PRESIDENT’S MESSAGE | August 2013

Well, well……

I was told this newsletter is our “End of Summer” edition and as I look at my calendar I see that I have not taken a vacation and now I am noticing school corners are posting their first day of fall classes…..Ok…where did summer go???

Well, I can all but assure you at BIA we know our seasons and as summer winds down, staff and our decision makers are saddling up for fall/winter season and we too are looking ahead to see what challenges we will be facing.  Many jurisdictions are gearing up to raise fees and the days of deferrals are becoming increasingly more difficult!  I am working hand in hand with Bill Blankenship to lend my support wherever he needs it and we may be calling upon some of you too to help us reinforce the reality that our marketplace remains fragile, yet promising.

While national employment numbers seem to be on the mend, here in Riverside County we still face some of the highest unemployment rates in the state. We have all experienced some fantastic home sales this summer but BIA is not resting on a few good months as we continue to work hard with our decision makers to prevent additional regulations and fee increases as we all try and build on our robust sales.

As I bounce from city to city in my daily travels I have met with a number of elected officials, city managers and planning directors and they all seem to be singing the same tune…. “We got hammered when the market came to a standstill and now we are getting hammered again on the upswing: Low staffing levels, decreased work hours, shorter weeks, and now our plan check times are getting hammered.”

My best advice is to tell your project managers and planners that it is crucial to sit down before a submittal and walk thru the details of every application and work product.  Iron out the issues before you submit. Achieve clarity and don’t assume that what you are preparing is what the city wants to see. KNOW the process. Don’t be afraid of the question, just the answer.  Also, work out reasonable time-frames up front not after you submit!  The advice I like the most - Tell your project team, “Go visit your city staff every once in a while.”  Stop in and actually develop relationships.  It never ceases to amaze me that after 35 years of entitlements, there is one thing I have learned that never changes, getting “face time” means a whole lot more than an email.

Well, all of us here at Riverside BIA remain committed to help any of you wherever we can.  Your membership is very important to us.  Your participation at our events over this past summer has been incredible!  Overall, as a sitting member of BIASC’s Governing Board I can tell you that while we still have some catching up to do, our Membership is up, our budgets look a lot better and we are nearing the final touches under our new ‘One Membership’ organization! But there is one thing that will never, ever change.  All of us at the local chapters, our executive officers and our dedicated staff are always standing by to help.

So, I hope you all enjoyed a terrific summer, enjoy the rest of August and my favorite time September! Again, from all of us THANK YOU for helping BIA remain strong and supporting us in making our industry a little easier….

 

Dan Boyd-D.R. Horton,
President, BIA Riverside County Chapter

More Great News on TUMF Reductions

Your Riverside BIA Government Affairs team is always eager to share good news when it comes to housing opportunities and homebuilding.

That's why we are very pleased to report that the Riverside County Board of Supervisors, Riverside City Council, Eastvale City Council and Perris City Council have all voted unanimously to extend temporary 50% TUMF reductions in their jurisdictions through 2012. The new City of Jurupa Valley also has a 50% reduction in place.

These votes were made possible due to recent action by the Western Riverside Council of Governments (WRCOG) Executive Committee, which approved an extension of the temporary 50% TUMF reduction opportunity for 2012, allowing WRCOG jurisdictions to decide whether or not to adopt the reduction for 2012.

Keep in mind that because TUMF reduction ordinances require two public readings, some jurisdictions will have a short time period where full TUMF rates will be collected. Please contact your Government Affairs team to get these dates for your area.

The Riverside BIA Government Affairs team will continue to solicit support for the 50% reduction in other jurisdictions and look forward to reporting continued good news!

Fall New Home Showcase Extended

The Fall New Home Showcase has proved so popular with potential homebuyers that it has been extended through October 31.

