www.elpasobuilders.
com
Lumber
Tariffs
hit home
U.S. builders say Trump's tariffs are adding $9,000 to new home prices, and that's not all
Higher lumber costs, labor shortages
and growing regulations are holding U.S.
builders back as they try to ramp up
construction to meet the huge demand for
housing.
After starting about 850,000 single-
family homes nationwide last year,
builders around the country are forecasted
to construct almost 910,000 houses this
year and increase production to 1 million
homes by 2020, says Robert Dietz, chief
economist of the National Association of
Home Builders.
The rise in construction still won't be
enough, Dietz said at a meeting of the
National Association of Real Estate
Editors.
"We probably need about 1.2 million
single-family starts," Dietz said this week
in Las Vegas. "We continue to under build
single-family housing."
Homebuilding in North Texas is still
more than 30 percent below where it was
before the Great Recession.
Last year, Dallas-Fort Worth builders
started almost 34,000 single-family
homes.
"I'm thinking we will see starts in the
35,000 to 36,000 range this year," said
429
PERMIT NO.
EL PASO TX
PAID
U.S. POSTAGE
PRSRT STD
Ted Wilson, president of Dallas-based
homebuilding analyst Residential
Strategies.
That's still nowhere near the almost
50,000 houses started in D-FW in 2006.
Wilson said that the factors affecting
market growth have shifted.
"Previously it was lack of labor that
limited starts. Today, it is more the lack of
affordable lots," he said. "Inflation is the
foe in the fight to maintain affordability."
Higher materials costs are also
hammering the industry.
A spike in lumber prices caused by the
Trump administration's tariffs on Canadian
wood products is one of the biggest
burdens on builders, Dietz said. Lumber
prices in the U.S. have risen 62 percent
since January 2017, according to him.
"We get a third of the lumber we use in
the U.S. from Canada," he said. "A lumber
tariff is very much a tax on homebuyers.
It's pushed up the price of a typical home
by $9,000."
Labor shortage
Dietz said a lack of construction industry
workers is also limiting homebuilding in
many U.S. markets.
"Labor has been an issue of the industry
National, State & Local
Building Industry News
2018: Issue 6
for the last four or five years," he said.
"The job openings rate in the construction
industry is now is actually higher than it
was at the peak of the building boom,"
even though builders are producing fewer
houses than in the early 2000s.
Almost 230,000 building sector jobs are
unfilled, Dietz said.
Local building regulations and zoning
requirements are also adding to higher
new home prices and resulting in fewer
starts.
"A quarter of a typical newly built
home's purchase price is due to regulatory
concerns," Dietz said. "These are zoning
requirements, impact fees, delay costs —
all of these factors are built into the cost of
a home."
He said local building regulations and
requirements add up to about a quarter of
the cost of a typical U.S. single-family
house and more than 30 percent of the
cost of an apartment. And, the higher
costs of building have restricted the
industry's ability to produce lower cost
new homes — the price point that is most
in demand by younger buyers.
In previous cycles, entry-level homes
accounted to about 30 percent of national
home building, Dietz said.
"Today it's less than 20 percent," he
said. "It's the hardest level for the builder
to reach."
Jim Boyd, a regional president with
nationwide builder Toll Brothers, said
longer production times caused by fewer
workers and more local requirements are
adding to construction costs.
"We are certainly experiencing a labor
shortage — everywhere from California to
Boise, Idaho, " Boyd said. "What used to
take six months to build now takes seven
or eight months to build.
"It used to take a year or two to take a
new project from inception to shovels in
the ground," he said. "Now in a lot of
markets, it's three to five years."
Boyd said that "demand is pretty
exceptional right now," even though home
mortgage rates are rising.
"Moderate interest rate increases are
the reflection of a good economy," he said.
"We'd rather see 5 percent interest rates
and a good economy than 3.5 percent and
a lousy economy."
By Steve Brown, Dallas Morning News
2 Builders Outlook 2018 Issue 6

