute to
gross domestic product this year, but
remains constrained by a persistent
shortage of homes available for sale.
New homes sales surged 23.1 percent
in the Northeast to the highest level
since May 2014. Sales increased 6.7
percent in the West and were up 5.8
percent in the populous South. In the
Midwest, sales fell 6.9 percent.
The stock of new houses for sale
increased 1.9 percent to 218,000 last
month, the highest level since March
2010. Still, supply remains less than half
of what it was at the height of the
housing boom.
At July's sales pace it would take 5.2
months to clear the supply of houses on
the market, down from 5.3 months in
June. The median price of a new home
rose 2 percent from a year ago to
$285,900.

2015 issue 8

11

Builders Outlook

SPECIAL REPORT:

Obama's Clean Power Plan:

Solar Energy, Panels Expected To Increase
In Homes As Costs Continue To Drop
By Sarah Berger www.ibtimes.com
If President Obama has his way, a
growing number of states will be
using sunshine for more than just a
healthy dose of Vitamin D. From the
East Room of the White House
Monday, Obama laid out his
ambitious plan for Americans to
employ solar energy to power their
homes, and energy experts predict
they will, largely due to increasing
affordability.
The trend we have seen over the
past six years has been a massive
decrease in solar energy prices for
consumers, said Rhone Resch, CEO
of Solar Industries Energy
Association, a group that found solar
technology coupled with a growing
industry has led to plummeting prices
over the past decade. Solar energy
is significantly lower than natural gas,
and those rates are guaranteed for
20 years. The price [of natural gas]
might be low today, but you cant lock
in that price for 20 years, like you
can with solar energy."
The Popularity Of The Solar
Industry
The U.S. residential solar market
grew by 76 percent during the first
quarter in 2015, with 437 new
megawatts of solar electric devices
installed in the first three months of
the year, a trend that the Solar
Industries Energy Association
attributed to falling prices. The
average cost of a residential solar
system has become lower than it was
in 2010 by 50 percent. Under
Obamas Clean Power Plan, which
sets targets and guidelines for how to
meet the new carbon emission
levels, Americans can expect to see
even further declining costs, Resch
said. The proposed regulations to
combat climate change will likely
spur an exponential amount of
additional solar deployment, along
with the 50,000 megawatts that are
expected to come online--meaning
they will be fully generating power
and past the testing phase- before
2020, Reschs group predicted.
olar Industries Energy Association
was not alone in its optimistic outlook
for the future of solar energy in
American homes. Americans will
continue to install rooftop solar as it
becomes more and more affordable,
especially if Obama's plan passes,
Gabe Elsner, the executive director
at the Energy and Policy Institute,
anticipated. Prices are expected to
decrease an additional 40 percent by
2017 according to Deutsche Bank,
and Bloomberg New Energy Finance
forecast a total of $3.7 trillion in solar
investment between now and 2040.
"The cost of renewable energy is
plummeting and becoming more
cost-competitive every year... Even if
we ignore the negative impacts of

Critics of the Obama plan say low-income families wont be able to afford the
type of renewable energy that the proposal calls for, contrary to what others
have said. Proponents for the plan and the move toward solar said the
government is working hard to create initiatives to help families strapped for
cash make the switch to renewable energy, such as solar panels.
fossil fuels, clean energy will be able
to compete head-to-head with fossil
fuels in the market, and when we
factor in energy efficiency, the Clean
Power Plan will save families money
on their bills," said Elsner, whose
Washington, D.C.-based pro-clean
energy think tank works to expose
attacks on clean technology and
counter misinformation by fossil fuel
and utility interests.
Differing State-By-State
Although solar industry specialists
have estimated that the Clean Power
Plan will cause an uptick in the
number of residential solar systems
deployed each year, exactly how
much of an increase will largely be
determined by subsidies, which will
differ state by state. States have
significant policy flexibility under the
plan, and while the new regulations
encourage families and businesses
to invest in solar power, theyre not
require to do so, Resch said. States
will have until 2018 to submit their
plans, and many states will most
likely offer subsidiaries to residential
homes that invest in solar energy,
because the states can then count
those resulting emission reductions
towards the Clean Power Plan.
Still, the specifics of Obamas plan
as they relate to solar energy were
left open to interpretation. "We will
have to wait another few years to find
out if and how exactly distributed
solar will be incentivized in each of
the 50 states," said Julie Pyper, a

