HBASC Legislative Conference Recap

Your Home Builders Association of South Carolina held its annual Legislative Conference this week in Columbia. The meeting kicked off with a candidate forum with the various announced candidates for Governor of the State of South Carolina.

Pictured from left to right are HBASC Vice President Steven Mungo, Congressman Gresham Barrett, Lt. Governor André Bauer, Dwight Drake, Rep. Nikki Haley, Sen. Robert Ford, Sen. Larry Grooms, Attorney General Henry McMaster, Superintendent of Education Jim Rex, Sen. Vince Sheheen, and HBASC President Jim Gregory.

The candidates discussed their points of view on various policy issues and answered questions from the audience.

The forum was followed by a Legislative Planning meeting in which members participated in the development of the association's legislative agenda for 2010. Mandatory fire sprinklers, point-of-sale property assessments, reform of the Building Codes Council, and public school infrastructure funding were discussed as well as numerous other issues.

The day wound up with an oyster roast at the HBASC office near the State House in Columbia.

HBA of Greenville Annual Meeting

Your Home Builders Association of Greenville held its Annual Meeting and Spike Appreciation Luncheon today at the Greenville Hilton. The agenda included recognition of Spike Members, election of the 2010 Board of Directors, and approval of amendments to the association's bylaws.

Barry Rutenberg, Third Vice Chairman of the National Association of Home Builders, addressed the membership. He provided a report on the national housing industry and the steps NAHB is taking to address AD&C lending conditions and appraisal rules. He also reported on the new Home Buyer Tax Credit and the new rules on Net Operating Loss Carryback.

Spike members recognized included:

· Todd Lanxton, 6 Penny Spike
· Seabrook Marchant, 16 Penny Spike
· Tom Dillard, 25 Penny Spike
· Coleman Shouse, 25 Penny Spike
· Todd Usher, 25 Penny Spike
· Tom Ward, 25 Penny Spike
· Lou Hutchings, 50 Penny Spike
· Bruce Pasquarella, 50 Penny Spike
· Keith Rodgers, 50 Penny Spike
· Hal Dillard, 75 Penny Spike
· Wayne Moore, 100 Penny Spike
· Rob Murphy, 100 Penny Spike
· Dan Rawls, 150 Penny Spike

Speaker Barry Rutenberg also was recognized for 750 Spikes.

Members also visited the table top displays of our three meeting sponsors:

· HBS Foam Insulation
· Palmetto Pro Tint
· Superior Walls by Weaver PreCast of South Carolina

Our next meeting will be the association's 50th Anniversary Celebration on January 16, 2010.

Greenville County Council Gives Second Reading to Comprehensive Plan

Last night Greenville County Council voted unanimously to approve the 10-year Comprehensive Land Use Plan at second reading. The plan is required by state law and is not an ordinance, but instead it is a road map for future development.

Before second reading council amended the plan to clarify that the plan is not binding like law, and that unzoned areas are unaffected by the plan.

Council will take up the plan again for third and final reading on December 1, and could amend the plan further.

Many members of the Home Builders Association of Greenville participated in the development of the plan through citizen groups that met to consult on the plan's contents. In addition the County Planning Commission, which developed the plan, met last Spring with the Board of Directors and the Legislative Committee of the association to receive the association's input.

Are You A Part of the New Economy?

By Michael Dey
Executive Vice President

There is a lot of talk about shifting ways of doing business. A book titled “The Tipping Point” gives a good perspective on the changing nature of life and how, one day, suddenly there is a recognized shift in a new direction regarding whatever the subject may be.

For example, do you know exactly when it became taboo to smoke in most public buildings? Probably not. But if you are over 50 or just watch movies made before 1960, you know that every nook and cranny of every office and restaurant was filled with cigarette or cigar smoke because smoking in public places was an accepted practice. Today, it is almost hard to imagine that was true. But back then, it was hard to imagine that there would ever be such things as smoke-free workplaces or buildings. One day, the issue reached its “tipping point.”

Our industry needs to be cognizant of tipping points which impact housing. We’ve been moving toward a tipping point on green construction over the past decade. We hear more and more HBA members showing interest in green building as they recognize that more and more buyers are asking about it. We also hear that there will be a greater demand for higher density lifestyles in the years to come—both from necessity and personal preference.

