A unanimous decision handed down by the U.S. Supreme Court this week is a huge victory for property rights advocates and very good news for NAHB's members.
In Sackett v. U.S. Environmental Protection Agency, the Court agreed with NAHB arguments (submitted in the form of two amicus briefs) that a property owner who receives a Compliance Order from the EPA or Army Corps of Engineers should be able to obtain judicial review in court. The case involved property owners Michael and Chantell Sackett, who owned an undeveloped half-acre lot in a residential area near Priest Lake, Idaho. When the Sacketts began the process of building their dream home by preparing the lot for development, the EPA accused them of placing fill material into a jurisdictional wetland and issued a Compliance Order requiring them to immediately remove that material and restore the wetland -- or face thousands of dollars in fines for every day they did not do so. When the EPA denied the Sacketts' request for an administrative hearing to challenge the order, they filed an action in district court seeking relief, but both the district court and the Court of Appeals for the Ninth Circuit held that the Clean Water Act (CWA) precluded pre-enforcement judicial review of Administrative Compliance Orders. On March 21, every member of the U.S. Supreme Court was in agreement in deciding that "there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into 'voluntary compliance' without judicial review." Moreover, two of the Justices (Ginsburg and Alito) wrote concurring opinions in which they explained that because the EPA had determined its jurisdiction over the Sacketts' property, judicial review was appropriate.
This decision is extremely important to our industry because home builders (like the Sacketts) are often subject to Administrative Compliance Orders with no means to challenge them, unless the government decides to file an enforcement action or the builder applies for and is denied a CWA Section 404 permit. As of now, this is no longer the case. Instead, any builder who receives a CWA Compliance Order can now challenge that order in federal court. In addition, whereas builders have previously had no place to turn when the EPA or Army Corps determines that a wetland or water body on their property falls under the agency's jurisdiction, Justices Ginsburg and Alito have now indicated that they may in fact seek relief in court.
In an official NAHB reaction statement, Chairman Barry Rutenberg summed it up in saying, "This ruling provides a check on EPA's capricious expansion of its regulatory authority. Finally, home owners and home builders have a way of challenging EPA Compliance Orders before they face big fines." Read the Justices' opinion online here, or for more information on this outstanding legal victory, contact Tom Ward (800-368-5242 x8230).
NAHB Chairman Barry Rutenberg and First Vice Chairman Rick Judson this week conducted two days of meetings with Democratic and Republican leaders in both chambers of Congress to urge lawmakers to pursue a strong national agenda for housing. Taking advantage of every opportunity to reiterate the importance of housing and homeownership to the economy, they held multiple meetings with influential lawmakers from both sides of the political aisle, including Senate Majority Leader Harry Reid (D-Nev.); Senate Minority Leader Mitch McConnell (R-Ky.); House Majority Leader Eric Cantor (R-Va.); Rep. Steve Israel (D-N.Y.), chairman of the Democratic Congressional Campaign Committee; and Rep. Carolyn Maloney (D-N.Y.), ranking member of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. Their discussions focused on the need to enact policies that would provide a stable and affordable supply of credit for home buyers, home builders and rental housing, and the importance of reducing unnecessary regulations to make homeownership more affordable for firefighters, teachers, police officers and other middle-class families. Seeking to build bipartisan consensus for housing priorities among Washington power brokers, the two NAHB Senior Officers also held productive meetings with Sen. Patty Murray (D-Wash.), the chairman of the Democratic Senatorial Campaign Committee, and Sen. John Cornyn (R-Texas), the chairman of the National Republican Senatorial Committee.
Amidst this presidential election year, when so much hangs in the balance for the housing industry, these meetings will help to lay the groundwork for a successful NAHB Legislative Conference on Wednesday, June 6. Builders seeking the rare opportunity to walk the halls of Congress with their colleagues and to meet with their lawmakers to discuss the issues of concern for the housing industry are encouraged to log on to www.nahb.org/legcon and register now to attend the industry’s most important lobbying event of the year. For more information on the NAHB Legislative Conference, contact Nick Gentile at 800-368-5242 x8542.
