New Construction Jobs Support Overall GDP

Home building generates a substantial amount of money for local governments and the federal government just by the nature of the industry.  According to the National Association of Home Builders, approximately 90,000 different governments receive approximately $111 million in taxes and fees from the construction and building of 1,000 single-family homes.

Sub-Contractors Contribute Greatest Share

In addition to the governments making a substantial amount of money from home building,

sub-contractors also are reported to make consistently higher wages because of home building.  One of the reasons for this is that sub-contractors actually do the work themselves instead of hiring the jobs out to employees.  Because sub-contractors make up the majority of the workforce when building a new home, the taxes on profit then paid by these sole proprietors also contribute greatly to the overall economy.

Tax Breakdown

The amount of taxes paid to the federal government is comprised mainly of income taxes and social security equaling an amount of $74.4 million.  State and local income taxes comes to $10.3 million, and city and county taxes equal approximately $6.9 million.  Other taxes consisting of impact fees, permit fees, and other fees for new construction bring in a total of $13.7 million.

A breakdown of industries which bring in the revenue shows that construction has the most jobs, and other affiliated companies related to construction such as manufacturing, bring in other revenue.  Other affiliated businesses include trade, transportation, warehousing, finance, insurance, real estate sales, rental and leasing, and professional, management, and admin services. A total of 2,975 jobs are created from building 1,000 single-family homes based on full-time jobs over one year.

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Interest Rates to Remain the Same According to the Fed

A unanimous decision by the Federal Reserve the first week of June declared that interest rates would remain the way they were. This decision was made after reports revealed that the labor market is still not showing a strong recovery.  Even though there are still job gains across the board, they are slow and business investment has also not picked up.
Home buyers have enjoyed and even taken for granted interest rates that are historically low for the past 10+ years.  For those buyers who have been able to recover and succeed after the Great Recession, it is still one of the best times to buy a new home or buy an existing home in today’s housing market.

Predicted Rise in Interest Rate

Originally, the “Fed” had predicted that there would be two more rate hikes of the interest rate during 2016, but June’s meeting saw 6 members stating that with the slow growth of the economy, they only would really commit to a possibility of one more interest rate increase, citing the normalization of monetary policy taking a longer period of time than expected.
The good news is that the unemployment rate went down by 4.7%, but the gain of jobs in May, 2016, was only 38,000.  Also, the job increases reported in March and April were revised down by 59,000 – a loss of 458,000 in the labor force.

Strong demand still exists for employees and contractors in the residential construction sector.  The BLS JOLTS data shows that builders have approximately 200,000 unfilled positions.  However, during the course of April and May, 9,600 jobs were lost in the residential construction industry, and these jobs are now having to be refilled.

First-Time Home Buyers

Because of the cost of labor and materials to build a new home, first-time home buyers are finding it hard to acquire a new home.  Homes that are priced less than $150,000 account for only 6% of the market according to the National Association of Home Builders.  Currently approximately 31% of the home buyers surveyed expected to be able to pay less than $150,000 for their new home.

New home buyers in the market to purchase a new home will still benefit greatly from the significantly and historically low interest rates.  Any rise in the interest rate in 2016 will still probably keep the interest rate low enough to have affordable house payments.

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Tax Credits Still Available for Energy Efficient Home Features

New homes which are “green-built” to reduce energy consumption have several benefits to new home buyers.  Many people don’t know that tax credits are still available for the use of energy efficient home features. First of all, because of the usage of the proper insulation, tightly sealed caulking and weather stripping, the home’s interior temperature is more comfortable.  Through the control of air and vapor through the use of air/vapor retarder systems, the humidity of the home is reduced significantly making it a more dry environment.  Because of the insulation and tightly sealed yet ventilated structure of the home, there is a reduction of a significant amount of noise as well.  All of these factors contribute to a peaceful and comfortable living environment for our new homeowners.

At Ron Lee Homes, we use many different energy efficient building techniques.  Because he is Green Building Certified through the National Association of Home Builders, Ron Lee is an expert on applying the latest trends and technologies in building green homes.  Currently, the federal government is offering tax rebates for two different types of energy efficiencies: the Residential Energy Efficient Property Tax Credit, which benefits those who have incorporated renewable energy features into their home, and the Nonbusiness Energy Property Tax Credit, which benefits those who have installed materials that meet the U.S. Department of Energy’s energy efficiency standards.