There are thousands of foreclosed properties on the market. One person’s problem becomes another person’s opportunity. As prices adjust, we will reach a tipping point when a surge in demand for new housing will again occur.

America currently has about 110 million occupied housing units. About 75 million are owner occupied. Demographers say our population will rise by about 35 million over the next 10 years. We should be building about 1.5 million new homes per year to meet the growing demand. We are currently building at an annualized rate of only about 500,000. Very old homes deteriorate and a few burn down. Many people opt for newly built homes over their used ones for the excitement, the modern features and design as well as perceived long term financial benefits.

Children are still growing up and forming households and we have a large immigrant population adding growth as well. When we get through the foreclosure bubble, we should start to see this mix create a tipping point of strong demand for new homes. How soon will that come? Our industry built more than 2 million homes nationally in 2006 and 2007, a surplus of roughly 1 million homes. Add to that nearly 1 million foreclosures, and you will understand why it will take at least another year for that inventory to be absorbed.

Where will financing come from? New and creative sources are emerging as new players who made their money outside of housing look at home building opportunities. They will be alongside the traditional banking sources.

The very best way for you to keep up with the rapid changes is to stay in touch with your Home Builders Association—its website, its publications and its meetings. Add to that the same items from the National Association of Home Builders and you have at your fingertips the expert knowledge that you need to draw upon as we reach new “tipping points” in the home building industry.

Our HBA will remain on the cutting edge—just like our expansion this year into social networking—with our Twitter followers, our bloggers, and our Facebook page and friends. A site on LinkedIn is coming soon. We also are nearing an exciting announcement of a new website feature to connect builders with those who are searching the Internet for a new home.

Recent survey data shows that builders are largely still advertising and marketing the “old” way and not spending sufficient time connecting with buyers who are overwhelmingly starting their new home search on the internet. To operate profitably in the new economy, you better be prepared to stay informed. No where will you be better informed than through the HBA. Be sure to keep your membership up-to-date and invite your colleagues to do the same!

UPDATE: Tax Credit Extension Signed by the President

On Friday President Obama signed into law the extension of the Home Buyer Tax Credit extension. The act includes expanding the tax credit to homes bought by certain existing homeowners who are moving up. It also includes a new Net Operating Loss Carryback Provision that will benefit home builders who have recently had operating losses in the businesses.

Below are details of the new tax credit, which is effective immediately. More on the Net Operating Loss Carryback Provision will be posted soon.

Who is Eligible

First-time home buyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for a tax credit of 10% of the home purchase price, up to a maximum of $8,000.

Existing home owners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for a tax credit of 10% of the home purchase price, up to a maximum of $6,500.

All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits

Home buyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

For married couples filing a joint return, the combined income limit is $225,000.

Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates

The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify

All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable

A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

For example:
o A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 tax credit).
o A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 tax credit).

All qualified home buyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions

The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

Tax Credit Extension and Expansion Passes in Congress

In a major victory for NAHB that will boost the fledgling housing recovery and help struggling business owners nationwide, Congress today approved legislation that will extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers. The bill also provides relief to cash-strapped home builders by providing broader tax benefits for businesses with net operating losses (NOLs).

The legislation, which will be signed into law shortly by President Obama, will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30. Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight.

In more good news, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised from $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return to $125,000 for individuals and $225,000 for married couples. NAHB’s consumer-oriented Web site, www.federalhousingtaxcredit.com, will provide complete details on the enhanced home buyer tax credit after the bill is signed into law by the President.

Thank you to all who wrote or called your Congressional representatives to let them know how important this legislation is to the housing industry!

For more on this from NAHB, click here.

Remodeling Activity Remains Relatively Stable

According to a report by Construction Week, Remodeling has remained a relatively stable component of the Upstate Housing industry. For the year ended September 30, 2009, the number of permits pulled for Remodeling Projects exceeding $25,000 has dropped just 15 percent from the same period the previous year. And remodeling activity in 2009 is ahead of the pace of activity in 2006, 2005, and 2004.

For Greenville, Anderson, Spartanburg, Pickens, and Oconee counties, remodeling permit activity for the year ended September 30 is as follows:

2004 — 497 permits
2005 — 456 permits
2006 — 557 permits
2007 — 626 permits
2008 — 669 permits
2009 — 571 permits