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2018 Issue 6
President’s
Message
Edmundo Dena
President
el Paso association of Builders
i have to say that i’m still feeling
really good about the direction the
association is in. in the first five
months of the administration
we’ve had some great events and
an awesome membership drive.
The direction is helped by the
commitment from our leadership
team and the volunteers who
have really captured my moto of
“good isn’t good enough”. i came
into my second term with a
renewed determination that the
status quo could change and that
it would take a team to make it
happen.
We started with making sure
our board was active and
committed to the association. it’s
one thing to be a member another
to be an acTiVe member. let
me give you an example.
Builders Outlook
EPAB headed in the
right direction
everyone thinks that events get
done with a click of a finger. i
acknowledge that we depend on
Ray and Margaret for most of
that, but i wanted to make sure
they had help this year. So, with
golf we named luis Rosas and
Patrick Tuttle to chair the golf,
helping Ray and Margaret and
Sam who has been really
involved in golf for years. Well
we had a great event to kick off
the year. Same thing with the
membership drive. We were told
to have seven or eight teams, but
you know we had four great ones.
Sergio, edgar, Kelly, Randy and
myself were able to recruit
members who took action and the
result was 108 new members.
i’m grateful that we’ve been
successful so far. our struggles
3
*
PRINT & INTERNET
PUBLISHING
*
Social Media & WeBSiTe
conTenT ManageMenT
*
e-Mail neWSleTTeRS
coMMUnicaTion
STRaTegY
continue with the city of el Paso
and promises made to our
builders over a decade ago for ediToRial SeRViceS
third party charges. We are
making headway with that and it
will have an impact. We’re not
there yet but we have their
attention and they are paying
attention.
as we go into July we have a
big event on Saturday July 7 at
Bassett Place shopping center. i
encourage you to be active in the
event as it shows off our
members as good as anything
else we do.
Have a good July, see you at
our new Member welcome party
that is being planned. Watch for
the date and time coming soon. Get Creative. Make it Snappy.
915•820•2800
www.snappypublishing.com
4
Executive’s
Builders Outlook
Message
Dealing with anti-development activism part of the job
Ray Adauto,
Executive
Vice President
EPAB
As the summer starts a couple
of things are evident in El Paso.
It’s hot and summer just started.
Gas prices are up so thank
goodness for Costco.
Also it’s clear that issues with
development are not over as
the case for the northwest TIRZ
land has had a group of
activists angry. This anger
seems to rise with cameras on
them while the City Council has
told them the deal is done. I
suspect that anti-development
activists will always be with us.
I tend to interpret their activism
to “we got ours and we don’t
want you to have what we
have.” Yes, that’s what I think
because I have found that these
activists are, or at least their
spokespersons, wealthy with
homes in areas where they
don’t want anyone else to live.
If we did research we’d
probably find they have second
homes in the forest or a beach
somewhere. Ruidoso, La
Jolla…in places where those
citizen activists also didn’t want
more development. Look, I
understand that some of the
activists are really concerned
with change. I find the
argument that this group has
concerning development
destroying the environment
when in fact they have already
done that with bike trails and
walking trails. They must think
it’s ok to have trails, just I never
get over the irony of claiming
2018 Issue 6
destruction while doing so with
trails. If you really want to
“save” the land, then nothing
but rattle snake marks should
be on the ground. Not tread
marks or shoe marks. Private
property rights in Texas are
there for a reason. Perhaps my
editorial is going to upset some
of you, but that’s why it’s my
editorial space. Growth is
change and some don’t do well
with change. I wonder if we’d
ever had gotten to be the 19th
largest city in the country if we
had had activists opposing Kern
or Coronado or Eastwood.
Imagine that.
 National
2018 Issue 6 Builders Outlook 5