Speaking at the spring meeting of the Financial Services Roundtable this week, NAHB Chairman Barry Rutenberg provided the home builder's perspective on a variety of important subjects concerning both of our memberships. The Financial Services Roundtable represents major financial services companies involved in banking, insurance and investment products and services. In a panel discussion on "reviving the housing market," Barry answered questions regarding the current state of the industry, efforts that the private sector and government need to take to promote a housing and economic recovery, and ways to responsibly expand loan modifications and reduce the inventory of foreclosed properties, among other subjects. Asked to define what needs to be done to reduce the inventory of Real Estate Owned (REO) property that is currently on bankers' books, Barry noted NAHB's support for efforts to develop programs for investor purchase of foreclosed homes that will then be held off the market for a period as rental units. He also said that NAHB believes that changes must be made to ensure that smaller investors -- including home builders who know their communities -- can invest in these properties, and provided several key recommendations in this area. Barry also talked at length about the need to reform appraisal practices and oversight to ensure that appraisals reflect true market values, and explained NAHB's recommended plan for reforming the housing finance system. In all, Barry's invitation to speak at this special forum represented a fantastic opportunity to continue our work with the nation's top banking, insurance and investment executives on efforts to get housing and the economy back on track. Contact: Dave Ledford (800-368-5242 x8265)
As part of a very busy week at the National Housing Center, NAHB hosted a special briefing on top housing issues for the Democratic Lieutenant Governors Association (DLGA), whose members were in town for a meeting of the National Lieutenant Governors Association. On March 20, NAHB Chairman Barry Rutenberg and CEO Jerry Howard sat down for a private breakfast discussion on key housing matters with members of the DLGA. This was followed by a thorough economic and political briefing provided by NAHB Chief Economist David Crowe and Celinda Lake, head of the polling firm Lake Research Partners - whose efforts have contributed to NAHB's new messaging strategy on the importance of homeownership to voting Americans. While Dave provided the latest economic and housing forecast, Celinda presented an overview of the results of recent NAHB-commissioned polls showing that the vast majority of Americans still consider homeownership as one of their most important goals/achievements and do not favor government actions that would discourage or prevent credit-qualified families from buying a home. NAHB's representatives also encouraged the Lieutenant Governors to bring our messages on the importance of homeownership directly to Vice President Joe Biden, with whom they were scheduled to meet the following day. These efforts were just the latest in a series of NAHB outreach activities aimed at elevating housing in the public and political debate as the election season continues. For more information on the DLGA meeting, contact Steve Gallagher (800-368-5242 x8319).
The International Code Council (ICC) will be releasing the first edition of its International Green Construction Code (IGCC) on March 28, and NAHB's codes specialists wanted to give you an idea of what to expect. Of special significance to builders is the fact that all residential construction is covered in the IGCC, but scoped in different ways according to the height of the building. Specifically, for the typical one- and two-family home constructed to the International Residential Code (IRC), R-3 residential buildings constructed to the International Building Code (IBC), and multifamily R-2 buildings and R-4 buildings constructed to the IBC that are four or less stories in height (including any accessory structures and the site or lot upon which these buildings are located), the IGCC will not apply unless the adopting jurisdiction specifically states it will regulate these buildings through the IGCC. This important distinction provides HBAs with the opportunity to address their concerns related to regulating green construction for low-rise residential buildings, including any conflicts with local green building programs that are already in place. If a jurisdiction does decide to regulate green construction for low-rise residential buildings, these buildings will be required to comply with the provisions and practices of the ICC 700 (the National Green Building Standard), not the requirements of the IGCC.
All R-2 and R-4 residential buildings that are five or more stories in height, as well as residential portions of mixed-use buildings, are covered under the IGCC. However, these buildings can be constructed using either the IGCC or ICC 700. If the builder chooses to use ICC 700, that project is considered “deemed-to-comply” with the requirements of the IGCC but will need to meet the minimum energy efficiency requirements of the ICC 700 Silver Level or equivalent. As with low-rise residential buildings, if ICC 700 is chosen, any accessory structures and the site or lot upon which these buildings are located will be covered under ICC 700.
Requirements contained in the IGCC are for the most part mandatory, with little room to use alternative methods for compliance. In contrast, the NAHB-developed National Green Building Standard is a point-based system that has four levels for green construction, and provides a variety of different green practices from which the builder can choose to reach the specified level.
For more than two years, NAHB has been covering the development of the first IGCC by submitting proposals and comments, attending the numerous meetings and hearings related to its creation, and being actively involved with the ICC to ensure that the final scope of the IGCC addressed our members' concerns. Staff will also be developing a Builder Code Adoption Kit to assist HBAs in areas where the IGCC is slated to be adopted. Your contact for more information is Larry Brown (800-368-5242 x8565).
