Housing is more affordable than anytime in decades

Nationwide housing affordability hit new highs in this year's first quarter, according to the latest reading of the NAHB/Wells Fargo Housing Opportunity Index (HOI), released May 25. During that time, 74.6% of all new and existing homes sold were affordable to families earning the national median income of $64,400. That's better than the previous high of 73.9% established during the fourth quarter of 2010, and marks the ninth consecutive quarter in which the index has risen above the 70% level.

Before 2009, the HOI rarely topped 65% and never reached the 70% margin. The bottom line: Homeownership is now within reach of more households than it has been for more than two decades — at least it should be, if not for tight credit conditions that are impeding both builders and buyers right now.

In the Greenville area, the Housing Opportunity Index is 77.9. That means that 77.9 percent of the available homes in the market are affordable to a family earning the median household income for the market of $58,000 per year.

Home Builders Association of Greenville Hires Hood, Kish

The Home Builders Association of Greenville has hired Michelle Hood as Meetings and Events Planner, and Michelle Kish as Administrative Assistant.

A native of Breaux Bridge, LA, Hood holds a B.A. in Art Education and a Minor in Fine Art. She is responsible for coordination and execution of association programs including general membership meetings, Builder After Hours and the annual HBA of Greenville Golf Tournament.

Kish is a 1999 graduate of Newberry College, and has extensive insurance industry experience in customer service and account management. She is a Certified Workers Compensation Advisor, a Certified Insurance Counselor, and has implemented and managed numerous workflow and office procedures initiatives.

Established in 1960, the Home Builders Association of Greenville is a professional membership organization that includes local and national builders, remodelers, specialty contractors, manufacturers, financial and insurance professionals, realtors, and many others who offer products and services for homeowners and first-time homebuyers. HBA of Greenville is an affiliate of the Home Builders Association of South Carolina and the National Association of Home Builders. For more information, call (864) 254-0133 or visit www.HBAofGreenville.com.

On School Impact Fees

Editor's Note: Last week HBA of Greenville Executive Vice President Michael Dey and Greater Greenville Association of REALTORS® Chief Executive Office Nick Sabatine co-authored an editorial that appeared in the Greenville News. It is reprinted here:

Before proceeding with a proposal to impose a development impact fee on new homes built in Greenville County, the Greenville County School Board of Trustees should give consideration to the following facts about impact fees:

• Home Builders and Developers do not pay impact fees; the buyers of the homes in the communities they build pay the fees, which will have a negative impact on the ability of young home buyers who are expected to dominate the new home market in the coming decade.
• Any buyer of any new home and the owners of existing homes, who add on to their home, even if they do not have children in school, will be required to pay the impact fee. However, the buyer of an existing home will not be assed an impact fee, even if they have children in school.
• The “South Carolina Development Impact Fee Act” (SC 6-1-190) specifically lists seven public facilities that are eligible to receive funding from development impact fees. Eligible public facilities include roads, parks, and libraries. Specifically excluded from the list are schools.
• When the school board begins assessing an impact fee, consider that those homeowners who pay the fee will be inclined to oppose a bond referendum or millage increase - both of which raise far more money than an impact fee - because they have paid for their burden on the school system.
  

The Greenville County School Board of Trustees also should consider the fact that in Greenville, South Carolina, new housing pays for itself, and quickly. In fact, according to two studies conducted by Dr. Elliott Eisenberg of the National Association of Homes Builders, new homes actually subsidize existing homes through their contribution to the local tax base.

In 2008, Home Builders in Greenville County built 1,852 new single-family homes. The impact of those homes on Greenville County include: Local income for workers was $308.8 million; Taxes and fees for local governments was $51.2 million; and local jobs created was 5,388.

Imagine first the condition our local school board’s budget would be in if housing production were able to rebound. Now imagine the effect an impact fee will have on new home construction in the future.

In addition to the effect that new home construction has on our local economy and tax collections, homes continue to benefit our community after they are built. The homes built in 2008 have continued to benefit our local economy and governments by contributing $45.1 million per year in local income to workers and $12.3 million in taxes and fees to local governments, while supporting 879 local jobs.

The question we have for our local school board trustees is on what basis do you conclude that new homes are not contributing fully to the demands they place on the school system and other local governments? Based on the studies we referenced, the following are facts:

• By the end of the first year after 1,852 new homes were built in 2008, economic impacts of constructing those homes offset all fiscal costs of serving those new homes, including all infrastructure costs like schools.
• Since the second year, those same new homes have been contributing NET INCOME to local governments, like the Greenville County School System, of more than $2 million per year.
• After 10 years, those new homes will have contributed NET INCOME to local governments of more than $25 million.
  

Even in the peak years of home building, the rate at which home building pays for its impact on government facilities was similar to 2008.

We caution our local school board trustees that adding a tax on new construction would actually hurt revenues for local schools, not help them.