Energy Efficient Materials

In order to clarify exactly which types of materials will help you in renovating and updating your home, saving you money on your utility bills, and receiving money off of the annual taxes you pay, Ron Lee Homes has provided a description of all of the potential changes or new building techniques you can use that are considered energy efficient enough for the IRS.
First of all, for new home building, you will want to make sure that your thermal envelope is designed and installed to help reduce moisture and air from flowing through your home.  Your thermal envelope includes the wall and roof, insulation, air / vapor retarders which reduce water vapor condensation, windows, weather stripping, and caulking.

A typical home loses more than 25% of its heat through its windows.  In addition to using Energy Star® rated double or triple-paned, energy efficient windows, something as simple as roof overhangs are excellent at providing shade keeping the heat and sun glare off of the sides of the house as well as the windows especially here in Southeast Louisiana.

Amazingly, properly applied caulking and weather stripping will reduce a home’s utility costs by 50%.  Sealing all of the potential places that air and moisture can escape or come into your home can enormously change your home’s environment – creating a less humid place to live with more stable temperatures.

Choosing the properly-sized heating and cooling system and then creating ventilation and air re-usage opportunities throughout the home will let the home “breathe,” which helps with reducing hot and cold air when it is not necessary.

Energy Star® water heaters, refrigerators, washing machines, dryers, dishwashers, lighting, and room air conditioners should be chosen to decrease entergy usage which makes it cost less to use your home appliances.

For more information about building a new home with energy efficient features or renvoting your current home with these features, Contact Ron Lee Homes at 985-626-7619 or E-mail Info@RonLeeHomes.com.

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NAHB Survey Shows Desire for Better Amenities Among Remodelers

Among the many reasons for remodeling your home, the National Association of Home Builders surveyed homeowners and found that the top reason for a remodel was a desire for better / newer amenities.  In conjunction with this reason, homeowners’ second reason for remodeling their current home was a need to repair / replace old components.

In order for a home to feel like “brand new,” homeowners can largely do an overhaul of their existing space, replacing or adding trim, repainting, putting down different flooring, replacing cabinets and countertops, and installing new fixtures, lighting, and appliances. The desire for new and better amenities includes all of these activities and also includes installing new components whether they be new faucets, sinks, toilets, tubs, showers, shower stalls / doors, kitchen islands, and much, much more.  Unused wall space can include new cabinetry, a kitchen desk or mini-office, a butler’s pantry, or a built-in wet bar designed specifically for entertaining, complete with ice maker, refrigerator, and / or wine cooler.

Other reasons for remodeling your home can include wanting to avoid moving or buying a new or existing home for sale, the ability or desire to stay where you are – age in place.  If you have children, you may love the area in which you live, your kids love their school, and you like the school district, your neighborhood is desirable and your neighbors are your friends, and other reasons for “staying put.”  Your home may not no longer be meeting your expectations for comfortable living, but remodeling your home to give it a fresh look or even adding on more space in the form of an expanded family room area, a new sun room, a new patio / screened-in porch, a mother-in-law suite, or even an upstairs apartment above your garage could make your life and your family’s life more enjoyable.

Whatever your reason for remodeling your home, Ron Lee Homes in St. Tammany Parish can help.  We have added entire outdoor space, completely reconstructed kitchens and bathrooms, and created private master suites for more comfort while you age in place.  To get more information on renovating your home with Ron Lee Homes, call 985-626-7619 or E-mail Info@RonLeeHomes.com.

FHA Backed Loans Reported to Have Slight Increase

Certain pricing requirements, mortgage types, and age requirements are considered a trend for first-time home buyers.  Different housing market statistics are indicating that first-time home buyers may soon be increasing to pre-Recession levels. The first indication was a slight uptick in FHA (Federal Housing Authority) backed loans.  With the recent easement of FHA loan requirements including a lower percentage required for the down payment, more first-time home buyers are able to qualify for FHA mortgages.  The increase in FHA-backed mortgages went up to a 17% market share for a quarterly count of 23,000 FHA loans in the 1st quarter of 2016.