Builder News

Housing Starts Reach

Post-Recession High in
May as Permits Soften
n Total housing starts rose 5
percent in May to a seasonally
adjusted annual rate of 1.35
million units, according to newly
released data from the U.S.
Department of Housing and Urban
Development and the Commerce
Department. This is the highest
housing starts report since July
2007.
While housing production
numbers rose, overall permits —
which are a sign of future housing
production activity — dropped 4.6
percent to 1.3 million units in May.
Single-family permits fell 2.2
percent to 844,000 while
multifamily permits fell 8.7 percent
to 457,000.
“Ongoing job creation, positive
demographics and tight existing
home inventory should spur more
single-family production in the
months ahead,” said NAHB Chief
Economist Robert Dietz.
“However, the softening of single-
family permits is consistent with
our reports showing that builders
are concerned over mounting
construction costs, including the
highly elevated prices of softwood
lumber.”
The May reading of 1.35 million
is the number of housing units
builders would begin if they kept
this pace for the next 12 months.
Within this overall number, single-
family starts rose 3.9 percent to
936,000 — the second highest
reading since the Great
Recession. Meanwhile, the
multifamily sector — which
includes apartment buildings and
condos — rose 7.5 percent to
414,000 units.
Year-to-date, single-family and
multifamily production are
respectively 9.8 percent and 13.6
percent higher than their levels
over the same period last year.
The year-to-date metric can help
compare performance data over a
specific time period and show
growth trends.
“We should see builders
continue to increase production to
meet growing consumer demand
even as they grapple with
stubborn supply-side constraints,
particularly rising lumber costs,”
said NAHB Chairman Randy Noel,
a custom home builder from
LaPlace, La.
Regionally, the Midwest led the
nation with a 62.2 percent
increase in combined single- and
multifamily housing starts. Starts
fell 0.9 percent in the South, 4.1
percent in the West and 15
percent in the Northeast.
Looking at regional permit data,
permits rose 42.1 percent in the
Northeast and 7.2 percent in the
Midwest. They fell 4.6 percent in
the West and 13.9 percent in the
South.
6
EPAB Membership
Builder members
as of June 1, 2018
Bain Construction
Scott Bain
Bella Vista Custom Homes, Inc.
Edgar Garcia
BIC Homes
Antonio Cervantes
Blue Star Construction
Carlos Villasana
Bowling Construction
Randy Bowling
Carefree Homes
Richard Aguilar
Casas De Leon, LLC
Nick Bombach
Cisco Homes LLC
Francisco Arroyos III
Classic American Homes
Priscilla Hernandez
Crown Heritage Homes
Lydia Mlouhi
Cullers & Caldwell Builders
John Cullers
Cullers Homes
Jason R. Cullers
Dawco Home Builders
Walter O. Lujan
Deal 2 Deal Custom Homes
Delton Deal
Del Rio Engineering, Inc.
Sal Masoud
Diamond Homes, LLC
Valerie Baquera
Donald Ward Builder, Inc.
Donald Ward
E. Valencia Land Development LLC
Eddie Valencia
Edward's Homes, Inc.
Eduardo Fernandez
EPT Bella Custom Dream Homes
Leti & Javier Navarette
EPT Land Communities
David Bogas
Everest Homes
Edmundo Dena, Jr.
Fortune Custom Homes
Javier Andrade
Gaddy Construction
Charles Gaddy
GMF Custom Homes, LP
Frank Torres
Guel Construction
Rudy Guel
Hakes Brothers LLC
Chris Hakes
Hanson Asset Management, LP
Russell Hanson
Homes by Design
Leslie Driggers Hoard C. D. Lee/Britton Insurance & Bonding
Hunt Communities, LLC
Kathy Parry
ICON Custom Builder, LLC.
Carlos Garcia
Industrial Realty Group Incorporated
Brent D. Harris
Central Texas Metal Roofing Supply
JER Custom Homes, LLC
Jorge E. Rodriguez
Kayton Lee Residential, Inc.
Brianna Barnes
Lloyd Hamilton Contruction
Lloyd Hamilton, III
LMJ Construction Co., LLC
Mike Lopez
Loyalty Homes
Gustavo Loy
M A Builders & Design, LLC
Commercial Insurance Brokers, Inc.
Mustafa Ali
Metro Homes, Inc.
Judith Arrunada, Fernando Torres
Millennium Homes
Dan Ruth
Pacifica Homes, Inc.
Juan Jose Vasquez
Palo Verde Homes
Edgar Montiel
Pointe Homes
Carlos Villalobos Demcon Disposal Management, LLC
Porter Homes
Albert Porter
R.C. Baeza & Associates
Robert C. Baeza
R.E. Welch Contractor
Gordon Welch
Rassette Homes, Inc.
Donald Rassette
Santana Custom Homes
Fernando Santana
Southwest Land Development Serv.
Doug Schwartz
Builders Outlook 2018 Issue 6
Updated every month, here is a list of the 2018 EPAB Membership.
Remember to please do buinsess with fellow members.
The Heritage Group E.F. Building Materials, Inc MTI Ready Mix, Inc.
David Bingham Efren Fraire Tony Mullen
Trejo Construction Co. Eagle Roofing Products New American Funding
Juan Trejo Scott Aguilar Brenda Trillo
Tropicana Building Corp. El Paso Building Materials New Era Foam
Bobby Bowling IV Ken Wade George Tollen
Tropicana Development El Paso Disposal Passage Supply
Greg Bowling Irma Parsons John Chaney
Tropicana Homes El Paso Mortgage Bankers Association Patriot Mortgage
Randy Bowling Gilbert Pedregon Randy Bowling
Tropicana Properties El Paso Times Pella Windows
Demetrio Jimenez Sal Hernandez, Justin Riley Jason Bates
Villagi Homes, LLC El Paso Truss Performance Glass & Aluminum
Kristi Eddings Luis Mendiola Hector Hernandez
Will Harvey Development
El Paso Winnelson Perl Mortgage
Will S. Harvey
Jesus Sanchez Steven Sepulveda
Winton/Flair/Accent Homes
Ferguson Enterprises Inc. Pioneer Bank
Herschel Stringfield
Albert Holguin Kathy Carrillo
Fire Smoke n Grill Post Tension Steel
Associate Members
Bill Owen Dennis Moore
as of May 1, 2018
First American Bank Powerfoam Insulation
Louis Sauceda Arnie Pedersen
2-10 Home Buyers Warranty
First Light Federal Credit Union Prewire of El Paso, Inc.
James Hebert
Lorenzo Revelez Steven Drury
84 Lumber
First National 1870 Pride industries dba Pride Ascend
Ernie Chavez
Haley Merritt Dr. Lonny Wright
915 Siteworks, LLC
Firth, Johnston, Bunn & Kerr Randall Smith, CPA
Hugo Jasso
Jay Kerr Randall Smith
ABC Supply Co., Inc.
Foxworth Galbraith Lumber Rebath of El Paso/Las Cruces
Larry Eck
Dan Villarreal Lisa Walling
Acme Brick Company
Franklin Building Materials Remcon Self Storage
Steve Bush
Cristina Sheldon Will Harvey
Adams Moulding & Lumber
G2 Ram Electric Richman Group Affordable Housing
Tom Swahlen
Luis Cano Corp.
Area Iron & Steel Works, Inc.
GCC Sun City Materials,LLC Kevin Hoffman
Fred L. Edmonston Jr.
Antonio "Tony" Chavez Rocky Mountain Mortgage Company
Atrium Homes
GECU- Greater El Paso Credit Union Dean Inniss
Ricardo Bocardo Jr.
Danny Galindo Roe, Brad
Bank of Texas
GEPAR-Greater El Paso Assoc. of Bradley Roe
Ray Owen
Realtors Rudolph Chevrolet
Baron Supply
Jason Sanchez Mike Ruffin
David Trammell
Greater El Paso Chamber of Commerce Saldivar Electric, Inc.
Barragan & Associates
David Michael Jerome Martin A. Saldivar
Benito Barragan
Harris Real Estate Group Sarabias Blue Sanitation
Barrett Airworks
Lane Harris Monica Brown
Alexandro Castro
Haskins Electric Senercon
Beasley, Mitchell & Co., LLP
Charles B. Haskins, Jr. Javier Ruiz
Brad Beasley
Home of Texas Sherwin Williams Paint
BMC Select
Mark Smiley Cruz Lopez
Mike Catalino
Homes of El Paso Sierra Title Company
Boise Cascade
Riley Stephens Angelique Roman
Mike Flores
HUB International Simpson Strong-Tie Company, Inc.
Border Construction Specialties
Luis Rosas Ken Donham
Ricardo Yvellez
Inter National Bank Snappy Publishing
Border Solar
Natalie Ojeda Ted Escobedo
Javier Ruiz
Interceramic Tile & Stone Gallery Solar Smart Living
Bukaty Financial Companies
David Holguin Larry Perea
Ruth Rivera
J & H Concrete & Post Tension Southwest Décor El Paso Corporation
Builders Source Appliance Gallery
Jorge Herrera Chris Matthews
Sandra Lucero
Jack White Building Specialties Spectrum Technologies
Claudia Lardizabal Miled Daou
Anthony Landavazo/Lisa Daniels
James L. Ellis, CPA, PC Stewart Title of El Paso
Casa Ford & Casa Nissan
Jim Ellis Cindy Bilbe
Luke Lowenfield
Jimmy Garza Emergency Water Removal StrucSure Home Warranty
CEA Engineering Group
Veronica Buchanan Scott Whisenant
Jorge L. Azcarate
Jobe Materials, LP Su Casa Magazine
Charlie Tellez Bob Skolnick
Co.,Inc.
Joe Bernal Insurance & Financial Sun City Winnelson
Ben Garza, III
Services, Inc. Dean Moore
Centricity
Joe M. Bernal Texas Gas Services
Brent R. Morgan
Keenan Supply Mica Short
City Bank Texas
Nancy Rivas Texas Title Company
Bob Kotarski
LCR Resources, Inc. Steve Raney
City Lights
Ralph Sanchez TFCU
Thomas Brown
L & P Building Supply Yolie Melendez-Estrada
Cognent, Inc.
Denise McConnell The Dorian Group/Ocean Gallery USA
Martin Paredes
Legacy Real Estate Services/TTi Prop. Miguel Angel Mercado
Man. The Home Systems Heating & Cooling,
Ken Foster
Patrick Tuttle Inc.
Conde, Inc.
Lone Star Title Co. of El Paso Jesus Chain
Conrad Conde
Sam Trimble Trane Residential Solutions
Copenhagen Imports
Love Engineering, Inc. Robert Meske/ Kathleen Chacon
Flemming Carlsen
Montez Love TRE & Associates
CQC Testing and Engineering,LLC
Majestic Realtors Linda Troncoso
Jaime Rojas
Patti Mushorn Trim Team
Delek US dba 7 Eleven
MAK Roofing & Construction Juan & Kris Hernandez
Sonja Scanlan
Felix Vizarreta USA General Contractors
Masco Contract Serv dba Gale Insul Javier Olmos
Maria Elena (Nena) Gomez
Tom Harmon Vision Consultants, Inc.
Desert Quest Plumbing
McCoy's Building Supplies Kelly Sorenson
Hector Gonzalez
Doug Danner WestStar Home Loans
Dorney Security
Merrill Lynch Cinco Houghton
John Dorney
Thomas Gabriel WestStar Bank
Dunn-Edwards Paints
Mini Concrete Materials David Osborn
Nathan Gordon
Joe Soto WestStar Title
Monster Link Marketing Rachel Valles
DWS Building Supply
Raul Mendoza
Sabrina Voorhies
Morrison Supply
Sam Shallenberger
2018 Issue 6
Economic
Forescast
Elliot Eisenberg
Economic & Policy
Blog
The Economy Through 2018:
Finally Behaving Well!
Despite more political uncertainty
than usual emanating from
Washington, the next 12 months are
shaping up well. The odds of a
recession remain very low – about
10% -- despite now being in the middle
of the second longest economic
recovery in US history. Global growth
is solid, and while inflation is rising, it’s
doing so slowly, giving the Fed time to
raise rates at a leisurely pace and not
upend the fastest economic growth our
economy is about to experience since
2005.
Giving the economy a strong boost
is a combination of net tax cuts totaling
more than $1 trillion passed in
December and spending increases
totaling $400 billion passed in
February. Collectively, these stimuli
should raise near-term GDP by half a
point. As a result, the Fed is likely to
raise rates at least two more times this
year – each time by one-quarter point
– and possibly three times. This will be
done to protect the economy from
overheating and proactively prevent
inflation from rising much higher than 2
percent/year, the Fed’s target inflation
rate.
GDP growth during the next 12
months should average 2.8 percent, up
from 2.3 percent in Q1 2018.
Unemployment will continue to decline
from the current rate of 3.9 percent to t
least 3.7 percent and perhaps as low
as 3.6 percent, rates not seen in more
than 50 years. Inflation, as measured
by the Consumer Price Index, will rise
from 2.0 percent now to 2.5 percent by
year-end 2018. As for 10-year
Treasury rates; by year-end expect
them to be at or near 3.2 percent, up
from the current 3 percent.
Regrettably, the worker shortage will
worsen. Employer surveys show an
ever-increasing number of firms in a
growing number of industries facing
growing difficulties in the recruitment of
skilled workers. With unemployment
below 4 percent – and with labor force
growth weak – the struggle to find
workers will get worse before it gets
better. More and more firms will be
Builders Outlook 7
u
CELEBRATING
EPAB
THE BEST OF EPAB
EL PASO ASSOCIATION OF BUILDERS
INNOVATION u DESIGN u EXCELLENCE u ACHIEVEMENT
ENTRY INFORMATION
forced to turn away work due to a lack
of skilled labor. With both U.S.
population growth and immigration
COMING SOON
slowing, an advantageous solution is
for firms to invest in labor-saving
technology to boost output.
Fortunately, due to the recent tax
reform, tax treatment of purchases of
plant and equipment is more favorable
today than at any time in recent
memory.
Because of the ongoing labor
shortage, skyrocketing input costs
including lumber, aluminum, and rising
land costs, single-family housing starts
will rise by no more than 5 percent
over the next 12 months and
multifamily activity should remain
where it is. By contrast, remodeling
activity looks to grow by a strong 7.5
percent due to a combination of ever-
rising home prices boosting home
equity, shrinking inventory of existing
houses, and limited starts, all of which
are causing homeowners to remodel
rather than move. As for existing sales
activity, it might grow by as much as 1
or 2 percent, but not more; home
prices will rise by 6.5 percent over the
next year.
Growth during the rest of 2018 looks
to be meaningfully better than what we
have experienced since the end of the
Great Recession. This is due to
decent global growth and passage of
tax cuts and spending increases here
in the US.
A wildcard in all this is trade. A
dissolution of the North American Free
Trade Agreement (NAFTA) and a trade
war with China or Europe would
weaken growth – albeit not
substantially – at least in the short-run.
The knock-on effects such as a
possible decline in consumer
confidence are of more concern.
Lastly, while interest rates will rise in
AWARDS CEREMONY
the second half of 2018 (as they have
in the first half), the increases will be
measured, and the chances of a
SUMMER 2018
recession are very low.
Have a wonderful summer and see
you in August!
 2018 Issue 6
BUILDERS OUTLOOK • EPAB ON THE SCENE

