State and National Housing News


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In this issue.. ..

  • Regulatory Update: Virginia's Construction General Permit
  • US and Virginia Economic Update
  • Softwood Lumber Prices
  • Wells Fargo Economics: Housing Starts Fall on a Pullback in Apartment Building
  • Common Interest Community Board Public Comment: POA Disclosure Packet and Condo Owners Association Resale Certificate

Regulatory Update – Virginia’s Construction General Permit

Earlier this year, HBAV and several other stakeholders were selected to serve on the Department of Environmental Quality’s Technical Advisory Committee (TAC) to assist the Department in development of a draft regulation for a general permit. The current General VPDES Permit for Discharges of Stormwater from Construction Activities expires on June 30, 2019. 

The TAC has met several times and has focused primarily on how to handle reissuance/issuance of coverage under previous permits once the new permit has been put in place (grandfathering and time limit on applicability).

If you are interested in reviewing the changes that have been discussed or proposed so far, please contact HBAV’s Vice President of Government Affairs, Andrew Clark, at AClark@HBAV.com
US and Virginia Economic Update
 
The Federal Reserve Bank of Richmond recently discussed economic conditions in Virginia at an annual meeting of the Virginia Association of Economists. Their presentation, which can be found here , contains some very interesting information on payroll employment growth in Virginia by region, growth data for various industries in Virginia, and the construction industry’s contribution to the Commonwealth’s employment growth.
Softwood Lumber Prices

HBAV recently sent a letter to Governor Northam and members of his cabinet about the need for action at the federal level to address the rising cost of softwood lumber. One of the most significant challenges facing our members is the increasing cost of construction and the price of materials. The most recent Producer Price Index (PPI) indicates that material costs have indeed been on the rise. In November, the PPI for input prices for construction industries rose 5.6% year over year, marking the fastest rate of growth since 2010. 
 
Specifically, the price of softwood lumber has been one of the greatest concerns for HBAV and NAHB members. The most recent PPI indicates that in November of 2017, the price of softwood lumber was up 17.4% year-over-year, after increasing at an average annualized rate of 5.6% per year since 2012. To put that into perspective, the National Association of Home Builders Construction Cost Survey, which we have verified with our members, indicates that the average cost to frame a house in 2017 was 15% of the total estimated sales price of a home and the largest share of construction cost, so the impact of softwood lumber price increases are not insignificant.  
 
At the center of this issue is the Softwood Lumber Agreement (SLA) with Canada. Since 2006, the SLA established a system of fees and quotas on Canadian imports to the United States that would be triggered in response to fluctuations in the market price of softwood lumber. This agreement brought about a period of relative stability in the trade relationship between the United States and Canada. However, the SLA expired on October 12 th , 2015.
 
The residential construction industry relies on a stable and affordable supply of lumber. U.S. domestic timber production is simply not sufficient to meet demand – in 2017, the United States consumed 47.62 billion board feet (bbf) of softwood lumber while producing only 33.86 bbf – historically, we have relied upon Canada to make up the difference.  With the expiration of the SLA, combined tariffs of just over 20% on imports of Canadian softwood lumber imposed by the United States Department of Commerce have driven up lumber prices to record highs. During the first week of March 2018, a key index for measuring the price of framing lumber hit its highest ever recorded level — $512 per thousand board feet. This represents a 25% increase from one year prior and a 43% increase since January 1st, 2017; and a 60% increase since January 1st, 2016. Estimates from the National Association of Home Builders show that the increase in the cost of lumber since the beginning of 2015 has been enough to drive up the price of an average new single-family home by $6,388, and the market value of an average new multifamily housing unit by $2,430. 
 
Furthermore, the impact on jobs in the United States and in Virginia will be significant. Our data indicates that tariffs on Canadian softwood lumber will result in the net loss of 9,370 U.S. jobs in 2018. This figure includes an increase of 1,193 jobs in U.S. sawmills, and a loss of 10,563 jobs in all other industries because there are millions more jobs in the U.S. that depend on lumber than there are jobs in domestic lumber production. Over half the net jobs lost are in construction, but the effects are broad-based and will also impact jobs in manufacturing, wholesale and retail trade, and a variety of professional services.
 
Virginia’s continued economic vitality and ability to attract and retain business is dependent upon a healthy supply of housing at all price points. The challenges to meeting that demand are well documented but we have an opportunity to help alleviate that burden by calling on the Trump Administration and the U.S. Commerce Secretary to return to the table and negotiate a new Softwood Lumber Agreement with Canada.
 
 
NAHB has also set up a portal to help our members contact policy makers in Washington about this issue – click here to learn more.
Wells Fargo Economics: Housing Starts Fall on a Pullback in Apartment Building
 
According to the Wells Fargo Economics Group, housing starts fell 3.7% in April, with multi-family projects account for all the drop. Single Family starts edged higher. Although the headline numbers may raise concerns, the Wells Fargo/National Association of Home Builders Index rose to 70 in May and has remained at or above that level for most of this year. Home builders report strong demand for new homes across virtually all price points and in most major markets. You can read the full report here.
 
  • Single family starts through the first four months of this year total 279,600 homes – which is 8.3% higher than the first four months of 2017.
  • The supply of new homes and apartments will almost assuredly increase in the coming months - the number of single family homes under construction rose 1% in April, but the number of homes in the pipeline still lags considerably behind past building cycles.
  • The supply of apartments, on the other hand, appear to be topping out at levels well ahead of the past two cycles.
Common Interest Community Board Public Comment:
  POA Disclosure Packet and Condo Unit Owners’ Association Resale Certificate
 
The Property Owners’ Association Act ( Virginia Code § 55-508 et seq. ) requires that associations provide purchasers in a property owners’ association community with an association disclosure packet. As part of the disclosure packet, associations must include a  disclosure packet notice  to prospective purchasers which is developed by the  Common Interest Community Board  (“the Board”). The Code of Virginia requires that the notice “. . . shall summarize the unique characteristics of property owners’ associations generally and shall make known to prospective purchasers the unusual and material circumstances affecting a lot owner in property owners’ association. . .”
As a result of legislation passed during the 2018 General Assembly Session ( HB 923 ) and signed into law by the Governor, the disclosure requirements for the notice will change effective July 1, 2018. In addition, HB 923 requires the Board to develop a similar notice to accompany condominium resale certificates required by the Condominium Act ( Va. Code § 55-79.39 et seq. ).
At its meeting on March 15, 2018, the Board discussed proposed amendments to the Property Owners’ Association Act Disclosure Packet Notice and a new proposed Condominium Unit Owners’ Association Resale Certificate Notice. The Board voted to make the proposed notices available for review and public comment. 

·        Review the  proposed revised POA Disclosure Notice    
·        Review the  new proposed Condo Resale Certificate Notice   
 
The proposed revised disclosure notice and new proposed resale certificate notice, along with any public comments received, will be reviewed by the Board at its next meeting on June 7, 2018.

The official notice for public comment can be found here .
Have questions about the 2018 Session or HBAV's Legislative and Regulatory Initiatives?
Contact HBAV Vice President of Government Affairs:
Andrew Clark at AClark@hbav.com or (978) 460-1331