The National Association of Home Builders (NAHB) addressed Congress today with a laundry list of recommendations which will help spur and maintain growth in the now blossoming real estate industry. One of the biggest fears for new home builders and all of the vendors and sub-contractors who are involved in the building and completion of new homes is that the fragile state of the economy will be derailed by legislation on the table which does not make sense for the home building industry. Also, there are a couple of incentives which have spurred builder growth throughout the Recessions, which if not renewed, could slow down the momentum in the growing construction market.
One of the first topics addressed was the interest rate deductions for current homeowners. NAHB’s chairman Rick Judson, a home builder and developer from Charlotte, N.C., in testimony before the House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade strongly recommended leaving this program in place. His platform echoed many presidential statements on the necessity of a strong middle class in America. Judson contended that because the interest rate deduction program helped and affected many young homeowners, that they were more apt to buy new homes and use the deductions to reduce the amount of taxes paid. Young home buyers were then able to build credit and equity in their home investment and therefore create more wealth both in the equity as well as the savings from the interest rate deductions.
Another issue that was addressed was that of the energy efficiency tax credits for both builders and homeowners which are set to expire soon. Judson urged the Committee to renew these tax credits in order to make builder more energy efficient homes and do more energy efficient renovations more affordably. Energy efficiency tax credits such as the Existing Home Retrofit Tax Credit (25C) that provides consumers a tax credit of up to $500 for the purchase of qualifying energy-efficient products and the New Energy Efficient Home Tax Credit (45L) available to builders who construct energy-efficient new homes are important policy tools to provide home owners and builders with incentives to perform energy efficiency upgrades on homes. With the advent of energy efficient products, more people in general look to buy a home instead of rent a home because the monthly utility payments become more affordable, the more modern and “green built” a home is.
While the economy and the real estate market have taken an upturn, because of the Recession and inflation, the cost of building materials has skyrocketed over the past 6 years. Judson urged the government to do all that it could to lower the increasing costs of building materials especially imported products. Citing a shortage of materials especially for framing lumber, oriented strand board and gypsum, Judson explained that vendors have a hard time buying up what they need because of price and availability constraints.
Another issue addressed before the Committee was the lack of labor available for the building or remodeling of homes. Because of the Recession, those who used to be in the construction industry had to find jobs elsewhere because work on new home construction and building was temporarily unavailable. A recent survey of NAHB members shows that since June 2012, residential construction firms have been reporting an increasing number of labor shortages in all aspects of the industry – from carpenters, excavators, framers, roofers and plumbers, to bricklayers, HVAC, building maintenance managers and weatherization workers.
“With congressional attention shifting to immigration reform, I believe strongly that this debate provides an important opportunity for the country to implement a new market-based visa system that would allow more immigrants to legally enter the construction workforce each year,” said Martin. “This would complement our skills training efforts within the nation’s borders, and fill the labor gaps needed to meet the nation’s housing needs.”