Co-sponsored by the Building Industry Association of Southern California (BIASC) and the Greater Sales and Marketing Council (GSMC), the Showcase promotion is spearheaded by 18 leading homebuilders whose 53-plus new-home developments are currently selling in Riverside, Los Angeles, Ventura, Orange, San Bernardino and North San Diego counties.

The builders are partnering with a variety of partners such as Bloomingdale’s, Lowe’s, Edison, the Gas Company, Sub-Zero®, Wolf®, and Zillow, to name a few, to host a series of special events highlighting the latest and best of new technology, interior design trends, energy efficiency, outdoor living and more.

The Showcase began September 15 and was originally scheduled to end on October 15, but high interest led promoters to extend it another two weeks.

View Upcoming Showcase Events

View Participating Developments

Visit the Showcase Facebook Page

Is it a good time to buy a house?

Uncertain times became even more uncertain this week with the stock market volatility.  Obviously consumers have a lot of questions, and KCAL9 viewers weren't shy about asking KNX Business Reporter Frank Mottek for his advice today on whether it's a good time to buy a house. In fact, it was his very first question.

His advice:  Indications are that the market is bottoming out or close to bottoming out. If you have decent credit and a good job and are able to put down a down payment, it's a good time to starting looking around.

New Report Cites Housing's Critical Importance to CA Economy

The Public Policy Institute of California released a report, "California Housing," last month as part of PPIC's ongoing Planning for a Better Future project. The four-page brief succinctly points out how critically important housing is for the state's economy and some of the things that should be done to help the industry rebound. Please share this important report with your industry colleagues!

Some of the highlights:

  • The housing depression has caused large losses of construction jobs, "which accounted for 6% of California's jobs when housing prices were at their peak."
  • Despite the drop in housing prices, they remain high in most of California, which helps make the state too expensive for many businesses and employees. "In both the short and the long term, California's economic performance and livability depend on its housing market."
  • Rents in the parts of the state where most people live have actually risen in nominal terms during the recent crisis. "Five of the ten most expensive rental markets in the U.S. are in California: San Francisco, Orange County, San Jose, Ventura County, and Los Angeles."
  • California is far from being the epitome of sprawl that many people contend it is. "(I)ts housing density is 35% above the national average and rising... the Los Angeles and San Francisco metropolitan areas have the second- and third-highest residential density in the U.S., after New York, while San Jose and San Diego are also in the top ten."
  • As we've been saying for some time, there is still a shortage of housing, counter-intuitive though that sounds. "High housing prices indicate that California's housing market is tight; low vacancy rates confirm this." In fact, "the residential vacancy rate in California remains among the lowest in the country. Even in the San Joaquin Valley and Inland Empire, residential vacancy rates are near the national average." Unlike Arizona and Nevada, where foreclosure often leads to abandonment, "in California, foreclosure more often means turnover."

Finally, the report lists three key recommendations: policy makers need to help resolve the foreclosure crisis, fund affordable housing construction, and remove unnecessary barriers to expanding housing supply. Here's what the PPIC says about government barriers:

"Why is housing so expensive in California? Many people and industries are willing to pay a premium to be in California, keeping demand high. At the same time, the supply of new housing is constrained both by geography and regulation. Most of populated California is nestled against the ocean, the Bay, or the mountains - natural barriers to construction. And California has unusually strong land use and building regulations, especially in the major coastal cities, which curtail construction and keep prices high. California cannot move the mountains or fill the ocean, but it can tackle some of the regulations and related rules and fees that contribute to high housing prices (emphasis added)."

Read the full report

California New-Home Construction Rebounds in March

The Construction Industry Research Board (CIRB) recently released some encouraging data on housing starts in California, as measured by the number of building permits issued. 

According to CIRB, permits were pulled for 4,130 total housing units statewide in March, up 9% from the same month a year ago and up 69% from February. Permits for single-family homes totaled 1,644, down 32% from March 2010 but up 28% from the previous month, while multifamily permits totaled 2,486, up 82% from a year ago and up 113% from February. 