senior writer at Greentech Media, a

leading news site that covers clean
energy. "A lot could change with
respect to the economics and
business models around solar in that
time."
Currently, the way solar energy
could benefit its users varies
dramatically state by state. Illinois, for
example, offers a rebate program for
a variety of sectors, including
residential, commercial and
government buildings that use solar
energy. Many states offer similar
rebate programs, but the details of
those programs differ. Even people in
California and Arizona were putting
up solar panels with little to no
incentives, often through a lease
structure with a solar company,
Pyper said.
Prices of actual solar energy vary
per state, as well. In 2011, it cost
California homeowners on average
about $10,000 to go solar, but in
Florida it cost residents about
$25,000. Still, the average Floridian
would save around $30,000 to
$39,000 over the course of 20 years,
and in California, New York, Nevada,
New Mexico and Arizona those
savings could reach beyond $40,000,
Cost of Solar reported.
Green For Everyone
Critics of the Obama plan say lowincome families wont be able to
afford the type of renewable energy
that the proposal calls for, contrary to
what others have said. Proponents
for the plan and the move toward

solar said the government is working

hard to create initiatives to help
families strapped for cash make the
switch to renewable energy, such as
solar panels.
Components of the initiative
announced last month by the Obama
administration include a National
Community Solar Partnership that
would do the following: unlock
access to solar energy for nearly 50
percent of households and
businesses that do not have
adequate roof space to install solar
systems; set a goal to install 300
megawatts of renewable energy in
federally subsidized housing; provide
technical assistance to make it easier
to install solar; and make available
more than $520 million in
independent commitments from
philanthropic and impact investors
and states and cities to advance
community solar energy and scale up
solar and energy efficiency for lowand moderate-income households.
Solar business models are all
about devising ways to spread out
the up-front costs required for solar
installation, so that customers can
start saving money on their electricity
bills from day one, said Pyper, the
Greentech writer.
"Low-income families can afford
solar because utilities and private
companies are setting up programs
where they cover the costs, and for
the most part, these families simply
see a savings on their bills."

12

Builders Outlook

2015 issue 8

MARKET WATCH

Does the Stock Market Affect the Housing Market?

Note: The Builders Outlook thought it
would be important to ask the
question about how the stock market
affects housing. For some of our
readers this will help you understand
it better and prepare you for the next
roller coaster ride.

by Thomas Metcalf, Demand Media

Macroeconomic variables, such as

the stock market, building permits and
housing starts, fluctuate in patterns
that repeat themselves in predictable
ways. As the economy pulls out of a
recession, investors, anticipating
increased home building, begin to buy
construction-related stocks, fueling
market movement. Rising stock
market prices precede the renewal of
the housing sector.
Stock Market and Housing
The housing and stock markets are
interconnected in multiple ways.

Major home builders shares are

traded in the stock market. Home
improvement companies tied to home
building also trade on the stock
exchange. The housing sector dips
deep into the economy as furniture
manufacturers, plumbers, electricians,
landscapers and more are all
dependent on housing. Housing starts
and the stock market are both leading
indicators of economic activity.
Psychological Factors
Consumer confidence is a major
consideration when people purchase
durable goods and real estate. Few
people are likely to commit to a big
mortgage payment if they feel that
their economic future is uncertain.
When the stock market retreats and
the value of portfolios declines,
investors are impacted
psychologically. Even if the portfolios
are in IRAs, which will not be touched
for years, peoples confidence is
shaken. Loss of confidence can
spread like a virus, affecting others
who have not been financially hurt but
have nevertheless become unnerved
by news surrounding the economy.
Funds for Home Mortgages
Down payments for real estate
purchases have varied in the past,
but following the housing crash that
began in 2007, credit requirements
tightened. Lenders began requiring

larger down payments than they had

before the housing bubble and crash.
For some home buyers, the funds for
their down payment comes from their
stock portfolios. When the stock
market slides, so does the net worth
of investors. Without the necessary
liquidity to make the down payments,
home buyers are forced to defer their
purchases. Rising stock prices restore
portfolio values, creating the funds for
home buying.

Real Estate in Portfolios

As the value of stock portfolios
increases, investors may look to other
investment instruments to diversify
their holdings. Real estate is one
alternative. Families will purchase
second homes or lock in current
prices and rates by purchasing
property with the intent to build later.
Investors will purchase rental homes.
Conversely, if the stock market were
to fall, it is likely that real estate prices
would follow suit.