Prove it Tour
The “Prove IT!” touring display made a
scheduled stop at the El Paso Association
of Builders. The display, actually a rolling
trailer, was brought into the area by
member Boise Cascade. The products
demonstrated were from AdvanTech and
Zipsystems, two of the national leaders in
wood and composite wood products and
sealants.
“I’m pleased that the Association was
able to arrange this tour for us,” said
President Edmundo Dena as he went
through the display. “Our building methods
keep changing and government
requirements including the newer insulation
requirements can be better met with
systems like these,” he said.
Casey McCuan and Miguel Flores from
Boise Cascade arranged for the demo to
visit. “Our customers are the leading
building materials retailers and
wholesalers,” Casey told the Outlook. “We
want to bring in the latest technology to El
Paso and show our end users, the builders,
how to use it and what their savings would
be,” he continued.
At the display Lowe’s Home
Improvement, one of newest members,
thought the display had merit. “We can
see the advantage of using a system like
these for the builder and homeowner.” The
AdvanTech reps were quick to point out
that when you can combine the strength of
their OSB insulated wood product you get
cost savings and a happier customer. “As
you can understand the insulation being
applied at the factory allows the builder to
present a quieter product with great
insulation qualities,” said Mike Flores.
More information is available by calling
Mike at 915-525-6037.