Pre-Recession Trends

 

Interestingly, in 2002 – 2003, well before the Great Recession, FHA backed mortgages were only 10% of the market share where in 2010, FHA loans had a 28% share of the housing market.  These statistics show a steady presence of FHA loans in real estate transactions.  It also indicates the necessity of a government supported loan program for struggling Americans who need assistance with their new home purchase.

Conventional home financing still makes up the majority of home purchases in America today.  For the first quarter of 2016, Conventional loans made up 68% of the homes achieved by home buyers.  The reason for this may be another market statistic which showed an overall increase of in personal income in the United States.  a 2.2% year-over-year increase for 2014 was reported with median income reported at $28,757.  This is 5.4% less than its high in 2007 right before the Recession, and it is still lower than income reported in 20000, but statistics show the trend of the total of personal income is and has been on the rise since it bottomed out in 2012.

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National Association of Home Builders Announces Positive Housing Recovery

According to the National Association of Home Builders’ (NAHB) Leading Markets Index (LMI), the national housing market is within a 5% range of complete housing recovery compared to what is considered a “normal” housing market which the United States last saw in 2006.  Out of a score of one, the latest LMI scored a .95 nationwide in housing recovery.

How is the LMI Calculated?

The way that the LMI makes a numeric determination is taking statistics of single-family housing permits, employment, and home prices calculated for the entire country and specifically 337 local markets.  Single-family home permits rose from .48 to .49, new home prices increased from 1.38 to 1.40, and employment rose from .96 to .97.  The really good news is that approximately 35% of the 337 markets have a score that exactly equaled 1 or is greater than 1.

The number of markets which increased overall in single-family home permits in a year-over-year comparison rose by almost 65%. Employment numbers increased 71%.  Three hundred twenty-four markets out of the 337 are now showing new home pricing that is considered normal according to the last data recorded in a normal real estate market in 2006.

For communities located in Louisiana, almost all counties accounted for were located in the top 20% of housing rankings.  Approximately 4 areas were in the top 60% – 80% rankings relative to normal housing numbers for new home permits, employment and new home pricing.  Louisiana overall experienced a far softer impact of the slowdown in housing market numbers of the Recession than other states in the United States.  Baton Rouge consistently ranks in the top 10 cities in the United States with the best recovery numbers to date.

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Real Estate Market Celebrates Statistics Which Indicate a Buyer’s Market

Real Estate Showing Buyer’s Market

In general, the real estate market seems to be turning more into a buyer’s market than a seller’s market – an indicator that the housing market continues its steady, slow rebound since the Recession.  New home buyers have cause for optimism with the increase in standing new home inventory which was upwardly revised for the month of March from 205,000 in March, 2015, to 246,000 new homes this year.  Currently, new home inventory stands at a 5.8 month’s supply.

Competitive Home Pricing

 

With the increase of available homes, new home pricing and existing home pricing are now competitively arranged in the housing market, making builders’ new homes for sale just as attractive price-wise as existing home pricing.  This trend of available new homes for sale is expected to continue as in the month of Market, there are approximately 149,000 new homes under constructions and 41,000 single-family homes that will be constructed according to the record of building permits throughout the country.  The building industry reported 56,000 move-in ready homes on the market ready to be closed.

New home pricing has also stabilized compared to new homes for sale in March, 2015.  The current new home median sales price is $288,000 where it was around $293,400 in 2015.  Overall, new home pricing gained in a year-over-year comparison, with homes in the $200,000 – $300,000 price range rising by 20% in comparison.

As new home inventory exponentially increases, and a high number of new homes “flood” the real estate market, new home sales are expected to increase in the months ahead as home buyers can expect to see a large variety of different floorplans, features, and upgrades available to them in making a choice of buying their new home for sale. Some buyers may choose to build their new home from scratch with a custom home builder such as Ron Lee Homes in St. Tammany Parish.  If you are interested in building your new, custom home, Contact Us at 985-626-7619 or E-mail Info@RonLeeHomes.com.

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