NAHB Housing and Economic Outlook Report
David Crowe, CHIEF ECONOMIST
Sackett Supreme Court Decision a Victory for Property Rights
A unanimous decision handed down by the U.S. Supreme Court this week is a huge victory for property rights advocates and very good news for NAHB's members.
In Sackett v. U.S. Environmental Protection Agency, the Court agreed with NAHB arguments (submitted in the form of two amicus briefs) that a property owner who receives a Compliance Order from the EPA or Army Corps of Engineers should be able to obtain judicial review in court. The case involved property owners Michael and Chantell Sackett, who owned an undeveloped half-acre lot in a residential area near Priest Lake, Idaho. When the Sacketts began the process of building their dream home by preparing the lot for development, the EPA accused them of placing fill material into a jurisdictional wetland and issued a Compliance Order requiring them to immediately remove that material and restore the wetland -- or face thousands of dollars in fines for every day they did not do so. When the EPA denied the Sacketts' request for an administrative hearing to challenge the order, they filed an action in district court seeking relief, but both the district court and the Court of Appeals for the Ninth Circuit held that the Clean Water Act (CWA) precluded pre-enforcement judicial review of Administrative Compliance Orders. On March 21, every member of the U.S. Supreme Court was in agreement in deciding that "there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into 'voluntary compliance' without judicial review." Moreover, two of the Justices (Ginsburg and Alito) wrote concurring opinions in which they explained that because the EPA had determined its jurisdiction over the Sacketts' property, judicial review was appropriate.
This decision is extremely important to our industry because home builders (like the Sacketts) are often subject to Administrative Compliance Orders with no means to challenge them, unless the government decides to file an enforcement action or the builder applies for and is denied a CWA Section 404 permit. As of now, this is no longer the case. Instead, any builder who receives a CWA Compliance Order can now challenge that order in federal court. In addition, whereas builders have previously had no place to turn when the EPA or Army Corps determines that a wetland or water body on their property falls under the agency's jurisdiction, Justices Ginsburg and Alito have now indicated that they may in fact seek relief in court.
In an official NAHB reaction statement, Chairman Barry Rutenberg summed it up in saying, "This ruling provides a check on EPA's capricious expansion of its regulatory authority. Finally, home owners and home builders have a way of challenging EPA Compliance Orders before they face big fines." Read the Justices' opinion online here, for more information on this outstanding legal victory.
New Member Benefit from NAHB
The NCHBA Board of Directors recently approved our participation in a new member benefit called the Member Rebate Program. The program provides Manufacturer rebates, the same rebates the national builders receive, for all of our builder and remodeler members, regardless of your volume!
The program will start in early January 2012 and you will be able to claim for all homes or remodel jobs completed from July 1 through December 31, 2011. To learn more visit the website www.hbarebates.com/nchba.html . More information to come soon.
Improving Markets Index: Fayetteville, NC
NAHB recently unveiled an index that tracks housing markets on the mend: the NAHB/First American Improving Markets Index (IMI). The IMI is intended to draw attention to the fact that housing markets are local and that there are metropolitan areas where economic recovery is underway. The index measures three readily available monthly data series that are independently collected and are indicative of improving economic health. The three indicators are employment, house price and single family housing permit growth.
For the second release, 23 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Fayetteville, NC metropolitan statistical area (MSA).
The improving housing market in Fayetteville is primarily due to growth at Fort Bragg, a major U.S. Army installation home to the U.S Airborne and Special Operations units. According to Lynne Green, the owner of Highland Lumber “Fort Bragg is always a big player in our economy but it’s now bigger and more important than ever before and that’s due to BRAC.” The Base Realignment and Closure process has resulted in more than 20,000 military and civilian employees relocating to Fort Bragg over the past few years.
The relocation of Forces Command, led by a four-star general and the Army Reserve Command led by a three-star general have collectively brought about 3,000 new employees to Fort Bragg, many of them with higher pay grades than the typical new recruit. This impact is already being felt with personal income in Fayetteville growing by 5.5% in 2010. According to the Census Bureau, military earnings in the metro area grew by $466 million, from $5.9 billion to $6.4 billion and that represents more than half of Fayetteville’s overall increase of $787 million last year. The added employment is a significant boost for the metropolitan area, which has 131,000 workers, according to the Bureau of Labor of Statistics and a population of slightly more than 366,000, up from almost 337,000 in 2000, an increase of 8.8% according to the Census Bureau.
Another factor in the success of the market according to Home Builder Greg West is that “builders were quick to adapt to the economic downturn by reducing supply, which has kept new home inventories normal, and by lowering the price of new homes by simplifying product offerings and shrinking their size.” As a result of that and the steadying influence of Fort Bragg, home prices remained stable during the downturn. House prices have moved up 3.2% since the trough of December 2009 and are within 1.5% of their all–time high set in July 2008.
Mr. West went on to say that now that the influx from BRAC is over, the city is looking forward to an influx of defense contractors and related personnel that should continue to help Fayetteville perform well.
Improving economic conditions have resulted in payroll employment returning to its all-time high, set in January of 2009, and is up by 4,000 since the trough in October of last year. Single family permitting activity is up to an annual average rate of 1,425 per year from a pace of just 1,057 at its trough set in December 2008. While new homes are being built in many parts of Fayetteville, it appears that starter homes are primarily being built in Hoke County due to its affordability and proximity to Fort Bragg while Harnett County (which is not technically part of the MSA) is where higher end houses and transferees may be found.
What is NAHB?
NAHB is a Washington, D.C.-based trade association whose mission is to enhance the climate for housing and the building industry. Chief among NAHB’s goals is providing and expanding opportunities for all consumers to have safe, decent and affordable housing. As “the voice of America’s housing industry,” NAHB helps promote policies that will keep housing a national priority.
Founded in 1942, NAHB is a federation of more than 800 state and local associations. About one-third of NAHB’s more than 175,000 members are home builders and/or remodelers. The remaining members are associates working in closely related fields within the housing industry, such as mortgage finance and building products and services.
The association is member-driven, with a professional staff of more than 300 in Washington. More than 2,800 members serve on the association’s board of directors, which elects the association’s Senior Officers and helps set the association’s agenda.
NAHB's various groups analyze policy issues, take the industry’s story to the public through the media and other outlets, monitor and work toward improving the housing finance system, and analyze and forecast economic and consumer trends. They also provide a wide range of services to members and Home Builder Associations. The association also represents the industry’s interests on Capitol Hill and strives to ensure that housing remains a national priority when laws are made and policies are established. NAHB also works with federal agencies on regulations affecting the housing industry in areas such as mortgage finance, codes, energy and the environment.
NAHB’s builder members construct about 80 percent of the new homes built each year in the United States.
NAHB’s Annual Convention and Exposition, known as the International Builders’ Show or IBS, is the largest show of its kind for the residential and light commercial construction industry. In 2011, the International Builders' Show will be held at the Orange County Convention Center in Orlando, Fla.
NAHB’s affiliates include the NAHB Research Center, which develops, tests and evaluates new materials, methods, standards and equipment to improve the technology and the affordability of America’s housing; and the Home Builders Institute, NAHB’s workforce development arm, which develops and administers a wide range of educational and job training programs.
Monday Morning Briefings
Calculator Shows Buyers How Much Home They Can Afford
A newly updated tool from NAHB Economics helps consumers determine how much home they can afford based on their current income and downpayment, and may also be an excellent resource for builders' sales staff. Read More