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You could win

$100,000
towards the purchase
of a new home!
Join us for a one-day
‘pop up’
home buying fair
SATURDAY 7•7•2018
10am - 4pm Bassett Place
6101 Gateway Blvd West

Event partners

#Real Texas
builders www.elpasobuilders.com
©

www.elpasobuilders.com
915•778•5387
* The El Paso Association of Builders has purchased a $100,000 insured promotion that will pay a winner if all eight digits are entered on a number pad to exactly match a
code that is controlled by the third party promotion company. There is no guarantee of a winner. Entrants must be 18 years or older. Entries will be accepted between
10:00am and 4:00pm July 7, 2018.

JOIN US JULY 7
A special one-day home buying extravaganza!
EXHIBITOR BOOTHS STILL
AVAILABLE!
Must be a member of the El Paso Asssociation of Builders

home buyers at your exhibitor

First Home Saturday - a home booth and receive contact data Bassett Place, with its central A media plan with extensive radio,
Make plans now to participate in LOCATION ADVERTISING

for visitors entering our location and ample parking, is a television, and print advertising
sweepstakes. perfect location for First Home will begin 10 days prior to the
buying fair to be held at Bassett

Saturday. Recent demographic event and run until July 7. A social

Place on July 7.

• The highly promoted event is an • First Home Saturday is data indicates that this is an ideal media campaign will also be
ideal opportunity to identify first specifically designed for venue to target first time buyers. launched two weeks before the
time home buyers and offer your affordable home builders and event.
services as they begin their those who wish to reach this
search for a new home. valuable target market. The First Home Saturday Event
SHOWTIME

will open July 7 at 10:00 AM

• A special grand prize • The event is exclusively and conclude at 4:00 PM. Spaces are available for $477 -
EXHIBITOR SPACES

sweepstakes promotion will be designed for Members of the Exhibitors will be allowed to set includes a 6 foot table.
featured in all event advertising El Paso Association of up their booths starting at 9:00
to help encourage a great turn- Builders only. Every participant PM Friday July 6 & Saturday July
out. must be a member of EPAB in 7 between 9:00AM - 9:30AM.
good standing.
SPACE IS LIMITED -