2015 Issue 8

13

Builders Outlook

www.elpasobuilders.com
www.epbuilders.org

Membership News
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14

Builders Outlook

2015 issue 8

Associates Council

Sam Shallenberger
Morrison Supply

Here comes the end of summer and

weve been busy. Its not all work and

no play as many of us took some welldeserved time off this summer. Some
of you probably are planning to do
some Labor day or other celebratory
event soon but the business of the
association goes on. Our bowling
event was awesome as we had 24
teams enjoy and afternoon of fun and
networking. Thanks to our sponsors
who stepped up and allowed us not to
worry about holding one or not. I also
am glad Ray changed the venue to

Bowling with Builders,

August 19, 2015

Oasis Bowl. I have heard nothing but

good about that place and how they
treated us. Coming up is some
important stuff with the association
and its ability to serve our needs. I will
be officially stepping down from this
spot and hope that we can fill it with
an energetic associate member willing
to spend time and money helping
represent the largest membership
group. If you think you have what it
takes talk to Ray or call me and Ill be
happy to share my experience. Its fun

but not for anyone who cant devote

time and money because thats what it
takes. I enjoyed my years of service
and will be there to help the new chair
any way I can. Get ready for Speed
Networking this September 15 at the
association hall. Sign up today or be
left out, simple as that. Enjoy your
late summer adventures and lets have
a strong September. Go sell
something.

2015 Issue 8

15

Builders Outlook

ElPasoDisposal

Builders

utlook
772-7495

www.elpasobuilders.com
www.epbuilders.org
6046 Surety Dr. El Paso, TX 79905
915-778-5387 Fax: 915-772-3038
execuTIve OFFIcers
edgar montiel, President
Palo Verde Homes
carlos villalobos, vice President
Pointe Homes
Don rassette, secretary/Treasurer
Rassette Homes
sam shallenberger, Associates chair
Morrison Supply

Sam Shallenberger
NATIONAL DIrecTOrs
Bobby Bowling IV.
Demetrio Jimenez
NATIONAL AssOcIATION OF
HOme buILDers
(800) 368-5242
TexAs AssOcIATION OF
buILDers

Frank Torres, Immediate Past President

GMf Homes

(800)252-3625

ray Adauto, executive vice President

Executive Vice President
Jay Kerr -Attorney of record
Firth, Johnston, Bunn & Kerr
cOuNcIL/cOmmITTee cHAIrs
Associates council
Sam Shallenberger
build Pac
Randy Bowling
Land use council
Linda Troncoso
Young Designer Award
John Chaney
remodelers council
Rudy Guel
membership retentiion
Patrick Tuttle
Finance committee
Kathy Carrillo
Henry Tinajero

For All Your Electrical Needs

Residential Specialists
Tract Homes Custom Homes

2014 builder member Of The Year

Frank Torres
GMf Homes
2014 Pat cox Award
bret Thompson
foxworth Galbraith Lumber
2014 Associated Of The Year
Joe bernal
Employee Benefits Of El Paso
2014 John shatzman Award
Cindy Bilbe, Stewart Title
Honorary Life members
Mark Dyer
Wayne Grinnell
Don Henderson
Chester Lovelady
Cliff C. Anthes
Anna Gill
Brad Roe
Greg Bowling Rudy Guel
Bobby Bowling, IV
Kelly SorensonE H Baeza Rudy Guel
Mark Dyer
Anna Gil
Past Presidents
Mike Santamaria
Bradley Roe
committed toBob
serve
John Cullers
Bowling, III
Randy Bowling
Edmundo Dena
Doug Schwartz
Hershel Stringfield
Robert Baeza
Pat Woods

ADvIsOrY TO THe bOArD

Jay Kerr, Firth, Johnston, Bunn & Kerr
James Martinez, Law Office of James Martinez

Total Customer
Satisfaction

915-208-9313
602-708-7560

Advertise your
business to the
home building
industry

bOArD OF DIrecTOrs

Antonio Cervantes, BIC Homes

Bret Thompson, foxworth Galbraith Lumber
Bud foster, Southwest Land Development Servises
Dan Ruth, Millienium Homes
Henry Tinajero, West Star Bank
Joe Bernal, Employee Benefits Of El Paso
John Chaney, Passage Supply
John Dorney, Dorney Security

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.

Kathy Carrillo, Pioneer Bank

Kathy Parry, Hunt Companies
Leti Navarette, Custom Dream Homes
Linda Troncoso, TRE & Associates
Robert Najera, Joseph Homes
Walter Lujan, Dawco Builders

2015 Builders Outlook

is published and distributed for the
El Paso Association of Builders
by Ted Escobedo, Snappy Publishing
ted@snappypublishing.com
El Paso Texas 915-820-2800

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
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TAb sTATe DIrecTOrs

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Greg Bowling

Call 778-5387 today for more information