Nick Sabatine, Chief Executive Officer
Greater Greenville Association of REALTORS®

Michael Dey, Executive Vice President
Home Builders Association of Greenville

How houses are homes, even in a disaster area

By Dr. Elliott Eisenberg, Senior Economist, NAHB

Recently I was to give a talk about the economic impact of home building in Joplin, MO. However, a few hours before I landed a devastating tornado destroyed 2,000 buildings and heavily damaged one-third of the city including the hospital, high school and many neighborhoods. In all, over 120 persons were killed. After a harrowing flight from Chicago filled with turbulence, lightning and the darkest clouds this east coast economist has ever seen it was great to land. I was, however, so shaken from the flight and from what I saw I was unable to articulate a cogent thought and putting one foot in front of the other was about all I could do.

Interestingly, this was my second recent frightening run-in with Mother Nature. About 10 weeks ago I was on the Oregon coast having given a talk at an HBA there. At 5:30 the next morning I was woken by the hotel manager and informed that there was a tsunami warning and that I might wish to evacuate; needless to say, I did. Luckily that warning was unnecessary. In Japan, however, it was a very different story.

To me the most poignant part of natural disasters is hearing survivors talk gallantly about rebuilding their destroyed homes and neighborhoods. No one cries about a car, boat, iPhone or credenza that was destroyed; they are all easily replaced. Yet, people regularly weep when surveying the wreckage of their destroyed home. This is because homes are repositories of memory and because homes speak to the importance of place. And our place and our memories intimately revolve around our homes. Thus, the profound desire to rebuild even though moving away is so much easier.

Joplin has suffered immense physical and psychological damage. It is now our turn, the turn of the home builders, to help make these communities whole and give them back part of what was brutally taken from them. In my speeches as an economist I regularly point out the number of jobs created and the amount of tax revenue generated by home building. But, to be honest, that misses the bigger point. What rebuilding homes in Joplin and New Orleans and Memphis does is offer people and communities hope about the future, comfort that they are part of it, and validation of their lives.

The next time I give a speech I will make these points, I will share this story and I will be more proud to be part of this great industry than I have ever been.

Editor's Note: Elliot Eisenberg, Ph.D. is an economist with the NAHB and looks forward to hearing from you. He has spoken to the HBA of Greenville twice in recent years and delivered good news about the impact of housing on our local economy. He can be reached at 202.266.8398 or by email at eeisenberg@nahb.org.

Dr. Eisenberg was set to speak on Monday to HBA members in Joplin, MO. He was intercepted by the Executive Director of the Springfield, MO, HBA before he finished his trip and arrived in the disaster zone. His is a story about how HBA members and staff come together to help one another.

The HBA office in Joplin is undamaged and will reopen May 24. However, two of 14 HBA board members in Joplin are homeless.

You can help by contributing to NAHB's Disaster Relief Fund.

Federal Housing Finance Agency Reports Mortgage Interest Rates

The Federal Housing Finance Agency today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 4.80 percent based on loans closed in April. This is a decrease of 0.04 percent from the previous month. Complete data can be found at www.fhfa.gov by clicking here.

The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 7 basis points to 4.99 percent in April. These rates are calculated from the FHFA’s Monthly Interest Rate Survey of purchase-money mortgages (see technical note). These results reflect loans closed during the April 25-29 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-March.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.80 percent in April, down 4 basis points from 4.84 percent in March. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.93 percent in April, down 5 basis points from 4.98 percent in March. This report contains no data on adjustable-rate mortgages due to insufficient sample size.

Initial fees and charges were 0.88 percent of the loan balance in April, down 0.07 percent from 0.95 in February. Twenty-eight percent of the purchase-money mortgage loans originated in April were "no-point" mortgages, up from 25 percent in March. The average term was 27.8 years in April, up 0.2 years from 27.6 years in March. The average loan-toprice ratio in April was 75.8 percent, up 0.3 percent from 75.5 percent in March. The average loan amount was $204,400 in April, down $4,200 from $208,600 in March.

To read this press release at www.fhfa.gov, click here.

Addison Homes earns national green advocate honor

Addison Homes earned the Green Building Advocate of the Year award from the National Association of Home Builders for its sustainable building practices. Only 13 building industry professionals nationwide received this award. Addison Homes builds all of its homes to Energy Star and EarthCraft House standards.

“Building to environmentally-friendly standards is about more than just saying you’re ‘green,’” Addison Homes President Todd Usher said. “This is a way to provide healthier, more comfortable and more durable homes with the added perk of reduced utility and maintenance bills.”

Todd Usher, GMB, Master CGP, CAPS, past president of HBA of Greenville, and Michelle Usher, co-owners of Addison Homes, educate the community on sustainability-related educational programs, ranging from consumer seminars on energy-efficient homes to children’s workshops featuring conservation projects. The couple’s volunteer outreach includes supporting high-performance standards for the local Habitat for Humanity.

“We are committed to increasing awareness about the very practical benefits of sustainable building techniques,” Usher said.

NAHB announced the Advocate of the Year and other awards during the 13th annual National Green Building Conference earlier this month in Salt Lake City, Utah.