• By participating in First Home

CALL EPAB TO RESERVE YOUR

Saturday, you will have the

SPACE TODAY! 915-778-5387

opportunity to meet first time

10
Mortgage
& Banking
BY MICHAEL NEAL
As was widely expected, the Federal Open
Markets Committee (FOMC), the monetary
policy making arm of the Federal Reserve,
raised the target federal funds rate to a
range of 1.75 percent to 2.00 percent from a
range of 1.5 percent to 1.75 percent. Going
forward, the median projection of the federal
funds rate at the end of this year rose, but
the median expectation for the number of
rate hikes in 2020 was offsetting, so that, by
the end of 2020, the median expectation for
the federal funds rate was unchanged.
The decision to raise the range of the
target federal funds rate largely reflects
strengthening in the labor market, both the
increase in jobs and the falling
unemployment rate. Household spending
has picked up and business fixed investment
continues to grow strongly. At the same time,
the FOMC noted that inflation, both overall
and core inflation, have moved close to two
percent.
Despite the decision to increase the target
rate, the FOMC still believes that the stance
of monetary policy remains accommodative.
Labor market conditions should continue to
strengthen and inflation should return to two
percent on a sustainable basis.
Several Fed officials have raised concerns
in recent weeks about the economy’s
“overheating” and publicly pondered whether
the Fed may need to pour on some cold
water with higher interest rates. The concern
is that if the Fed does not raise interest rates
quickly enough, wages and prices could
begin to spiral up, forcing a sharp rate
increase that could push the economy into
Builders Outlook
Fed Raises Target Range
Communicates More Hikes in ’18 but Fewer in ‘20
recession.
If such a situation arises, “it’s very hard to
navigate that without having an economic
downturn,” Eric Rosengren, the president of
the Federal Reserve Bank of Boston, said in
an interview last month. “My concern is that’s
much worse than just having slightly slower
growth” from a slightly faster pace of rate
increases.
No sign of concerns over economic
growth
The chairman of the Fed, Jerome H.
Powell, and other officials are broadly
optimistic about the strength of the economy
but have noted some risks on the horizon for
growth — most notably a potential drag from
a trade dispute with other nations, like China.
Some economists have also raised early
concerns about slowing growth in Europe,
which could affect the United States, and
about other market metrics that could
portend a slowdown, such as the rise in
Treasury bond yields.
There were few hints of those concerns
in this meeting’s statement.
The statement declared that “business
fixed investment continued to grow strongly”
since the last Fed meeting, which was more
bullish language than the March statement. It
noted, as it did in March, that household
spending growth had moderated since the
end of last year. It eliminated a line from the
March statement that declared “the economic
outlook has strengthened in recent months,”
but did not add any new language about
risks to growth.
Officials said that “risks to the economic
outlook appear roughly balanced,” a slight
change from March, when they declared that
“near-term risks” appeared roughly balanced.
Analysts read that as an endorsement of
the economy’s staying power. “By not
referring to the slower G.D.P. growth in the
first quarter or potential risks from trade
policy, the committee is emphasizing that
there are more signs of strength than
weakness in the economy,” Ben Ayers,
senior economist at the insurance firm
Nationwide, wrote after the meeting.
The FOMC also released its Summary of
Economic Projections which capture,
anonymized, economic projections of
Federal Reserve Board members and
Federal Reserve Bank presidents under their
individual assessments of projected
appropriate monetary policy. These
projections are released every three months
and provide “forward guidance” about the
views of the FOMC.
A histogram illustrating the distribution of
expectations for the federal funds rate across
Board members and Bank presidents in both
March and June 2018, indicates that the
number of respondents expecting the federal
funds rate to reach a mid-point of 2.125
percent, one more rate hike this year, fell
from six to five, while the number expecting
the mid-point to reach 2.375 percent, two
more rate hikes this year, rose from six to
seven. At the median of respondents, the
expectation for the federal funds rate rose
from 2.125 to 2.375 percent, or from three
total this year to four.
The reason likely reflects an upward
revision to the median rate of economic
growth in 2018, from 2.7 to 2.8 percent and,
2018 Issue 6
at the median, a decline in expectations for
the unemployment rate from 3.8 to 3.6
percent. The relationship between economic
growth and the labor market is captured by
Okun’s Law. In addition, and consistent with
an expectations-augmented Phillips Curve,
the decline in the median expectation for the
unemployment rate at the end of 2018,
coincides with an expectation, at the median,
of faster inflation.
In 2019, the median projection for the mid-
point of the target federal funds rate rose
from 2.875 percent in the March iteration to
3.125 percent in June. If the FOMC follows
the median expectation in 2018 and 2019,
then the number of rate hikes, presuming
they are all 25 basis points, in 2019 remains
the same at three.
Although the median expectation for the
federal funds rate increased in 2018 and
filtered to a higher median rate in 2019, it
remains the same in 2020 at a mid-point of
3.375 percent. Assuming all the hikes are 25
basis points, then FOMC projections
communicate one more rate hike in 2018,
but one less in 2020 so that the total number
of rate hikes by the end of 2020, the longer
path of the federal funds rate, remains
unchanged. However, the figure above
indicates that one fewer respondent expects
the mid-point to be 3.375 in 2020 and an
additional respondent expects it to be higher
by the end of that year. While the median
expectation for the federal funds rate in 2020
remains unchanged, there appears to be
upward pressure on the median expectation
for the federal funds rate in 2020.
 11

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12 Builders Outlook 2018 Issue 6

