Trump WOTUS Rule Replaced
Twice last Fall, the US Army Corps of Engineers suspended issuance of nationwide permits under the Federal Clean Water Act. The suspensions were the result of legal challenges to the Trump Waters of the US (WOTUS) rule.
The Biden Administration is replacing the WOTUS rule with the rule that was in place for nearly 30 years until it was replaced by the Obama Administration. The new rule will include the substance of a US Supreme Court ruling in Rapanos.
Below is more on the subject from NAHB. You can learn more by attending the briefing by SC Attorney General Alan Wilson on February 7, and support his campaign for reelection as well.
Dr. Robert Dietz
The decline, rebound and growth of home construction in 2020 has been dramatic. After a significant decline in the spring, home building has seen notable gains supported by historically low interest rates, favorable demographics, an evolving geography of housing demand, and a significant inventory deficit.
New home sales have led the way: Sales of new single-family homes are up almost 17% on a year-to-date basis, with a growing number of sales contracts attributable to homes not yet under construction. In fact, such sales are up 47% as of September. A recent NAHB analysis found that the current gap between new home sales and for-sale single-family starts was at historic levels.
The housing market is already beginning to adjust to this notable gap between sales and construction, as the growth rate for new home sales saw a 3.5% decline from August to September. But to be clear, the pace of sales in September (959,000 annual rate) is still strong, with a 32% year-over-year increase. Combined with the low level of inventory at a 3.6-month supply, the September data indicate growth opportunities for home building.
For these reasons, builder confidence in October reached a new, all-time high. The rising optimism is a reflection of the gains in September’s home construction data, which show single-family starts up 6.2% on a year-to-date basis and permits up almost 10%. In contrast, multifamily building is weakening, with 5-plus unit apartment permits down 8.4% thus far in 2020.
–NAHB Chief Economist Robert Dietz
Last week Dr. Robert Dietz, Chief Economist of the National Association of Home Builders, provided a forecast to remodelers across the country. He stated that the economy has been outperforming his earlier rosy forecasts that housing would lead the economy in the coming months.
“Consistent with the National Association of Home Builders forecast, home building data are showing signs of leading and emerging economic rebound. In fact, high-frequency data suggest gains for most sectors of the economy, even as confirmed virus casts rise in many states.”
Dr. Dietz also said, “I have been chasing up my forecasts.”
We also read the statement in our headline in a Haro Setian’s newsletter. This is what he had to say about our local housing market:
“The number of homes for sale dropped by almost 20% annually this April. This is the lowest April housing inventory of all time.
Inventory was already low before the coronavirus hit. Now, many sellers are either hesitant because of the pandemic, or they simply don’t realize how strong demand currently is.”
Haro’s email went on to say that now is a great time to sell. But it’s also may be a great time to build. The latest quarterly building permit data, for the first quarter of 2020, was recently released by our friends at MarketEdge. This is what they reported*:
- Upstate: (10.1%)
- Greenville County: (9%)
- Spartanburg County: (17%)
- Anderson County: (1%)
- Laurens County: 52%
- Pickens County: (20%)
Anecdotally, our friends in the Greenville County permit office told us they saw a slow down from late March until early April, then a return to normal permit levels.
Could now be a great time to build? Check out this article and this article for a little more context on the economy.
* First quarter 2020 vs. first quarter 2019.
In January 2018, Greenville County Council amended the Land Development Regulations over the objections of your Home Builders Association of Greenville. More than 30 members attended the meeting to tell County Council “no.” The ordinance was amended six months after six members of your HBA worked for more than three years on an overhaul to the LDR.
Two months later, after a quick review with the help of three members: Jamie McCutchen, Paul Harrison, and Jay Beeson, County Council removed most of the January changes, with the exception of Section 3.1.
In April, the Planning Commission began enforcing Section 3.1 and the flaws in the ordinance, which we pointed out to County Council, quickly became apparent.
In June, the Planning Commission approved a subdivision proposed by Niemitalo, Inc., an HBA member. After some behind the scenes intervention by a member of County Council, the Planning Commission reconsidered their decision in July 2018 and denied Niemitalo’s subdivision, a 30-lot single family development on 30 acres in the unzoned area of Northern Greenville County.
Brian and Bruce Niemitalo, partners in Niemitalo, Inc., appealed their decision in September after receiving written notice of the denial. They were not notified that the Planning Commission would reconsider their earlier decision.
NAHB’s Legal Action Fund Steps in to Help
Your Home Builders Association immediately went to work to help Niemitalo, Inc. We had the county’s Land Development Regulations reviewed by NAHB’s Legal Department. They provided us with several recommendations. They also told us they consider Section 3.1 “unconstitutionally vague.” They also told us they are concerned that allowing an ordinance like ours to go unchallenged could set a precedent for other unzoned areas around the country. Adding to the urgency, a neighboring property owner intervened as a party in the appeal, and she is represented by the Southern Environmental Law Center, an nonprofit law firm based in Raleigh that focuses on the environment.