For the first three months of the year, permits were pulled for 9,360 total units, down 10% when compared to the first three months of 2010 when 10,371 permits were issued. Permits for single-family homes were down 27% while permits for multifamily units were up 15%. 

View March statistics for CA's metropolitan areas 

KB Home to Include Solar Panels Standard in 10 New Developments

Another BIA member is taking a strong stand to save homebuyers money while protecting the environment.

KB Home recently announced a new initiative to provide solar power systems for its new homes as a standard feature in 10 Southern California communities. The photovoltaic solar systems will help homeowners reduce their monthly energy bills and cost of homeownership for years to come, while also benefiting the environment.

KB Home has provided solar power systems as an option for buyers in the past, but this will be the first series of developments with solar energy systems as standard. The homes will be outfitted with six-panel photovoltaic solar systems built by SunPower Corp. Buyers will have the option of upgrading to systems as large as 14 panels, which could cut electricity bills to zero, Steve Ruffner, president of KB Home's Southern California division and Riverside BIA past president, told the Los Angeles Times.

The 10 new developments will be rolled out this year and in early 2012. The developments are being built in Eastvale, Chula Vista, Temecula, Lancaster, Santa Clarita, Chino, Valencia and Lake Forest. 

Read the full LA Times story

Read the KB Home press release 

Photo credit: Flickr user Nassef

Inland Empire Economic Forecast Sees Hope

Many thanks to everyone who attended our Inland Empire Economic Forecast yesterday at the Riverside Convention Center. Chapman University's chief economist, Esmael Adibi, said that while conomic times are still tough, there is hope that job growth, albeit slow, is on the way.

Speaking before more than 450 business leaders, Adibi said 2011 will be another year of slow improvement.

According to Adibi's forecast, the Inland area could see about 12,000 new jobs this year, 1% increase. That will likely trigger more good economic news. Personal income is expected to rise 3% in 2011, leading to better sales tax revenues for cities as well as Riverside and San Bernardino counties.

On the residential real estate front, low prices and interest rates should start to increase demand, particularly for first-time homebuyers.

"If you have a job and are in the market place to buy something, it's a good opportunity," said Riverside BIA CEO Mark Knorringa.

Please note: We'll post event photos to our Facebook page as soon as they are available. Please be sure you have "friended" the page so you will be alerted when they are available, as well as receive other up-to-the -minute housing news.

Read the San Bernardino Sun article

Photo courtesy of Applied Photography

2010 is Second-lowest Year on Record for Homebuilding in California

The latest data from CBIA and the Construction Industry Research Board shows California homebuilders put up the second-lowest number of homes for a single year in 2010, posting a modest improvement over the record-low that was set in 2009.

CBIA said just 44,601 permits were issued statewide last year for new homes, apartments, condominiums and townhomes, up 23% from 2009, but down 31% from 2008, which had held the distinction of the second-lowest total on record with 64,962 permits issued. Records began being kept in 1954 with the lowest yearly total set in 2009 with 36,421 permits issued. 

In Riverside County, the difference between single-family and multi-family permits was vast.

A total of 3,887 single-family permits were pulled in 2010, up 5% from 2009, and up 2% from 2008. However, permits for multi-family homes totaled 538 in 2010, down 29% from 2009 and down a whopping 74% from 2008. 

View the permit table

Photo credit: Flickr user steveleenow

Economist Sees Bright Spots in Riverside County’s Economy

It's that time of year again when all the economists and forecasters make their predictions for the new year. So far the outlook has been positive, but tempered. Economists seem to think the worst is behind us, but that the recovery will be slow.

At the recent International Builders Show in Orlando, economists said they expect builders to start construction on 575,000 single-family homes this year, up 21% from last year. That would still be far below the 2005 peak of 1.7 million housing starts.