The El Paso Association of Builders proudly welcomes our neswest members

150 Sunset W.W. Sales Go Pro Refrigeration Southwestern Prewire

Danny Heredia Eric Hoppes Huberto Diaz Joe Trejo
4 Tech A/C Service Eze-R-Designs Parra's AC & Heating Services Bella Vista Realty
Enrique Hernandez Leticia Mata Aureliano Parra Grisel Ortega
Marlo Building Services Barraza Drywall Corp. Polar Mechanical LLC Century 21 The Edge
Roberto Martinez Ignacio Barraza Francisco Amezquita Scott Kesner
Electrolux Jose Moreno Drywall StarTech Heating and Air ERA Sellers & Buyers Real
Adger Colley Jose Moreno Conditioning Estate
Whirlpool S & J Dry Wall, LLC Luis Proctor Karla Rayos
Gwen Walker Sergio Jalil Wolf Air HVAC Home Pros Real Estate Group
G E Appliances Allbrite Electrical Arturo Alcantar Penny Moore
Christine R. Villanueva Carlos Nunez New Start Insulation Keller Williams, Mo Goodariz
El Paso Audio Video by Design Castillo Electric Jose Carreon Agency
Noe Gutierrez Jose Del Val Dominguez Insurance Agency Mo Goodariz
Althon Investments, LLC Elizardo Garica Electric Victoria Dominguez Minerva Al-Tabbaa Realtor
Jose Luis Martin Mario Elizardo Garcia Farmers Insurance Mercedes Minerva Al-Tabbaa
D B Innovations LLC L O I Engineers Ruiz agency Hector de la Canal Summus Realty
Dan Berry Bernadino Olague Mercedes Ruiz Hector de la Canal
Padilla Homes Bukaty Financial Compaies Great American Insurance Group Alden Roofing and Remodeling
Misael Navarrete Group Julie Tomlison Alejandro Dena
Vallance Construction LLC Ruth Rivera Edmund Esper Investor H P Roofing & Construction
Oswaldo Prieto Jack White Building Specialties Edmund Esper Heriberto Prieto
Vista del Sol Archetectural Claudia Lardizabal Amelia's Janitorial Service Hernandez Roofing
Design Bordertown Carpets Amelia Gomez Concepcion Hernandez
Luis J. Lopez Brian M. Abraham Designers Mart Imperial Construction
Rosewood Design and Build Carpet Warehouse Valerie Edmiston Alejandro Garcia
Brianna Barnes Erez Belkin Citizens Loan Center RGR Roofing LLC
Medlock Commercial Edgars Flooring Jim Easley Mario Rodriguez
Contractors LLC Edgar Enriquez New American Funding Loyas Shutters
Steve Medlock G E Appliances - Tania Guzman Alfredo Loya
Eclat Homes & Designs Christine R. Villanueva Tania Guzman St. Mary's Custom Shutters
Veronica Guerra G & G Enterprises GC Monster Link Marketing Dolores Lopez
Massey Johnson Foundation Repair Raul Mendoza Soil Mechanics
Josie Ledesma Juan F. Garcia A + Remodeling & Repairs Lorenza Escareno
J.B. Laminates Segura Framing Martin Arroyos Value Stone
Gina Rodriguez Erika Segura J. C. Balcorta Painting Isabel Chacon
Cabinet Masters Sergio Herrera Framing Cruz Balcorta JFM Stucco (Enterprises)
Mike Robles Sergio Herrera Ramon Romero Painting Jaime Flores (Jose)
Eagle Custom Cabinets Garage Doors and More Ramon Romero CMF Tile Installation
Juan Benabidez Miguel Moran Rey Construction Carlos Munoz
David Hernandez Cabinets Sun City International Doors Manuel Reyes Miguel Sanchez Cano Tile
David Hernandez Jorge Carmona Serrano's Construction Miguel Sanchez Cano
Bassett Woodworks Juan Carlos Perez, grading Juan Serrano David J. Ellis fee attorney for
Danny Murillo Juan Carlos Perez VMP Painting Sierra Title
Agustin Favela Concrete Quality Granite Victor Prieto David Ellis
Agustin Favela Hector Porras X Construction Hector Phillips, fee atty for
Oropeza Concrete Stone City Rocks Emannuel Chavaria Sierra Title
Angel Oropeza Chris Baca Alvarado Plastering & Stucco Hector Phillips
Felipe Rocha Construction Forge Factory Strength & LLC Senpai Training and
Felipe Rocha Conditioning Jorge Enrique Alvarado Development
Border Construction Specialties Edmundo Portillo EDLR Plastering Leonardo Corral
Ricardo Yvellez Lowes Home Improvement Eduardo DeLa Rosa Sun West Windows and Glass
Big A Construction (concrete) Johnny Rodriguez J. F. Plastering Ernie Hernandez
Thelma Vasquez A C Refrigeration LLC Juan Flores DeLa Torre Iron Works
Pate & Appleby LLP Angel Cabrera Q Martins Plumbing Alfredo dela Torre
Richard De Santos Belmont's Air Conditioning, INC. Jose Martinez The Iron Snail Inc.
SBNG, P. C. Rafael Belmonte MOEN David Zuniga
Tyler Smith Diaz Services Inc. HVAC Frank Graf Rito Magallanes
Emmanuel Diaz Rito Magallanes
2018 Issue 6 Builders Outlook 13

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Upcoming Events
July 7
First Home Saturday
Bassett Place





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August 8-10
Sunbelt Builders Show
Hilton Anatole- Dallas, TX

August 16
Board meeting 11:00
General meeting 12:00
El Paso Club

Condolences
S h o w ro o m :
Our deepest Condolences to 9400 Gateway East
El Paso, TX
79907
Ruth Arroyos on the loss of her mother. (915) 593-1301
(800) 356-9546
www.efbmi.com

Soda Sponsor

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Richard Roman

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Call 778-5387 today! © 2018 El Paso Association of Builders •  6046 Surety Drive • El Paso • Texas • 915-778-5387
Regulation:
14 Builders Outlook 2018 Issue 6