Your HBA of Greenville applied for support from NAHB’s Legal Action Fund and in January 2019 they approved a grant of $10,000 to help Niemitalo, Inc., with their challenge.
The latest and more help from NAHB
After 18 months of legal wrangling, Greenville County and Niemitalo, Inc., came to an agreement to settle with the approval of the subdivision. At that time, the county ceased enforcing Section 3.1 in the unzoned areas. However, the neighbor refused to approve the settlement.
Without an approval for their project, in April Niemitalo, Inc., made their next move and filed a lawsuit challenging the legality of Section 3.1 and last month your HBA of Greenville applied for and received another grant of $10,000 from NAHB in support of Niemitalo, Inc.’s, latest cause of action.
“This situation is just one example of the importance of our Home Builders Association and the support it brings to our industry,” said Bill Kane, APB, President of your Home Builders Association of Greenville and Division Manager of Ryan Homes. “It is also just one of many reasons why every business in the Home Building Industry should support our Home Builders Association.”
Support for Vested Rights
This case also has one other benefit for Home Builders: potential case law in support of the Vested Rights Act. Your Home Builders Association actively lobbied for the Vested Rights Act in 2002. Our Vice President of Government Affairs, Michael Dey, was the lobbyist on that bill.
A decision in this case could benefit all Home Builders both in invalidating Section 3.1 and supporting the Vested Rights Act. All Home Builders owe Brian and Bruce Niemitalo their thanks for challenging Greenville County and their anti-housing and anti-development policies.
By Dr. Robert Dietz, Chief Economist, National Association of Home Builders
In a surprisingly positive reading for the labor market, recent jobs data from the Bureau of Labor Statistics reported the unemployment rate in May declined to 13.3%. The true unemployment rate is likely closer to 16% due to many who reported being “employed but absent from work” but who were most likely unemployed. However, even with this technical adjustment, the jobless rate came in well below the 20%-plus rate some analysts had forecasted. (NAHB’s forecast called for a 17.8% rate for the second quarter.) This forecasting miss by those predicting a much higher level of unemployment appears to have been based on somewhat unreliable state-level jobless claims data. The unemployment rate for construction workers is currently 15.2%.
Moreover, a job gain of 2.5 million was reported for May; a striking contrast to what many analysts had predicted of a job loss of up to 8 million. Residential construction was among the top sectors in terms of the May turnaround. After posting a job loss of 422,000 in April, home builders and remodelers added 226,000 jobs last month, as housing demand improved. Getting the economy back on track will require additional hiring by employers, as well as a recovery for the labor force participation rate, a measure of people who hold a job or are actively looking for one. After declining 2.5 percentage points in April, the participation rate gained 0.6 points in May, rising to 60.8%.
The reopening of the economy in most states has led to a rapid reversal for the jobs outlook and the prospects for the beginning of a recovery in the third quarter. Housing data indicate the industry will lead the way in such a rebound: For eight consecutive weeks, data from the Mortgage Bankers Association has shown weekly gains for home purchase mortgage applications, a sign of improving housing demand, particularly for the single-family market. In fact, the data from the last week of May and first week of June show applications are running higher on a year-over-year basis. However, risks remain as the recovery could be uneven. For example, recent NAHB analysis identified states with vulnerable labor markets due to exposure of high unemployment business sectors, including tourism and hospitality enterprises.
Furthermore, we expect the economic crisis associated with the virus to accelerate existing geographic trends of home construction activity. The NAHB Home Building Geography Index (HBGI) found that in the first quarter, single-family construction expanded at a faster pace in small metros, small towns and rural areas than in larger metro areas. A similar pattern has been in place for apartment construction, with multifamily market share for less-dense markets having risen since the start of 2019. The impact of the virus, with people telecommuting more and seeking lower-density neighborhoods, will accelerate these existing trends.
Challenges remain ahead for housing, but as the labor market improves, so too has the outlook for the housing market. And while a decline in listings of existing homes is holding back the resale market, home builders have benefitted in the short-run due to the corresponding decline in competition. However, on the whole, historically low interest rates and a more rapid than expected improvement in the labor market should set the stage for a V-shaped recovery for housing, which in turn will provide support for the overall economy as a rebound takes shape in the second half of the year.
Did you know that professional trade association’s like your Home Builders Association were among the few groups not eligible for stimulus funding? And like nearly all nonprofit organizations, ours has been impacted by the economic shutdown.
That is why your HBA signed onto a letter from the US Chamber of Commerce calling on Congress to provide stimulus funding to association’s like the HBA and the Chamber. We were one of more than 1,000 that signed the letter, and the only HBA in South Carolina to sign it. You can read the letter here.
Your HBA’s Board of Directors will be asking your to help the association that is helping your business remain essential. Watch for that request soon.