Closer to home, Economist John Husing noted in his quarterly economic forecast that prices in the Inland Empire have stabilized and that affordability has jumped to 64% of area families being able to afford a home. That compares to 15% just three years ago!

And next week the Riverside BIA will be hosting our annual Inland Empire Economic Forecast, a not-to-be-missed event for those wanting to know more details about where the economy stands today and where it's headed. Esmael Adibi, Director of the Anderson Center for Economic Research at Chapman University, will lay it all out January 26 at the Riverside Convention Center.

Haven't registered for the Economic Forecast yet? Download the registration form. 

Read the Wall Street Journal article about the national forecast

Read the Southwest Riverside News Network article about Husing's forecast

New Homes vs Resale

It's not a surprise where we come down on the question of whether to buy a new or a used home. 

The overall cost savings and benefits of buying new home far outweigh any initial savings that may entice a buyer to purchase a foreclosed home from a bank.

In case you missed it during this weekend's revelry, the Riverside Press-Enterprise's Leslie Berkman wrote a very good article on the subject and included some comments from our Riverside BIA Past President, Steve Ruffner with KB Home.  

Definitely worth a read to start your week!

Read the full article

Also, our regional BIA of Southern California offers an excellent list of 10 reasons why new homes are a much better value than resale.

Read the list

New-Home Construction in California Up 21% in November

The latest data from CBIA and the Construction Industry Research Board shows California homebuilders pulled permits for 21% more homes in November when compared to the same month a year ago.

That sounds good, but let's not forget that it doesn't begin to get us back to where we need to be in order to meet housing demands in our state. And right now we're building a record low number of units at the same time our state's population is growing.

It seems that multi-family permits are responsible for the boost. Permits were pulled for 3,175 total housing units in November, up 21% from the same month a year ago and up 35% from October. But permits for single-family homes totaled 1,318, down 28% from November 2009 and down 10% from the previous month, while multifamily permits totaled 1,857, up 129% from a year ago and up 108% from October.

The story is a little different in the Inland Empire. 

In Riverside and San Bernardino counties, permits were pulled for 385 total housing units in November, down 44% from the same month a year ago and up 26% from October. Permits for single-family homes totaled 265, down 29% from November 2009 but up 6% from the previous month. Multifamily permits totaled 120, down 62% from a year ago and up 122% from October.

For the first 11 months of 2010, a total of 5,666 permits were pulled in Riverside and San Bernardino counties. That down 7% when compared to the first 11 months of 2009.

View the permit table

Editorial Board Says Market Good For Home Buyers

In case you haven't seen it, the North County Times has a great editorial in today's newspaper highlighting the improving housing market.

While acknowledging the October year-over-year drop in homes sales, the editorial draws special attention to the quarterly Southern California Leading Economic Indicator tracked by Cal State Fullerton economist Adrian Fleissig that showed a small gain in the three months ending Sept. 30 - the fourth consecutive quarter of growth. 

The editorial concludes:

For would-be buyers with good credit reports, some job security and an itch for new digs, this may be a good time to jump in.

Read the full editorial

New Building Codes Take Effect January 1, 2011

An important reminder for developers with projects planned for the near future: All permit applications submitted after December 31 will be subject to the new California Building Codes.

The updated building codes include changes associated with the new green building standards and the mandate for fire sprinkler systems in all new homes. The administrative trigger for any state or local building code is based on the permit application submittal date.

Specifically, Health & Safety Code 18938.5(a) states: "Only those building standards approved by the commission, and that are effective at the local level at the time an application for a building permit is submitted, shall apply to the plans and specifications for, and to the construction performed under, that building permit." 

The building permit application submittal date is the key point in the statute. However, it should be noted that it is entirely up to the local building department to determine what constitutes a building permit application, and this does vary from jurisdiction to jurisdiction.

For example, many jurisdictions will allow a phased project that is already well under construction to continue to show compliance under the existing California Building Codes, providing the models have not changed from those originally approved when the project started.