Builder confidence in the market for newly built, single-family homes was unchanged in March from a revised level of 28 on the NAHB/Wells Fargo Housing Market Index (HMI), released on March 19. This means that following five consecutive months of gains, the HMI is now holding at its highest level since June of 2007. NAHB Chief Economist David Crowe observed that "Builder confidence is now twice as strong as it was six months ago, and the West was the only region to experience a decline this month following an unusual spike in February." Nevertheless, he noted that many of our members continue to cite obstacles on the road to recovery, including persistently tight builder and buyer credit and the ongoing inventory of distressed properties in some markets. While the HMI component gauging current sales conditions declined one point to 29 in March, the component gauging sales expectations in the next six months continued climbing for a sixth straight month, posting a two-point increase to 36. Also, the component gauging traffic of prospective buyers held unchanged at 22, which, while low on the 100-point scale, ties for the highest level that component has reached since June of 2007. Regionally in March, the HMI gained five points to 25 in the Northeast, two points to 32 in the Midwest and two points to 27 in the South, but fell 10 points in the West following a 22-point gain in the previous month. For more information, read NAHB's press release, view the HMI tables online or contact Rose Quint at 800-368-5242 x8527.
Nationwide housing starts edged down 1.1% to a seasonally adjusted annual rate of 698,000 units in February, according to government figures released on March 20. This was the second-best pace of new construction since October of 2008 following an upwardly revised 706,000-unit pace in January. On the single-family side, after four consecutive months of gains, starts declined 9.9% to a seasonally adjusted annual rate of 457,000 units in February. Meanwhile, on the multifamily side, starts gained 21.1% to a 241,000-unit rate. Regionally, combined starts activity was mixed in February, with the Midwest and South posting gains of 3% and 1.5%, respectively, and the Northeast and West posting respective declines of 12.3% and 5.9%.
The starts numbers were accompanied by some very positive permit data. Specifically, nationwide permit issuance rose by just over 5% to a seasonally adjusted 717,000 units in February – the strongest pace since October 2008. This gain was reflected across both sectors of the market, with single-family permits up 4.9% to 472,000 units (best pace since April of 2010) and multifamily permits up 5.6% to 245,000 units (best pace since October 2008). Permit issuance was also up in three out of four regions of the country, with gains registered in the Northeast (up 14.3%), the Midwest (up 14.7%) and the West (up 12.8%). Meanwhile, the South posted a 1.9% decline following a significant gain in the previous month. Commenting on the latest numbers, NAHB Chief Economist David Crowe said, “NAHB’s most recent builder surveys have shown steady improvement in builder expectations for the next six months, and the February report reflects that optimism in the permit numbers, which are up across the board and are typically the most statistically reliable data." He also said that January’s exceptionally good weather was likely a factor in pulling some single-family starts activity forward that might otherwise have occurred in February. Read NAHB's press release here or view the government's full report online. Contact: MondayMorningQuestions@nahb.org
Sales of newly built, single-family homes slowed by 1.6% to a seasonally adjusted annual rate of 313,000 units in February, according to data released by the government on March 23. On a regional basis, the data indicated gains of 14.3% in the Northeast and 8% in the West, and declines of 2.4% in the Midwest and 7.2% in the South. Meanwhile, the inventory of new homes for sale held unchanged at a record low of 150,000 units, which indicated a 5.8-month supply at the current sales pace. NAHB Chief Economist David Crowe said that exceptionally good weather conditions in December could have helped pull some home sales forward that would otherwise have occurred in January and February. But he also noted that the February sales rate is still up 11.4% year-over-year, and that the quarterly average sales pace is at a two-year high. Dave also pointed out that the sales report indicated greater buying activity in the above-$200,000 range in February. This suggests that those who have higher incomes and can more easily qualify for a mortgage are the ones who are moving forward with a home purchase, while first-timers who are looking in the lower price ranges may be having a tougher time getting qualified. For details, read NAHB's press release or the government's full report online. Contact: MondayMorningQuestions@nahb.org.