Over 30 Percent of the Cost of a Multifamily Development

BY PAUL EMRATH
Regulation imposed by all levels of
government (whether local, state or
federal) accounts for 32.1 percent of
the cost of an average multifamily
development, according to a new study
conducted jointly by the National
Association of Home Builders (NAHB)
and the National Multifamily Housing
Council (NMHC). The study is based
primarily on a survey of multifamily
developers from both organizations.
The results show that well over 90
percent of multifamily developers
typically incur hard costs of fees paid
to local governments, both when
applying for zoning approval, and
again when local jurisdictions authorize
the construction of buildings. But the
study also shows that government
regulation often imposes costs in other
ways as well.
Among the regulations covered by
the NAHB-NMHC analysis, the cost
was highest for changes to building
codes over the past 10 years,
accounting for 7.0 percent of the cost
of developing the property on
average. No one would argue against
standards for basic soundness and
safety of structures, but building
codes have been in place for
decades, and have expanded well
beyond this. There is now a separate
code devoted to energy conservation,
for example, and NAHB has criticized
particular changes to this code for
limiting flexibility and driving up costs
without improving energy efficiency
(sometimes to the benefit of specific
product manufacturers).
Many local governments require
new development to conform to
community design standards (for
example, streets, sidewalks, parking,
height of buildings, landscaping, and
architectural design). These
standards impose added costs if they
require more than a multifamily
developer would normally provide.
These beyond-ordinary development
requirements were the second most
costly type of regulation, accounting
for 5.9 percent of development costs,
on average. The chart below shows
the average costs for the various
types of regulation covered in the
NAHB-NMHC study.In the chart, the
“other” category includes Interest on
refundable fees charged when site
work begins, the value of land that
the developer must dedicate to the
government or otherwise leave
unbuilt, the cost of so-called
affordability mandates imposed
without any incentives to offset the
cost, and a “pure” cost of delay (i.e.,
how much the delay would cost even
if regulation imposed no other type of
cost)
As mentioned above, on average
these costs sum to 32.1 percent of
the cost of developing a new
multifamily property. One-fourth of the
time they reach as high as 42.6
percent. For more detail on each
type of regulation, as well as a
complete description of the NAHB-
NMHC survey and methodology used
to estimate the costs, please consult
the full NAHB-NMHC study.
 Builders Outlook 2018 Issue 6 El Paso Disposal
6046 Surety Dr. El Paso, TX 79905
915-778-5387 • Fax: 915-772-3038
■ ExEcuTivE OFFicERS
PRESiDENT
Edmundo Dena
Luis Rosas, HUB International
Brenda Aguirre, Rocky Mountain Mortgage
Sandra Lucero, Builders Source
772-7495
vicE PRESiDENT Ted Escobedo, Snappy Publishing
Sergio Cuartas Jorge Herrera, J&H Post Concrete & Post Tension
SEcRETARY Angelique Roman, Sierra Title
Edgar Garcia Patrick Tuttle, Legacy Real Estate
ASSOCIATES VICE PRESIDENT Sam Trimble, Lone Star Title
Sam Shallenberger Patricia Martinez, Stewart Title
ExEcuTivE vicE PRESiDENT Randall Smith, Randall Smith, CPA
Ray Adauto
PAST PRESiDENT ■ TAB STATE DiREcTORS
Don Rassette Randy Bowling - Life Director
Sam Shallenberger
■ cOMMiTTEE cHAiRS Edmundo Dena
Membership
Ted Escobedo ■ NATiONAL DiREcTORS
Patrick Tuttle Bobby Bowling, IV
Demetrio Jimenez
Finance committee Leslie Driggers Hoard -Alternate
Kathy Carrillo/Treasurer Antonio Cervantes - Alternate
Henry Tinajero
Honorary Life Members
Community Outreach Mark Dyer
Angelique Roman

For All Your Electrical Needs

Wayne Grinnell
Brenda Aguirre Don Henderson
Patricia Martinez Anna Gill
Brad Roe
Land Use Council Rudy Guel
Sal Masoud

Residential Specialists
Past Presidents
Education committed to Serve
Kelly Sorenson Edmundo Dena

Tract Homes • Custom Homes

Delton Deal Edgar Montiel
Frank Torres
■ ADviSORY TO THE BOARD Frank Arroyos
Jay Kerr, Firth, Johnston, Bunn & Kerr Greg Bowling
Randy Bowling
■ BOARD OF DiREcTORS Bobby Bowling Iv
Builders: Doug Schwartz
Delton Deal, Deal 2 Deal John Cullers
J.J. Vasquez, Pacifica Homes Robert Baeza
Leti Navarrete, Bella Custom Dream Homes Mark Dyer
Bud Foster, Southwest Land Development Kelly Sorenson
Kathy Parry, HUNT Communities Rudy Guel
Lee Gillett, Classic American Brad Roe

915-208-9313
Laura Loy, Loyalty Homes Herschel Stringfield
Walter Lujan, Dawco Homes Bob Bowling Iii

Total Customer
Fernando Torres, Metro Homes Pat Woods

800-853-3996
Leslie Driggers Hoard, Homes by Design Carlos Villalobos
Carlos Garcia, ICON Custom

Sal Masoud, Del Rio Development
Fernando Santana, Santana Custom Homes
Chris Hakes, Hakes Brothers
Associates:
Joe Bernal, Joe Bernal Insurance
Henry Tinajero, WestStar Bank
Kathy Carillo, Pioneer Bank
John Chaney, Passage Supply
Satisfaction
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.
© 2018 Builder’s Outlook is published and distributed for
the El Paso Association of Builders
by Ted Escobedo, Snappy Publishing, LLC

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