Other jurisdictions may take a more aggressive interpretation. That is why developers should contact their local building department now to get a clear interpretation of how they plan to implement the new 2011 California Residential Code and California Green Building Code.

For more information on the new building codes, contact Bob Raymer at CBIA.

Photo credit: steveleenow

Commission Calls for Changes to Mortgage Interest Tax Deduction

A White House commission released a draft plan this week to cut the federal budget deficit by hundreds of billions a year through a combination of slashing spending and eliminating popular tax deductions.

Among the proposals put forth in the lengthy draft are limiting mortgage deductions to exclude second residences, home equity loans and mortgages over $500,000, all of which could potentially hit Southern California hard.

For businesses, the plan would significantly lower the corporate tax rate — from a current top rate of 35% to as low as 26% — but also eliminate a number of deductions. It would make permanent the research and development tax credit.

The plan, developed by a bipartisan commission, would hold down the growth of the federal debt by about $3.8 trillion by 2020.

Read the complete commission draft

Read NAHB's fact sheet on mortgage interest deductions

Photo credit: Flickr user Arghmonkey

California Housing Finance Agency Reinstates First Time Home Buyer Program

The federal and state tax credits for home buyers may be long gone, but there are still programs available to provide financial assistance to first time home buyers.

The California Housing Finance Agency just reinstated its School Facility Fee Down Payment Assistance Program (SFF), which offers a conditional grant based on the amount the school facility fees paid by the builder of a new home.

The SSF has two programs. The first aids first time buyers. The second aids buyers in specific economically challenged counties and waives the first time buyer requirement.

The aid allows new home owners to be able to fund their down payment, closing costs and any other costs that are associated with their first mortgage loan. 

Read more here

Housing Starts Down in Sept But Up for 2010 to Date

Anyone related to the building industry in Southern California knows that housing starts have fallen dramatically from where they were six years ago. So it's really no surprise that housing starts fell again in September, as reported this week.

The good news is that there are signs of improvement. As reported in today's Contra Costa Times, builders in Riverside and San Bernardino counties pulled 4.1% more housing permits in the first nine months of 2010 compared to 2009.

Our own Riverside BIA CEO Mark Knorringa was quoted in the article:

"There won't be anything that will return to what we've historically seen," Knorringa said. "But little by little we're going to find our way out of this."

 Read the full article

 

Riverside County Building Permits Rise in August

More good news this Friday!

The Construction Industry Research Board and CBIA are reporting that the number of pulled housing permits were up in August versus the same time last year.  Our own Mark Knorringa was quoted in today's North County Times in their piece about the permit trend.

We're also hearing anecdotal stories from a few members that traffic at model homes is picking up. More on that later.  Happy Friday, everyone!

Read the full North County Times article

Read the CBIA press release

Download the CIRB statistics

Photo Credit: Flickr user Terinea IT Support

CA Tax Credit for New Home Buyers Nearly Gone

If your buyers plan to apply for the state tax credit, they need to hurry. According to the Sacramento Bee, the state Franchise Tax Board has received nearly 16,000 applications and reservation requests totaling about $103 million, as of Tuesday. The state has allocated $100 million for the credit.

But the board is encouraging buyers to continue applying for the credit since many of the submitted applications are duplicates. The board plans to accept at least 24,000 applications from qualified buyers of new homes to ensure that the full $100 million is exhausted.

So today's word of the day? Hurry!

Read the full story

Photo credit: ambert

Multifamily Builders Encouraged by Rising Occupancy

Some interesting news out of NAHB today. Its Multifamily Market Indices (MMI) show that current and expected demand for rental apartments improved significantly in the second quarter of 2010 compared to the first quarter. That seems to hold for A, B and C apartment classes. 

Builders' expectations for demand in the next six months also increased, according to NAHB.

Do you share this sentiment? Leave a comment on our Facebook page

Read the NAHB press release

Photo credit: T Hoffarth