An interesting item in NAHB's Eye on Housing blog this week looks at recent data from the Survey of Market Absorption of Apartments (SOMA), which is produced by the Census Bureau and the Department of Housing and Urban Development. Our blog specifically notes how this data highlights the importance of extending the 9% credit rate for the Low Income Housing Tax Credit, an NAHB advocacy priority. Below are a few highlights from the piece:
For unfinished apartments, the SOMA data indicate a return to strength after a soft patch during the middle of 2011. The fourth quarter three-month absorption rate grew to 67%, the highest rate since early 2005. This occurred despite the fact that completions were also up for this period, totaling 24,500.
Even more strength was evident in the for-sale multifamily sector. The three-month absorption rate for units completed during the third quarter of 2011 and sold during the fourth quarter accelerated to 80%, a level not seen since 2005. However, this high rate of sales is tempered by the fact that the 3,000 units that were completed during the third quarter were but a fraction of what was produced in healthier times.
Low-Income Housing Tax Credit Units
The SOMA data illustrate the importance of the LIHTC program in terms of supporting multifamily construction activity, job creation, and providing affordable housing during the housing crisis. Two critical policy changes ensured that LIHTC-related starts did not collapse during 2009 and 2010, and in fact resulted in the share of multifamily 5+ unit completions due to the LIHTC program growing from less than 20% on average to 25% or more. One of these changes, the fixed 9% credit rate, expires soon and NAHB is seeking an extension, which would ensure investment in affordable housing. If this provision is not extended, private equity in LIHTC projects would decrease by more than 15%. This would come at a time when sources of gap financing are dwindling and demand for affordable housing remains acute.
NAHB BuilderBooks is hosting a free webinar focused on ways to generate leads and sales using Internet marketing at 2:00 p.m. ET on Wednesday, April 11. Log on to find out how to recharge your web presence, convert online prospects into actual buyers, and effectively use the tools available to you to strengthen your brand on the Internet. The program, “Generate Leads and Sales with Internet Marketing,” will feature Internet marketing expert Mitch Levinson, MIRM, managing partner of mRevelance and author of Internet Marketing: The Key to Increased Home Sales. Participants will earn one hour of continuing education credit for their NAHB professional designation.
This webinar is offered free of charge thanks to the generous support of Liberty Mutual, NAHB’s auto and home insurance affinity program partner. Visit the Liberty Mutual Auto & Home Insurance website or call 800-531-3398.
The HBA of Southern Indiana is supporting the rebuilding process now under way after a tornado ripped through the state on March 2, destroying hundreds of homes. With the help of the nearby HBA of Louisville, Ky., association leaders have launched a fundraising drive to help pay for the construction of new homes for families who lost everything – and had no homeowners’ insurance. Local builder Greg Furnish is collecting various building supplies and has already filled a warehouse near Henryville, Ind., with enough materials to complete 20 homes, according to Southern Indiana EO Dawn McLean. Organizations including Samaritan’s Purse and the Red Cross as well as a local television station are also leading the effort. While the state association has a charitable arm, its designated focus is on education and scholarships. Since the Louisville charitable fund is able to take donations for disaster assistance, that organization's help was gladly accepted when Louisville's builders offered it. For those who would like to contribute to this important effort, donations can be made online at the Building Industry Charitable Foundation website, and those donations that are made before April 16 will be earmarked for the rebuilding fund.
We are sad to report the passing of Lt. Colonel Herbert Ferlmann, USAF (Retired), on March 18, at the age of 85. A longtime member of the NAHB family, Herb was the first Staff Vice President of the National Council of the Housing Industry, which is now known as the Leading Suppliers Council, and frequently chaired that organization's annual golf outing. NAHB was Herb's second successful career in what was truly a lifetime of significant achievement. Born in Peoria, Ill., he enlisted in the U.S. Navy in 1944 and served in the Pacific Theater aboard the USS Mount Olympus until the end of the war. After earning a degree in Aeronautical Engineering from Parks College of Engineering, Aviation and Technology, he then joined the U.S. Air Force, attending flight school to become a military pilot. He and his wife, Doris, moved multiple times for assignments at various military installations, ending with a tour of duty in Washington, D.C. Upon retiring from the Air Force in 1970, he embarked upon his career with NAHB. In his second retirement, Herb bought a sailboat and could often be found sailing on the Potomac River with his family and friends. He was also a community volunteer who selflessly devoted time to helping others, and was a beloved father and grandfather. Our hearts are with Herb's family at this difficult time. A more complete obituary is available here.
For the latest housing/economic news and analysis:
Eye on Housing blog (continuously updated)
For in-depth legislative and regulatory news:
Washington Update (published on 3/23/2012)